Friday, February 27, 2015
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- Craig Farr, 43, joined KKR in 2006 from Citigroup, where he co-led the North American capital markets business, and he helped build and syndicate the $900M IPO of KKR's first debt vehicle.
- As head of credit and capital markets at KKR, he oversees 125 rainmakers.
- Adam Smith will replace him as head of the capital markets unit, and Nat Zilkha and Alan Burke will take over the credit group.
- Capital markets generated 8.7% of KKR's pretax profit last year, write Devin Banerjee and Jason Kelly, and the public markets business - which includes hedge funds and credit strategies - was responsible for 14%.'
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12:18 PM| 16 Comments
- With today's 10.4% decline, Walter Investment (NYSE:WAC) has lost about 25% of its value since reporting Q4 yesterday morning. Legal and regulatory expenses of $50.4M in Q4 brought the year's total to $100.8M.
- On the earnings call yesterday (transcript), management disclosed pending regulatory settlements with the FTC and CFPB. Both still await judicial approval, but Q4's financials reflect the full amounts related to those resolutions.
- KBW - whose Bose George was on the call but didn't tip his hand - downgrades Walter to Underperform.
- Previously: Walter Investment -16% as legal and regulatory costs rise (Feb. 26)
- Previously: Walter Investment misses by $0.69, misses on revenue (Feb. 26)
- "The single-family rental industry has entered the beginning stages of industry consolidation," said Silver Bay Realty (SBY +2.8%) CEO David Miller on the earnings call (transcript) yesterday, noting an increasing number of portfolios on the block coming across his desk in the past 12-18 months.
- Earlier this week, the company announced the acquisition of the American Home Portfolio - 2,460 homes - for $263M in cash. The purchase - once closed - will boost Silver Bay's portfolio size by nearly 40%.
- JMP is a buyer, upgrading the stock to Outperform with price target of $18.
- Previously: Busy quarter for acquisitions for Silver Bay Realty (Feb. 25)
- Previously: Silver Bay Realty beats by $0.02, misses on revenue (Feb. 25)
- Previously: Silver Bay boosts portfolio size nearly 40% with purchase (Feb. 18)
- Nervousness grows ahead of the stress test and CCAR results, with UBS downgrading Bank of America (BAC -2%) to Neutral from Buy, saying disclosures in the just-released 10-K increase the risk of a qualified failure in the CCAR.
- Even should the bank pass the CCAR, says UBS, its regulatory capital ratios are below those of peers, meaning lower capital returns.
- A note published yesterday from Evercore ISI makes a similar argument.
- Previously: Bank of America falls 3% ahead of stress test results (Feb. 26)
- "I believe a great amount of profit in the next few years will be made by those who hold positions in energy companies," says Carl Icahn after Icahn Enterprises (NASDAQ:IEP) reported its first annual loss since 2008, largely on the back of declining oil prices. "However," he adds, "I also believe that oil prices will continue to decline in the near term."
- Apple - the largest position in IEP's investment segment - helped soften the blow from oil. "I look forward to wearing the watch in the very near future and possibly driving the car in the more distant future."
- Q4's loss of $1.022B stands against a profit of $405M a year ago. For the full-year, the company lost $373M vs. a profit of $1,025B in 2013.
- Previously: Icahn Enterprises reports Q4 results (Feb. 27)
- Q4 adjusted core FFO of $16.8M or $0.44 per share vs. $6.3M and $0.16 in Q3.
- NOI for stabilized portfolio of $22.9M up 14%; NOI margin of 62.8%.
- Total rental portfolio of 11,417 homes up from 10,428 in Q3. Percent leased of 83.8% up 200 basis points.
- Stabilized homes of 9,754 vs. 8,625 in Q3, Percent leased of 95.6% down 10 basis points.
- 9,066 homes owned 180 days or longer up from 7,268. Percent leased of 93.4% down 80 basis points.
- Homes 90 days past rent ready of 7,865 vs. 6,669 in Q3. Percent leased of 98.6% down 40 basis points.
- NPL portfolio: Company owns 4,389 NPLs at a total purchase price of $610.3M, representing 65.5% of BPO vs. 4,695 NPLs at end of Q3. The decrease is due to resolutions.
- 2015 outlook: Stabilized NOI margins to trend in the low-to-mid 60s, with the leased percentage on the stabilized portfolio to normalize inn the mid-90s. About $100M-$150M will be deployed in Q1, mostly towards home purchases.
- Earnings call at 10 ET
- Previously: Starwood Waypoint misses on revenue (Feb. 27)
- SWAY flat premarket
- Q4 core earnings plus drop income of $36.4M or $0.87 per share vs. $27.8M and $0.67 in Q3. Dividend is $0.70.
- Book value per share of $14.94 slips from $15.26 at Q3's end. Last night's close of $14.38 is a 3.7% discount to book.
- Economic return for quarter of 2.5% (dividend plus the decline in book value). Full-year economic return of 15.8%.
- Net interest spread bounces back from Q3's big decline (caused by a bad bet on yields), 2.71% vs. 1.95%. CPR on agency portfolio of 6.8% vs. 6.5%.
- Conference call at 11 ET
- Previously: Western Asset Mortgage Capital EPS of $0.87 (Feb. 27)
- WMC flat premarket
- "The increased cost of maintaining the relationship with HLSS, combined with operational changes required by regulators, will have a material adverse impact on Ocwen's (NYSE:OCN) servicing margins over the long-term," says analyst Kevin Barker after further review of New Residential's purchase of Home Loan Servicing Solutions. He downgrades to Sell from Neutral, with price target cut to $7 from $7.50.
- Despite New Residential management's protests otherwise, Barker believes the risk of having servicing pulled on private label trusts or transferred by NRZ is high. "If this were to occur, it would have a serious adverse impact on the sustainability of OCN's business model."
- "Finally, the revelation from Gibbs & Bruns that they believe OCN's servicing practices caused $26B of damages to the RMBS trusts that the company serviced from 2008 to 2013 creates an enormous litigation and operational risk."
- Shares -6.3% premarket
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