Report Vol 1. July 2025
GBFH - The Gift That Keeps Giving
In late June GBFH Stock action seemed very bizarre, come to find out over 500k shares were sold short. Anyone that has watched GBFH for some time knows this is a large amount of selling pressure for this stock. Another Anecdote for you is that the 2 weeks before and after the index addition has produced over 95% of trades below 100 shares (odd lots). I do not recall one investment bank showing us a natural order since May.
However, after reading the June 26th, 2025 Stephens Russell Recon report, it was showing that 2025 marked the worst performance of R2 new bank adds over this period in the last decade. This is only 1 reason this pullback should be viewed as a gift.
Here are a few more:
Debunking the sale registration of 4 insiders
Chairman Ed Nigro - Registered and sold a small amount of stock (under 100k shares) ownership is still over 9% (over $40 million in stock). Nigro family ownership is in the low teens. In my opinion the 82 yr old man is allowed a little liquidity.
Chuck Griege of Blue Lion - Chuck sold 100k in his fund because the position breached a concentration limit in the fund. He counteracted this sale by buying 10k personally.
Lee Finley - Finley owned well over 10%. As we all know, owning over 10% of an SEC registered bank is a nightmare. He just needed to get under 10%.
James Scklar - Long time board member and a top 5 insider sold a small amount of shares.
Why is this totally irrelevant?
Well in my 26 year career, I can honestly say, it is rare where an insider group owns 35% of a company. I have worked with the company since 2019 and I have not seen many sales by insiders. We also should add that 100% of GBFH insiders take 100% of their compensation in stock.
That my friends .. is unprecedented .. and should be praised!
All novice G-Bank investors should glance over the insider roster of this tiny bank. When the chairman and CEO of MGM Hotels isn’t the most impressive Director, you can conclude the Board is stacked
Lets Talk Impact on the Uplist
Given the limited audience of mostly bank focused investors prior to the uplist, we should see a significant shift in ownership in the next several quarters. In my opinion, if we were able to look out 12 months, we would find that 75% of institutional owners just learned GBFH was a company due to the uplist.
GBFH is now going to attract the FINTECH growth investor that traffic in TFIN, TBBK, CCB, SOFI, AFRM etc.
Ask yourself this question …
If that investor has no problem investing in TFIN at 50x EPS which are declining, what multiple do you put on GBFH which is basically doubling EPS YOY?
I don’t have the answer to that, but valuation gets silly when you start unpacking that question!
The Current Problem
As we stand today, GBFH has only 1 publishing analyst, Tim Coffey at Janney. I worked with Tim at FIG Partners and consider him one of the top West Coast bank analysts. I am also sympathetic to being the only analyst publishing on a very unique bank. However, similarly to 2025, his current 2026 EPS of $2.37 is very conservative.
How conservative?
Well, given the parabolic growth in credit card transactions, the credit division alone could very well earn over $2.00 per share and possibly Tim’s estimate in 2026.
I believe Tim will continue to adjust his estimates as we get more clarity from management in the back half of the year. However, given the fact that many index and quantitative funds heavily weight consensus estimates in their valuation process, Coffey’s estimates have created a drag on the stock.
Conclusion
On the Q1-25 Earnings call, Ed Nigro stated, Q2 is going to be a flattish quarter for the company. This is expected with the SEC registration, NASDAQ Uplist and initial rollout of the Slot Machine App.
FYI .. Anyone who is not familiar with the Slot Machine Division should do some real diligence on this business. Recently the credit card has stolen the show, however, I feel the slots could massively out earn the card. Nigro also stated that he expects real growth in the back half of the year. Historically, Ed has under promised and over delivered.
So when he says real growth .. MY EARS PERK UP!
Thoughts on GBFH Stock Price ($41.86)
Well, it is a little unfortunate the stock is up 12% since I started writing this report. I am still shocked that the stock retreated below $35 after the rebalance. That being said, I believe that $42 will be proven a gift for investors short and long term.
As an investor, I cannot tell you what multiple or 2026 EPS number to put on GBFH that you are comfortable with; that is for your own due diligence.
However, here is some quick math
When I created a peer group (some companies still aren’t profitable), 40x 2026 EPS seems reasonable but it very well could be higher.
Just for kicks …
Let's use Coffey’s 2026 conservative EPS estimate of $2.37 and use a low multiple of 30x. That valuation brings GBFH share price north of $70.
Let's humor the growth investors …
Lets use a very achievable 2026 $3.00 EPS and put a fair 40x multiple. The valuation brings GBFH share price north of $120.
Good Luck to all!
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Thanks for this Brad.
Since your comments in this note there’s been more insider share activity.
Your assessment of some of the directors’ share sales make sense but the latest activity involves some key management executives and to me, raise some concerns as to why they’re undertaking these transactions at this time if those individuals were super bullish about the company’s prospects - (1) EVP of cards and payments selling over half his stock and (2) COO exercising her well in-the-money options 8.5 years prior to expiry.
I struggle to come up with obvious, rational reasons for these transactions - surely the EVP of cards would have good insight into future value (or otherwise) and why would the COO exercise the options now unless she also plans to sell in the near term? Tax planning possibly.
Interested in if you have any insight or views?