Cahaba Research
Value, growth at reasonable price, long-term horizon

Cherry Hill: Strong Value With Low Credit & Interest Rate Risk

Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) carries a strong value proposition for shareholders seeking income in a yield starved environment. I believe CHMI offers a total return opportunity of +40%, including a significant income component, for the following reasons:

    Conservative strategy focused on high quality segments of residential mortgage market. Low interest rate and credit risk. Founder and owner-operator, Stanley Middleman, holds a 13.3% stake in Cherry Hill. He has a strong track record of creating value and is the sole owner of affiliated company, Freedom Mortgage. He has plenty of incentive to repeat that success at Cherry Hill. >10% dividend yield, covered dividend with +10% projected ROE. Trading at 0.9x book value vs. closest peers (i.e. HLSS, ...
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