New Residential Investment: Significant Upside Ahead For This Recent Spin-Off
Soldier of Fortune • 12 Comments
Soldier of Fortune • 12 Comments
Spin-Off REIT New Residential Investment Hits The Mortgage Sector From A Different Angle
Tim Plaehn • 11 Comments
Tim Plaehn • 11 Comments
Wed, Jun. 22, 8:54 AM
- Fitch affirms Ocwen Financial's (NYSE:OCN) long-term issuer default ratings and the rating on the company's senior secured term loan (SSTL). The outlook is stable.
- As for whether New Residential (NYSE:NRZ) might exercise its right to transfer non-agency servicing rights away from Ocwen, Fitch acknowledges the risk, but says such a move is unlikely given the required third-party consents and licenses, not to mention Ocwen's skill at servicing these mortgages at such low cost.
- Ocwen is higher by 11% in modest premarket trading. Altisource Portfolio Solutions (NASDAQ:ASPS) is up 1.9% in very thin action.
Wed, Jun. 15, 11:27 AM| Wed, Jun. 15, 11:27 AM | 14 Comments
Wed, May 18, 9:23 AM
- Sell-side favorite New Residential (NYSE:NRZ) loses one of its fans as Compass Point takes the occasion of a big run higher in the stock to pull its Buy rating.
- Though down sharply from year-ago levels, New Residential has rallied about 35% since mid-February.
- It's off 1.1% in fairly active premarket action.
Wed, Feb. 24, 2:48 PM
- Given the opportunity to throw struggling Nationstar Mortgage (NSM -0.4%) and Ocwen Financial (OCN +3.1%) under the bus, New Residential (NRZ +3.2%) CEO Michael Nierenberg says both do a good job, and his company is comfortable with both.
- Yes, the nonbank servicers have come under severe regulatory scrutiny, but one could say the same thing about virtually the entire financial services industry, says Nierenberg.
- "We are very close to Ocwen. We are very close to Nationstar ... The desire, quite frankly, would be to work closer."
- Asked about his company's seemingly cheap valuation, Nierenberg doesn't complain, again noting the entire financial services sector, where valuations across the board are trading at sizable discounts to book value. Would he prefer NRZ trade at an 8% yield (instead of the current 17%)? Of course, but it's not something management can control. Capital deployment, however, is.
- Earnings call transcript
- Presentation slides
- Previously: New Residential results top last month's guidance (Feb. 24)
Mon, Jan. 25, 3:16 PM
- Modest declines in the major averages are masking the continued liquidation in a number of financial sectors.
- Hotel REITs: Pebblebrook Hotel (PEB -2.4%), LaSalle Hotel (LHO -2.2%), FelCor Lodging (FCH -2.9%), DiamondRock Hospitality (DRH -3.3%)
- Nonbank servicing: Ocwen Financial (OCN -6.9%), Walter Investment (WAC -10.5%), Nationstar Mortgage (NSM -6.7%), Altisource Portfolio (ASPS -4.6%), New Residential (NRZ -3.2%)
- Mortgage REITs: Two Harbors (TWO -3.8%), Invesco (IVR -4.3%), American Capital Mortgage (MTGE -3.4%), Western Asset (WMC -3.7%), Apollo Residential (AMTG -3.8%), AG Mortgage (MITT -3.9%)
- BDCs: Prospect Capital (PSEC -4%), Apollo Investment (AINV -2.2%), Medley Capital (MCC -4.1%), Gladstone Capital (GLAD -4.4%). A few in this sector are managing gains though: Main Street (MAIN +1%), TICC Capital (TICC +1.9%), Harris & Harris (TINY +1.8%)
Wed, Jan. 20, 9:54 AM
- Unbridled selling of the mortgage-related names continues in today's session.
- A sampling: PennyMac (PMT -3.9%), Ocwen (OCN -12.8%), Walter Investment (WAC -1.4%), Nationstar Mortgage (NSM -4.3%), New Residential (NRZ -3.8%), Altisource Portfolio (ASPS -12.2%).
- There's a general market panic going on, but there's also a plunge in interest rates which lowers the value of servicing portfolios as it makes refinancings more likely. Indeed, the MBA earlier today reported a 19% increase in mortgage refis last week.
- Owcen and New Residential come to mind as two with active buyback programs in place.
Tue, Jan. 19, 11:43 AM
- The best thing that can be said about the market reaction today, is that New Residential (NRZ -0.6%) isn't down as much as the other mortgage-related names (REM -1.8%) which continue to be mercilessly pounded.
- PennyMac (PMT -4.5%), Ocwen (OCN -3.7%), Walter Investment (WAC -4.8%), Stonegate (SGM -3.4%), Armour (ARR -3.5%), Invesco (IVR -2.4%), New York Mortgage (NYMT -4.1%), Apollo Residential (AMTG -3.1%), AG Mortgage (MITT -3.4%), Five Oaks (OAKS -6.7%), American Capital (MTGE -2%), Two Harbors (TWO -2.2%), Chimera (CIM -3.4%).
- Citi's Michael Kaye - who rates NRZ a Buy - says the repurchase plan makes sense given the stock trades at just 0.84x book and yields 18%. Depending on how the buyback is funded, it could add up to a couple of hundred basis points of accretion. It also sends a signal to the markets about management's belief in the stock's value. Management gave little detail on a timetable.
- Previously: New Residential steps in with $200M repurchase plan (Jan. 19)
Tue, Jan. 19, 7:28 AM
- Tarred with being in the mortgage REIT sector and the servicing sector when its business model really differs from both, New Residential (NYSE:NRZ) has been punished to the tune of nearly 50% since early last summer.
- The $200M buyback plan would be enough to repurchase nearly 20M shares, or 8.5% of the float at Friday's closing price of $10.18. Assuming the $0.46 quarterly dividend is maintained, this stock is a 18% yielder at that price.
- Source: Press Release
- The stock's higher by 3.4% premarket to $10.53.
Wed, Jan. 13, 1:14 PM
- It wasn't supposed to be this way after the Fed embarked on a rate hike cycle as these yield-starved names could finally look forward to earning a better spread on their money.
- Since the Fed hiked last month, however, the long bond yield has tumbled about 20 basis points, further narrowing the yield curve.
- With today's 1.3% decline, the XLF is lower by 7.6% YTD, about 200 basis points worse than the S&P 500 (but about 250 basis points better than the energy sector).
- TBTFs: Morgan Stanley (MS -3.9%), Goldman Sachs (GS -2.3%), Citigroup (C -1.8%)
- Regionals: U.S. Bancorp (USB -2%), Regions Financial (RF -3.4%), New York Community Bancorp (NYCB -2.2%)
- Mortgage-related names like Ocwen (OCN -6.2%), Nationstar (NSM -5.3%), Walter Investment (WAC -13.9%), and New Residential (NRZ -5.3%) have come in for particular punishment this day and this year. The mortgage REITs too: Hatteras Financial (HTS -4.4%), Western Asset (WMC -3.6%), New York Mortgage (NYMT -2.3%), Five Oaks (OAKS -5.2%), PennyMac (PMT -2.6%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ, XLFS
Nov. 6, 2015, 11:51 AM
- The brutally roughed-up sector enjoys a small bounce today after this morning's jobs report nearly assures the Fed will embark on a rate hike cycle in one month's time.
- Mortgage prepayments fall as rates rise, thus meaning the mortgage servicing rights which make up the bulk of these firms' assets go up in value.
- Ocwen Financial (OCN +1.2%) for one, reported a loss in Q3, with the big move lower in rates - the 10-year stood at 2.43 at Q2's end and fell to 2.02% at the end of Q3 - and subsequent markdown on MSRs a big factor in the loss. With today's sharp move higher in rates, the 10-year is all the way back to 2.34%, maybe setting the stage for a profit in Q4.
- Nationstar (NSM +4.3%) and Walter Investment (WAC +9.6%) share similar stories, but Ocwen has been the first of the group to de-lever, maybe putting it in a better place to buy MSRs and repurchase stock (an authorization is already in place).
- Also on the move is New Residential (NRZ +2.6%).
Nov. 3, 2015, 12:35 PM
- In an earnings presentation that could be titled, "What The Heck Is Going On Here," New Residential (NRZ -0.1%) makes its case for a higher valuation.
- From CEO Michael Nierenberg on today's earnings call (transcript): "Quite frankly we are disappointed where our stock price is."
- The 7th-largest holding of iShares Mortgage Real Estate Capped ETF (NYSEARCA:REM), New Residential could be unfairly being lumped in with mortgage REITs which make up the overwhelming majority of that ETF, when an argument can be made its business and prospects are about the exact opposite of those of mREITs.
- NRZ's excess MSR portfolio with UPB of $399B should rise in value as interest rates go higher, as opposed to mREITs who face declines in book values in that scenario. The company points out it's protected in the event rates decline thanks to the well-seasoned nature of the portfolio, and the credit-impaired status of the borrowers. The MSRs also have recapture provisions with the servicer partners in the event prepayments rise.
- Checking the scorecard, core EPS of $0.49 is up from $0.43 a year ago, and the dividend of $0.46 is up from $0.35. Are there any mREITs out there even close?
- As for stock performance, though NRZ is down about one-third from a May high, it's up 3% Y/Y vs. a 16% decline for the mREITs and a 42% dive in the specialty servicers.
- Previously: Earnings grow at New Residential (Nov. 3)
Oct. 2, 2015, 11:41 AM
- Zigging higher while the rest of the market zags lower is roughed-up New Residential (NRZ +2.2%) after repaying $2.5B of term notes issued by the HLSS Servicer Advance Receivables Trust.
- The $2.5B HSART notes became immediately due thanks to S&P's downgrade of Ocwen Loan Servicing this week.
- New Residential had planned for this contingency by securing about $4B of surplus servicer advance financing commitments from lenders, and was able to quickly make payment. Now the company is able to increase advance rates, freeing up about $200M of additional liquidity which can be put to work.
- "We look forward to continuing to work closely with Ocwen (OCN -0.6%) as one of our primary servicing partners."
Aug. 6, 2015, 9:59 AM
- No sooner do we get a story out about New Residential's (NRZ -1.5%) delayed earnings release than the company posts preliminary Q2 results.
- Core EPS is expected to be $0.43-$0.47 vs. $0.44 in Q1.
- CEO Michael Nierenberg notes the delayed report is due to the HLSS acquisition.
- Previously: New Residential reschedules earnings release; down another 3% (Aug. 6)
Aug. 6, 2015, 9:52 AM
- A tough run continues for New Residential (NRZ -3%) as it pushes the release of Q2 results - originally scheduled for today - to next Monday before the bell.
Jun. 18, 2015, 10:41 AM
- Yesterday, the Office of the Comptroller of the Currency put restrictions on the servicing operations of Wells Fargo, JPMorgan, U.S. Bancorp, HSBC and two others thanks to their failure to comply with an earlier agreement.
- The lenders will be restricted from acquiring MSRs or performing servicing for other parties. For Wells Fargo and HSBC, they will be prohibited from acquiring MSRs or entering into new contracts to perform servicing for others.
- New Residential (NRZ +1.9%) has taken a breather of late following the HLSS purchase, with last week's secondary offering hitting the stock particularly hard. With the new OCC order, the capital raise looks pretty well-timed.
- Previously: OCC ends enforcement actions on several banks, puts new restrictions on others (June 17)
Jun. 10, 2015, 9:39 AM
New Residential Investment Corp. is a real estate investment trust that focuses on investing in, and actively managing, investments primarily related to residential real estate.
Industry: REIT - Diversified
Country: United States
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