Walter Investment Management: Catching A Falling Knife
Buying Opportunity In Walter Investment Management: Sooner Or Later The Limbo Will Stop
Ashleigh Rogers • 22 Comments
Ashleigh Rogers • 22 Comments
Tue, Jul. 12, 1:15 PM
Tue, Jul. 5, 1:00 PM
Wed, Jun. 15, 11:27 AM| Wed, Jun. 15, 11:27 AM | 16 Comments
Tue, May 3, 12:48 PM
Tue, May 3, 10:03 AM
- Like with Ocwen Financial before it, the big drop in interest rates took its toll on the fair value of Walter's (WAC -27.1%) portfolio of mortgage servicing rights - $226.6M pretax to be exact ($3.95 per share after tax).
- Total expenses of $343.4M fell 8% Y/Y, thanks to lower payroll.
- The servicing segment added $17.5B of UPB to its book in Q1, ending with 2.2M accounts with a UPB of $255.3B.
- Originations revenue slowed 23% Y/Y to $100.3M. Adjusted earnings of $17.9M fell from $44.3M.
- The conference call is just getting underway.
- Previously: Walter Investment misses by $0.78, misses on revenue (May 3)
Wed, Mar. 2, 5:43 PM
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)
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. 17, 2015, 3:20 PM
- Daniel Beltzman gets a seat on the Walter Investment (WAC +11.2%) board, and his Birch Run Capital Advisors will have the opportunity to acquire up to 25% of the company without triggering any sort of poison pill. Birch Run and Beltzman agree to vote all of their stock at the 2016 annual meeting in favor of each director nominated by the board.
- Walter will also identify and appoint a new independent director as soon as possible.
- Birch Run recently boosted its stake in Walter to nearly 20%.
Nov. 9, 2015, 10:21 AM
- Very few are fans of the specialty servicers, and it's been a particularly rough ride for Walter Investment (NYSE:WAC) - down more than 50% since late June.
- KBW rings the register on its Underperform call, upgrading to Market Perform, with price target boosted to $14 from $10.
- The stock's higher today by 5.1% to $11.13.
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%).
Oct. 28, 2015, 2:32 PM
Oct. 1, 2015, 3:58 PM
- The specialty servicers are lower across the board today, but Ocwen Financial (OCN +6.5%) is up sharply following news of the closing of an MSR sale and the subsequent debt payoff.
- Ocwen bull John Devaney takes note of massive short interest in the stock, pointing out that shorts made up 70% of the volume of NYSE, Nasdaq, and OTC trades in the company's shares yesterday.
- Other data show short interest in the stock as of Sept. 15 at a near-record 32.5M shares. Curious, says Devaney, as the company's delevering plan pretty much assures it won't be a zero. Further, Devaney notes about 65% of the stock (81M shares) is held by just nine investors. Unless one of them cashes out, where are further sellers going to come from?
- A bond man at heart, Devaney says Ocwen's corporate bond pricing has remained steady, while that of Walter Investment (WAC -1.1%) and Nationstar Mortgage (NSM -2%) are lower by 10 big numbers in the last 30 days. "Credit likes Ocwen more. Credit is normally right."
Jul. 30, 2015, 2:29 PM
- "Near-term events should transform Walter Investment (WAC +5.1%) into a growing, capital-light, recurring sub-servicing and asset management fee business," says Baker Street Capital, calling the stock its highest conviction idea with a price target of $54 (price prior to the presentation was under $20).
- The current valuation of roughly 1x pro forma EBITDA and 3x EPS on growing, asset-light cash flows is a "wacky" one, according to Baker Street.
- Then there's the catalyst in the form of Walter Capital Opportunity Corp. REIT's raising capital. It's a game-changer, says Baker Street, and should allow WAC to grow its servicing business over the next two years by 40% without using any of its own balance sheet capital.
- Full presentation
Walter Investment Management Corp operates as a mortgage banking company. It focuses on the servicing and origination of residential loans, including reverse loans. . It operates through six business segments: Servicing, Originations, Asset Receivables Management, Insurance, Loans and Residuals... More
Industry: Asset Management
Country: United States
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