Key Takeaways
- • Blue Tower Asset Management's Global Value composite returned 0.54% net (0.83% gross) in Q3 2026, bringing year-to-date net performance to 21.50% (22.50% gross) at quarter-end.
- • The abandoned Enova Corporation acquisition of Grasshopper Bank, terminated after regulatory delays, was the largest detractor, with Enova shares falling 23.4% on September 15 from $226.72 to $173.61.
- • Enova's standalone business continued to grow strongly in Q2 2026, with revenue up 22% to $929 million, originations up 27% to $2.3 billion, and adjusted EPS up 33% to $4.31, per the letter.
- • At the October 16 close of $177.89, Enova traded at about 10.3 times consensus 2026 adjusted EPS of $17.27, and remains Blue Tower's largest position.
- • Blue Tower is entering South Korean equities for the first time in 2026, citing governance reforms such as the Corporate Value-Up Program and 2025 Commercial Code amendments that address the long-standing 'Korea discount.'
Summary
Blue Tower Asset Management's third-quarter 2026 commentary for its Global Value composite reported a net return of 0.54% (0.83% gross) for the quarter ended September 30, 2026, and year-to-date net performance of 21.50% (22.50% gross). The manager attributed Q1 energy holdings' contribution to a rally in oil stocks as West Texas Intermediate prices rose more than 30% during the quarter. The largest detractor was the failed merger of Enova with Grasshopper Bank.
Enova announced the acquisition of Grasshopper Bank on December 11, 2025, which management projected would generate adjusted EPS accretion of more than 15% in the first year and more than 25% once synergies were fully realized. The deal required approval from the Office of the Comptroller of the Currency and the Federal Reserve. In July 2026, a coalition of 20 state and district attorneys general argued the transaction aimed to export interest rates nationwide to circumvent state usury laws. Enova withdrew its applications on September 14 before either regulator ruled, and on October 16 the companies signed a mutual termination agreement under which Enova paid Grasshopper $4 million. According to the letter, neither regulator identified any deficiency in Enova's financial condition, credit performance, or compliance. Management said the failure reflected a lack of clearly defined standards for nonbank lenders acquiring banks and a politicized review. Blue Tower's manager acknowledged underestimating the opposition, and said Enova has not permanently ruled out acquiring a federally chartered bank.
Enova shares fell 23.4% on September 15, erasing roughly $1.3 billion of market value, and closed the quarter at $167.11. The manager argues the decline reflected both lost synergies and a lower multiple on the standalone business. Enova reaffirmed full-year guidance, which had never included Grasshopper. Share repurchases had been slowed during the pending deal, with about $19 million bought back in Q2; management intends to accelerate buybacks. Of $349 million remaining under the authorization at Q2-end, $218 million was available under senior note covenants, which the letter estimates would retire roughly 5% of shares outstanding at current prices. Q2 2026 results showed originations of $2.3 billion and record loans and finance receivables of $5.5 billion, with the net charge-off ratio falling to 7.3% from 8.1%. Blue Tower estimates Enova trades at about 10.3 times 2026 consensus adjusted EPS and about 13 times trailing GAAP earnings.
The letter also outlines Blue Tower's first-time entry into South Korean equities this year. The manager cites governance reforms, including the 2024 Corporate Value-Up Program, under which 756 companies representing 83.4% of market capitalization had filed plans by end-August 2026, and 2025 Commercial Code amendments extending directors' duty of loyalty to shareholders. The manager also notes that 63.5% of KOSPI-listed companies traded below book value as of April 2026, and that Korean withholding and capital gains treatment has been improved for foreign investors. The letter also cites geopolitical risk, including the unresolved armistice with North Korea and the December 2024 martial law crisis.
Enova announced the acquisition of Grasshopper Bank on December 11, 2025, which management projected would generate adjusted EPS accretion of more than 15% in the first year and more than 25% once synergies were fully realized. The deal required approval from the Office of the Comptroller of the Currency and the Federal Reserve. In July 2026, a coalition of 20 state and district attorneys general argued the transaction aimed to export interest rates nationwide to circumvent state usury laws. Enova withdrew its applications on September 14 before either regulator ruled, and on October 16 the companies signed a mutual termination agreement under which Enova paid Grasshopper $4 million. According to the letter, neither regulator identified any deficiency in Enova's financial condition, credit performance, or compliance. Management said the failure reflected a lack of clearly defined standards for nonbank lenders acquiring banks and a politicized review. Blue Tower's manager acknowledged underestimating the opposition, and said Enova has not permanently ruled out acquiring a federally chartered bank.
Enova shares fell 23.4% on September 15, erasing roughly $1.3 billion of market value, and closed the quarter at $167.11. The manager argues the decline reflected both lost synergies and a lower multiple on the standalone business. Enova reaffirmed full-year guidance, which had never included Grasshopper. Share repurchases had been slowed during the pending deal, with about $19 million bought back in Q2; management intends to accelerate buybacks. Of $349 million remaining under the authorization at Q2-end, $218 million was available under senior note covenants, which the letter estimates would retire roughly 5% of shares outstanding at current prices. Q2 2026 results showed originations of $2.3 billion and record loans and finance receivables of $5.5 billion, with the net charge-off ratio falling to 7.3% from 8.1%. Blue Tower estimates Enova trades at about 10.3 times 2026 consensus adjusted EPS and about 13 times trailing GAAP earnings.
The letter also outlines Blue Tower's first-time entry into South Korean equities this year. The manager cites governance reforms, including the 2024 Corporate Value-Up Program, under which 756 companies representing 83.4% of market capitalization had filed plans by end-August 2026, and 2025 Commercial Code amendments extending directors' duty of loyalty to shareholders. The manager also notes that 63.5% of KOSPI-listed companies traded below book value as of April 2026, and that Korean withholding and capital gains treatment has been improved for foreign investors. The letter also cites geopolitical risk, including the unresolved armistice with North Korea and the December 2024 martial law crisis.
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