Nationstar Mortgage (NSM +3.7%) won't be able to make its 2014 guidance ($3.15-$4.20 per share) for servicing operations even using management's preferred accounting treatment, says Hedgeye's Josh Steiner, making the stock one of his firm's best ideas on the short side.
A bull on Nationstar about a year ago amid its big run higher, Steiner - worried about slowing origination business - cashed in his chips last fall. A focus on the servicing operations has turned him outright bearish.
Is there a bull case to be made? A sharp drop in mortgage rates, says Steiner, could re-ignite mortgage originations.
Off 42% since the September high, the stock is higher today amid an upgrade from Sterne Agee.