BETR Follow-Up: Garg Won. Now the Operating Thesis Gets Its Test.

A follow-up to my earlier BETR thesis:

https://www.reddit.com/r/ValueInvesting/s/bVQgbbOwdZ

In that post, I argued that there were really two overlapping theses at Better Home & Finance ($BETR): a cyclical mortgage recovery combined with secular digital adoption, and a separate fight over who would control the company when that recovery eventually arrived.

We now have an answer to the second question.

**Vishal Garg won the shareholder vote.**

I view that as a very positive outcome for shareholders. The governance fight was creating enormous uncertainty around an already difficult turnaround. With control moving back to Garg’s group, the focus can return to what ultimately matters: whether Better can turn the platform it spent years building into a profitable and increasingly important mortgage business.

**Garg as Chairman, Not CEO**

One point I made in the discussion under my original post is worth emphasizing now.

I do not think Garg needs to return as CEO.

My preferred outcome is for Garg to become an outstanding and highly engaged Chairman while the board recruits a qualified permanent CEO to run the company day to day.

That CEO should have the operating experience required to manage a complicated mortgage, credit and technology platform through the next phase of its development.
Garg’s role should be different.

He built the company, raised the capital, developed the original vision and has by far the strongest reputational incentive to demonstrate that Better was not simply a product of the mortgage boom.

I want that founder energy and long-term orientation represented at the board level.

I also want a first-rate operating executive running the business.

If Better gets both, I think the governance outcome could ultimately leave the company considerably stronger.

**The Mortgage Thesis Has Not Changed**

The proxy fight was always the second thesis.

The first remains mortgage.

The United States is working through an extraordinary housing affordability problem. Mortgage rates remain elevated, transaction volumes are depressed, affordability is strained and millions of homeowners remain locked into mortgages originated at substantially lower rates.

I do not believe this represents the permanent state of American housing.

People still form families. They relocate for work. They have children. They retire. They inherit homes. They divorce. Housing supply changes. Incomes change. Rates change. Existing mortgages eventually refinance or disappear.

The housing market can remain dysfunctional for a surprisingly long time, but it cannot remain frozen indefinitely.

Better does not need another 2020-2021 refinancing mania for the thesis to work.

It needs American mortgage activity to gradually normalize from historically depressed conditions.

That can take years.

My investment horizon here is measured accordingly.

**The Secular Thesis Is Digital Adoption**

The part I continue to find more interesting than simply betting on lower rates is digital mortgage adoption.

Mortgage remains an unusually cumbersome financial product. Origination involves underwriting, income and asset verification, documentation, appraisal, title, insurance, closing and substantial regulatory complexity.

That complexity slowed the digital transition relative to simpler financial products.

It did not eliminate it.

My expectation remains that the next normalized mortgage market will be materially more digital than the last one.

Better has spent years building specifically around that transition.

The company does not need to become the dominant mortgage lender in America for the equity to work. It needs to demonstrate that its technology and operating model allow it to originate mortgages at sufficient scale with lower labor intensity, lower fulfillment costs and better operating leverage than the market currently gives it credit for.

That remains unproven.

But if mortgage volumes normalize into a substantially leaner Better while digital penetration continues increasing, the company potentially receives two tailwinds simultaneously: cyclical volume recovery and secular digital share gains.

That is still the core of my thesis.

**My 2030 View**

My expectation is that BETR can approximately quadruple by 2030.

That is not based on a return to Better’s old private-market valuation. I do not think the thesis requires anything close to that.

It requires execution.

Better needs to install the right CEO. It needs to demonstrate disciplined capital allocation. It needs to control dilution. It needs to prove that its dramatically reduced cost structure produces operating leverage as mortgage volumes recover. And ultimately it needs to demonstrate that its technology translates into superior economics rather than simply a better-looking mortgage interface.

There is plenty that can go wrong.

But I also think investors risk focusing too heavily on what Better has looked like during one of the worst mortgage environments in recent history.

The more interesting question is what the company looks like on the other side.

If Better survives the downturn, maintains its technology advantage, reaches profitability and captures even a modestly greater share of a normalized mortgage market, I think today’s equity value can look extremely small in retrospect.

That is how I get comfortable underwriting the possibility of roughly 4x by 2030.

**I Don’t Think 2030 Is the End of the Thesis**

The more interesting possibility is what happens afterward.
America has a large housing affordability problem that will probably take many years to resolve. The current combination of high home prices, elevated financing costs, constrained supply and unusually low transaction volumes is not something I expect to unwind neatly over the next twelve months.

It may take much of the next decade.

But normalization itself creates enormous mortgage activity over time.

And as that activity returns, I expect an increasing percentage of it to occur through digital platforms.

If Better establishes itself as one of the scaled beneficiaries of that transition, I don’t view 2030 as an exit date. I could see the company continuing to compound well into the following decade.

The 4x case by 2030 is therefore not necessarily my terminal-value case.

It is what I think can happen during the first stage of normalization.

**What the Garg Victory Changes**

The original post argued that Better could work under either governance outcome.

I still believe that.

The underlying asset either has economic value or it does not. Mortgage volumes can recover regardless of who sits in the boardroom, and digital adoption can continue regardless of who controls Better.

But I also wrote that if Garg won, I thought the stock could work **faster and better**.

He won.

Now that proposition gets tested.

I expect Garg to be an outstanding Chairman.

I expect the new board to recruit a highly qualified permanent CEO.

I expect the company to remain intensely focused on technology, automation and the cost structure.

And I expect management to recognize that the next phase is no longer about winning a proxy fight. It is about earning the confidence shareholders have placed back in the founder’s group.

There are no more governance hypotheticals to hide behind.

**The Setup From Here**

The framework is now simpler than it was when I wrote the original post.

Mortgage activity remains deeply depressed.

America’s housing affordability problem will take years to work through.

Digital mortgage adoption should continue increasing throughout that process.

Better has spent the downturn dramatically restructuring itself around a technology-heavy, lower-cost operating model.

Garg has now won the shareholder fight.

A professional CEO should be installed to execute against the opportunity.

The remaining question is whether the economics actually show up.

I think they will.

My expectation is approximately 4x in the equity by 2030, followed by the possibility of substantial additional compounding through the following decade if Better becomes one of the meaningful digital winners as American housing and mortgage activity normalize.

That is obviously a bullish forecast, and there is considerable execution risk between here and there.

But the reason I remain interested is the same reason I became interested originally: the market is evaluating Better largely through the experience of the last several years.

I am trying to underwrite what the business can become over the next several.

The control fight is over.

Now they have to build.