A Portfolio Manager For The People
I’m going to begin this story on the curb in front of Drake’s house.
On August 20, 2025, a hedge fund manager named Eric Jackson posted a video of himself in front of the Canadian rapper’s mansion in Toronto.
In the video, Jackson holds up a small white board that reads, “DAY 1 BUY $OPEN”.
OPEN is the stock ticker for Opendoor, an online company that buys homes from sellers in cash, renovates them, and resells them. Jackson's idea was for Drake to purchase a share of OPEN (and post about it), with the hope that his celebrity would contribute to the stock’s rise.
That morning OPEN closed at $3.22. It was less than a dollar just weeks before. As of this writing, it's hovering around $6. If you followed Jackson's advice perfectly you would have had caught a "100-bagger" as the parlance goes.
In September, the price of another stock, the Better Home and Finance Holding company (NASDAQ: BETR, BETRW) shot up almost 60 points, peaking around $94 on Sept. 22. It settled at just under $50. On the same day, Jackson had called BETR “the Shopify of mortgages” on X. And trading continued to surge for another day.
Weeks later I emailed Jackson asking if he was worried about whether his online followers would time the market right. The stock price closed that day at $86.07, +480% for the year.
I suppose I got my answer.
On September 30, the podcast In the Money with Amber Kanwar released an episode where Jackson said he adopted the bullish case for BETR from another manager.
Part of the argument stems from the stock price of the mortgage-related company, Figure (NASDAQ: FIGR). If Figure, a company that specializes mostly in home equity loans, had a valuation of $7.6B, why wasn't BETR worth more? After all, it was exposed to a larger market.
Well, now that the price of BETR has skyrocketed, it begs the question of why other players in the mortgage space, like Loan Depot (NYSE: LDI), aren’t increasing as well (at the time of writing, you can grab a share of LDI for less than $3).
The bull case for BETR has everything to do with AI. BETR's proponents have dubbed it an “orphan stock”, an AI-native home-lending platform that had largely been forgotten due to its chaotic road to the public market and its CEO’s reputation. On the Q2 2025 earnings call, CEO Vishal Garg said that he expects the company to return to profitability by Q3 2026. While its revenues have grown sharply, the company is not currently profitable and its operating margin is "deeply negative".
It is hard for entrepreneurs to start mortgage companies. Doing so requires an enormous amount of capital and advertising spending. Google keywords are expensive. Regulations are complex. But Vishal Garg persisted. Better was incorporated in 2014.
In the aftermath of the Great Financial Crisis, Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders and package them into securities, harmonized underwriting criteria. Thus, it became possible for homebuyers to make apples to apples comparisons among mortgage products.
Lacking the advertising budget to, say, buy naming rights to a stadium, Better management elected to compete on rates.
So in order to attract customers, Better set out to post the lowest rate on sites like Lending Tree and Nerd Wallet.
By 2016, fintech companies were responsible for 8% of US mortgage originations, according to research by the New York Fed. Two years later, another survey by the Philadelphia Fed, put the size of the market at 17%. According to the same survey, Better accounted for less than a quarter of a percentage point in the fintech category. Jackson has said that Better now makes up something like "2.6% of its market". In 2024 the mortgage origination market was about $1.8T (including all loan purposes). To give you a sense of comparison, the size of the origination market was more than twice that in 2021, when Better 's business went through an inflection point.
For a while, Better was killing it. Its system allowed its mortgage originators to be so successful that employees with almost no originating experience ranked alongside historically successful lenders, people with decades in the business, in total origination dollars. And in 2020 and 2021, Better topped LinkedIn’s promising start-up list.
But then things got ugly. When you started reading this article, unless you were aware of Eric Jackson's social media presence or had taken out a mortgage with Better, it is unlikely that you had heard of the company before.
But you might have.
After the Covid Pandemic and the 2021 housing boom, the Fed sharply increased rates in 2022, which decreased demand for new mortgages and refinancing.
At its peak, Better employed around 10,000 employees. But in 2021, over-hiring and low productivity, according to Garg, required letting a lot of people go.
So he chose to fire 900 people over Zoom, and immediately went viral for doing so. This resulted in a mainstream media pile-on and a series of lawsuits.
In the best known case, an employee sued for whistleblower retaliation and alleged that Garg had "violated securities laws". They later settled. The SEC also investigated the company but nothing came of it.
Debuting on the NASDAQ took longer than it expected. When it finally did so in 2023, its valuation dropped a whopping 90%.
Better benefitted immensely from going public via a special kind of offering known as a SPAC, receiving a huge cash influx it would unlikely have been able to get via the traditional IPO route. Garg also personally guaranteed a massive loan from SoftBank in 2022. As Yahoo Finance put it, "This isn’t normal. Executives, Elon Musk aside, rarely agree to take on personal liability in a deal like this—not to mention uncapped liability, where there is no ceiling to the potential losses". And as the Financial Times noted, "Meeting the terms of the guarantee could force Garg to sell his Better shares and drive down the stock price, a filing warned".
If the stock market is our indicator, we are still in very good times. Things are choppy but we have repeatedly reached all-time highs. The Fed cut rates in late October, but it remains unclear if the Fed will continue to do so.
Better’s performance–regardless of its meme stock status and AI tech–is beholden to other risks in the long run. A sluggish housing market, funding pressures, and its ability to continue to execute its digital mortgage lending business are all major factors.
Yes, revenues are trending upward and Better’s Tinman proprietary lending platform is AI-native, but there is an entire software marketplace that can sell similar tech advances to Better’s competitors. And there are many in the space.
Whether BETR becomes a “350-bagger” in 2 years as Eric Jackson has predicted remains to be seen. But if this guy peddling stocks on Drake's lawn isn't the surest sign of an AI bubble, I don't know what is.
I am not a licensed financial advisor. This content is for informational purposes only. It does not constitute investment advice. Please consult a financial advisor before making financial decisions.