$OMF - OneMain Financial: Lending Opportunity or Borrowing Trouble?

Leader in Personal Lending Space

I’d understand if you have concerns with trading a company focused on subprime lending.

Company Background: OneMain Holdings, Inc. specializes in personal loans, primarily targeting consumers with non-prime credit profiles. The company operates over 1,400 branch locations across the U.S., offering loans, credit insurance, and financial services to individuals who may not qualify for traditional bank loans. Its business model combines digital lending with a robust physical presence, catering to individuals in desperate need for credit.

Key Points

Personal Loans: OneMain provides unsecured and auto-secured personal loans for debt consolidation, home improvement, and other personal needs. The average loan size ranges between $5,000 and $20,000.

Subprime Lending Niche with Credit Risk Management: By focusing on borrowers with lower credit scores, OneMain earns higher interest rates; They compensate for the elevated credit risk through use of advanced underwriting models and maintaining a significant loan loss reserve.

Consistent Cash Flow: The company generates steady cash flow through interest income and fees, enabling it to pay a generous dividend, which appeals to income-focused investors.

Monthly Chart

Each of these orange lines represents a measured move of ~ 15$.

Options Flows

Big 2026 flows of 60/75C spreads came in. Either tail these or choose something just as dated in the middle.

The Trump Presidency Angle. As the new presidency focuses his government on intense de-regulation, OMF could have reduced compliance costs and lower lending regulations could broaden its pool of potential customers.

However, deregulation comes with heightened risk of defaults as regulations ostensibly protect businesses from getting too greedy.