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Thu, Feb. 4, 9:45 AM
- "PMTs investment returns underperformed our expectations in the fourth quarter due to a combination of factors, the largest of which was reduced earnings from our distressed loan portfolio driven by higher yield requirements and lower home prices versus prior forecasts," says CEO Stan Kurland. The distressed mortgage portfolio yielded gains of just $2M in Q4 vs. $31.9M in Q3.
- Net income of $15.7M fell 60% from Q3; per share of $0.21 fell 57%. Net investment income of $50.6M fell 44%.
- Book value per share of $20.28 slipped from $20.52.
- Investment Activities segment yielded a quarterly loss of $6.131M vs. a profit of $34.9M in Q3.
- The MSR portfolio grew to $42.3B in UPB from $39.9B.
- Correspondent Production segment looks better, with pretax income of $13.1M vs. $10.2M in Q3.
- The conference call comes at 4:30 ET
- Previously: PennyMac Mortgage reports Q4 results (Feb. 3)
- PMT -15.4% to $11.58.
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)
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
Tue, Jan. 12, 3:17 PM
- The 10-year Treasury yield is off eight basis points on the session at 2.10%, and now lower by about 20 basis points since the Fed Funds rate got hiked 25 basis points less than a month ago - probably not the best scenario for mREIT earnings going forward.
- Other income favorites like equity REITs, BDCs, and utilities (XLU -0.8%) are also being aggressively sold today.
- Annaly Capital (NLY -1.8%), American Capital Agency (AGNC -1.7%), Armour Residential (ARR -2.4%), Two Harbors (TWO -2%), CYS Investments (CYS -1.9%), Invesco (IVR -2.3%), New York Mortgage (NYMT -2.3%), Hatteras (HTS -3.2%), Capstead (CMO -3.6%), Western Asset (WMC -2.9%), Apollo Residential (AMTG -3.6%), Dynex (DX -3.1%), Ellington Residential (EARN -3.5%), AG Mortgage (MITT -3.2%), PennyMac (PMT -4.9%), FIve Oaks (OAKS -5.7%)
- ETFs: MORL, REM, MORT, LMBS
Dec. 10, 2015, 10:32 AM
- The roughed-up mortgage sector sees some dip-buying as Barclays initiates coverage on PennyMac Mortgage Investment (PMT +3.5%) and PennyMac Financial Services (PFSI +0.9%) with Overweight ratings.
- The $21 price target on PMT is a 36% upside to last night's close. The $20 PT on PFSI represents 25% upside.
Oct. 7, 2015, 11:15 AM
- So roughed up are the mortgage REITS (REM +0.7%), that what's now a six-day rally in the sector is little more than a blip on the longer-term chart.
- There's no particular news today, but with much of the sector trading at somewhere in the area of a 15-20% or even higher discounts to book value, even the worst scenario on interest rates may be more than priced in.
- Leading the way higher today are Ellington Residential (EARN +4.3%), Javelin Mortgage (JMI +3.4%), Arlington Asset (though not a REIT) (AI +2.3%), Dynex Capital (DX +0.9%), Apollo Residential (AMTG +1.2%), PennyMac Mortgage (PMT +1%), Cherry Hill Mortgage (CHMI +1.2%), Hatteras Financial (HTS +0.5%), Two Harbors (TWO +0.8%). The action in Annaly Capital (NLY) and American Capital Agency (AGNC -0.3%) is more subdued.
- ETFs: MORL, REM, MORT, LMBS
Aug. 6, 2015, 10:13 AM
- Q2 net income of $28M or $0.36 per share vs. $7.5M and $0.09 in Q1, and $75.2M and $0.93 one year ago.
- Net investment income of $69.8M vs. $37.7M in Q1, and $120.6M a year ago.
- Book value per share of $20.39 slipped from $20.68 at the end of Q1.
- Investment Activities Segment pretax income of $19.9M on revenue of $47M vs. pretax loss of $8.2M and $18.9M in Q1.
- Distressed mortgage portfolio generated gains of $30.1M, up from $17.2M in Q1.
- The MSR portfolio UPB grew to $37.1B vs. $35.2B. Net loan servicing fees of $13M vs. $8M.
- Correspondent Production Segment pretax income of $5.2M vs. $4.4M in Q1.
- Previously: PennyMac Mortgage misses by $0.13 (Aug. 5)
- PMT -9.3%
Jun. 25, 2015, 4:17 PM
- The XLU underperformed again today, losing 0.7% and bringing its year-to-date decline to more than 12%.
- Looking at equity REITs, the IYR dipped another 0.95% and VNQ fell 1%. Both are down about 6% in 2015, and roughly 15% since late January. Some individual names: Spirit Realty (SRC -2.8%), Senior Housing (SNH -1.2%), HCP (HCP -1.4%), American Realty Capital (ARCP -3%), Gramercy Property (GPT -2.8%), Duke Realty (DRE -2%).
- In mortgage REITs, REM lost 0.9% today and is off 7% YTD. Some individual names: American Capital Agency (AGNC -1.2%), Armour (ARR -1%), CYS Investments (CYS -0.9%), Annaly Capital (NLY -0.8%), Invesco Mortgage (IVR -1.2%), Apollo Residential (AMTG -1.1%), PennyMac Mortgage (PMT -2.3%), Western Asset Mortgage (WMC -2.7%).
- The 10-year Treasury yield gained three basis points to 2.40%.
- Previously: Sell-side abandoning REITs as rates rise (June 25)
- ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
May 7, 2015, 8:38 AM
- Q1 net income of $7.5M or $0.09 per share down more than 70% from Q4. Pretax loss of $3.8M vs. income of $11.9M in Q4.
- Net investment income of $37.7M down 29%.
- Book value per share of $20.68 slips from $21.18.
- Investment Activities Segment pretax loss of $8.2M on revenue of $18.9M vs. a gain of $11M on revenue of $38.8M in Q4. Valuation loss of $13.7M on MBS holdings. Net servicing fees of $8M down from $11.2M thanks to MSR valuation losses as rates dropped.
- Distressed Mortgage Investments gains of $17.2M vs. $20.7M in Q4. The NPL portfolio had fewer loans transitioning from severely delinquent to foreclosure, and fewer loans transitioning into reperformance.
- Previously: PennyMac Mortgage reports Q1 results (May 6)
- PMT -1.6%
Apr. 30, 2015, 3:15 PM
- A big rise in interest rates early in the session made for a good excuse to sell REITs, but - with the averages sharply lower - rates have reversed course. Still, the sector can't catch a bid, with many of the bigger names down way more than the broader market.
- Equity REITs: Realty Income (O -2.3%), Health Care REIT (HCN -3.2%), Ventas (VTR -3.2%), HCP (HCP -3.1%), Equity Residential (EQR -2.6%), Silver Bay Realty (SBY -2.5%), General Growth Properties (GGP -2.4%), Retail Opportunity (ROIC -3.9%), Boston Properties (BXP -2.4%), Hospitality Properties (HPT -2.9%)
- Mortgage REITs: Armour Residential (ARR -5.6%) - which reported another weak quarter overnight, Two Harbors (TWO -1.1%), Western Asset (WMC -1.3%), Arlington Asset (AI -2.8%), PennyMac (PMT -1.5%). When things get tough, money does have a tendency to flow into the sector giants though: Annaly Capital (NLY -0.4%) and American Capital Agency (AGNC +0.3%) are notable outperformers on the session.
- ETFs: IYR, VNQ, DRN, URE, REZ, SCHH, ICF, SRS, RWR, KBWY, DRV, REK, FRI, FTY, PSR, FREL, WREI
Mar. 3, 2015, 8:05 AM
- Altisource Portfolio Solutions' (NASDAQ:ASPS) contract is with Ocwen (NYSE:OCN), not with the servicing, writes the Sterne team, and it thus loses every time Ocwen shrinks or sells assets.
- The winners? Those would be the asset buyers: New Residential (NYSE:NRZ) and PennyMac Mortgage (NYSE:PMT).
- The analysts write their note the morning after Ocwen Financial announced more MSR sales, and the hiring of advisors to explore strategic options. The team is suspending Ocwen EPS estimates for 2015 and 2016 "since we have no idea what the new Ocwen will look like." Sterne's best estimate of tangible book value is about $10 per share.
- Previously: Ocwen volatile after business updates (March 2)
- OCN +5.4%, to $9 in premarket action. ASPS +2.6%
Feb. 4, 2015, 5:35 PM
Feb. 4, 2015, 5:08 PM
- Q4 net investment income of $53.1M vs. $106.5M in Q3, with net gain on investments of $11.2M vs. $70.4M. Net income of $26.5M vs. $54.9M. EPS of $0.34 vs. $0.69. Dividend is $0.61.
- Book value per share of $21.18 vs. $21.42 at end of Q3.
- Investment Activities segment $11M pretax income on revenue of $38.8M vs. $55.1M and $86.4M in Q3.
- Distressed Mortgage Investments segment realized and unrealized gains of $20.7M vs. $81.3M in Q3. Portfolios of performing and nonperforming loans increased in value somewhat, but was more than offset by decrease in home prices and tempered expectations for the future.
- Mortgage servicing rights portfolio grew to $34.3B in UPB from $32.3B.
- Correspondent Production Segment pretax income of $900K vs. $2.8M in Q3, with revenue of $14.2M down 29%.
- Conference call is underway
- Previously: PennyMac Mortgage NII of $53.1M (Feb. 4)
- PMT -5.1% after hours
Feb. 2, 2015, 2:52 PM
- "The combination of a negative duration and relatively long dated hedges lead to book value underperformance in a flat curve environment," merits a downgrade to Underperfrom for Armour Residential (ARR -5.9%), says analyst Doug Harter.
- "With above-average economic return volatility we expect CYS Investments (CYS -2.8%) to continue to have one of the lower price to book multiples among the Agency-only REITs," he says, also cutting to Underperform.
- Tight credit spreads combining with low yields will make it tough for New York Mortgage Trust (NYMT -2.2%) to meaningfully expand core EPS enough to cover the dividend, says Harter, cutting that stock to Underperform. He also notes NYMT has the highest price-to-book ratio in his mREIT coverage universe.
- Harter and team, however, still see some attractive values given the 12.9% discount to book the sector is selling for. PennyMac Mortgage Investment (PMT +0.2%), Two Harbors (TWO -0.7%) and New Residential (NRZ -1.6%) remain among top picks (though PMT and especially NRZ can hardly be considered mREITs).
- Previously: Credit Suisse downgrades three mortgage REITs (Feb. 2)
- Previously: JPMorgan previews Q4 for mREITs (Feb. 2)
Sep. 2, 2014, 2:26 PM
- REITs and other so-called "shadow bankers" for the last several years have used captive insurers to join Federal Home Loan Banks, thus getting access to more dependable financing and better terms than they otherwise could.
- The FHFA for some time has voiced its concern over the practice, and under new rules just proposed, would sunset those existing memberships over a five year period.
- ETFs: REM, MORT, MORL
- Two Harbors (TWO -1.8%), Invesco Mortgage (IVR -1.9%), Hatteras Financial (HTS -1.2%), Dynex Capital (DX -1.1%), PennyMac Mortgage (PMT -1.5%), Annaly Capital (NLY -0.8%), American Capital Agency (AGNC -0.3%).
PennyMac Mortgage Investment Trust is a real estate investment trust investing in residential mortgage loans and mortgage-related assets. The Company operates in two segments: correspondent production and investment activities.
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