Walter Investment Looks Quantitatively Cheap But Has Limited Potential
- The business model leaves a lot to be desired for and exposes WAC to a lot of regulatory risks due to its diverse set of services.
- Growth beyond the current acquisition spree will be very difficult to obtain due to the commodity nature of the business and numerous other difficulties.
- The revenues are mostly high quality due to the nature of the businesses involved and should be stable for the most part absent an extraordinary event.
- Tangible book value represents a good bottom line for the company's realizable net asset value since WAC's asset values are representative of market values.
Walter Investment Management: Catching A Falling Knife
- Government efforts to severely curtail the activities of mortgage servicing companies are having a negative effect on WAC.
- With management's latest announcement about the negative effects of regulation on the reverse mortgage business, the stock has slid further.
- If government regulators do not put the firm out of business here, WAC is very undervalued, but that is a big IF.
Is It Time To Buy Walter Investment Management, Again?
Thu, Jan. 22, 3:51 PM
- Tilting against conventional wisdom (at least for the specialty servicer bulls), a new Moody's report (behind paywall) suggests new capital requirements are unlikely to drive a large transfer of MSRs from the big banks to the non-bank servicers.
- The sizable transfers of the past years were less about capital and more about the banks' desire to reduce the volume of troubled mortgages they were servicing. While MSR sales will continue, says Moody's, the pace going forward will be far slower.
- Watching with interest: Ocwen Financial (OCN -0.6%), Walter Investment (WAC -2.5%), Nationstar Mortgage (NSM -2.7%), New Residential (NRZ +1%).
Thu, Jan. 15, 12:47 PM
- News hedge funder Robert Chapman is a buyer of Ocwen Financial (OCN +18.7%) makes for a nice excuse for the sizable move in the sector, but that leaked yesterday and it had no discernible impact on any of the names.
- Altisource Portfolio Solutions (ASPS +9.7%), Home Loan Servicing (HLSS +0.6%), Altisource Asset Management (AAMC +4.7%)
- Others: Nationstar Mortgage (NSM +5%), Walter Investment (WAC +6.5%).
Tue, Jan. 13, 10:49 AM
- With much of the Ocwen family of stocks rushing towards zero on a report California is set to suspend Ocwen Financial's (OCN -36.4%) mortgage license, Inside Mortgage Finance is reporting sources believe the company will eventually work out a settlement with the state.
- It could be good for a bounce, but veterans of the Ocwen saga will note the company's settlement with New York provided no relief for the punished shares.
- Previously: Ocwen family craters as California moves (Jan. 13)
- Altisource Portfolio Solutions (ASPS -28.2%), Altisource Asset Management (AAMC -28.5%), Altisource Residential (RESI -4.5%), Home Loan Servicing (HLSS -24%).
- Others in the industry: Nationstar Mortgage (NSM -11.5%), Walter Investment (WAC -6.7%).
Tue, Jan. 13, 10:16 AM
- California is looking to suspend the mortgage license of Ocwen Financial, sending that stock and most of the rest of the Ocwen family down more than 20% on the session.
- More business for competitors? That's not the view right now as Nationstar Mortgage (NSM -8%) and Walter Investment (WAC -5%) fall alongside.
- Previously: Ocwen family craters as California moves (Jan. 13)
Dec. 22, 2014, 10:52 AM
- Nationstar Mortgage (NSM -2%) and Walter Investment (WAC -4.2%) managed to eke out gains early, but now have been unable to resist the shellacking in Ocwen Financial (-22%) in wake of that company's settlement with the NY Department of Financial Services.
- We don't want to get too breathless, but the settlement more or less makes Ocwen state-run, and one wonders if regulators will be sated or if more is in store for Nationstar and Walter.
- Previously: Ocwen tumbles as Erbey exits (Dec. 22, 2014)
- Previously: More Erbey resignations in wake of Ocwen settlement (Dec. 22, 2014)
- Altisource Portfolio Solutions (-18.4%), Home Loan Servicing (-5.4%), Altisource Asset Management (-20%), Altisource Resdiential (-5.6%)
Dec. 16, 2014, 10:13 AM
- Walter Investment (WAC +2%) is an outlier to the upside among the specialty servicers after its Green Tree Servicing unit passed all metrics by the Office of Mortgage Settlement Oversight, including two metrics covered by corrective action plans.
- Source: Press Release
- Previously: Big banks improve loan servicing practices; one smaller player not so much (May 14)
- Previously: Ocwen in sights of another regulator (Dec. 16)
Nov. 20, 2014, 1:19 PM
- Heavily-shorted Ocwen Financial (OCN +9.8%) is having a big session with no new news readily apparent at the moment. We already know Ben Lawsky is exiting the New York Department of Financial Services. Will his replacement be any softer on Bill Erbey's empire?
- Altisource Portfolio Solutions (ASPS +4.4%), Altisource Asset Management (AAMC +0.6%), Altisource Residential (RESI +2.1%), Home Loan Servicing Solutions (HLSS +1.8%)
- Ocwen competitors: Nationstar Mortage (NSM +4.7%), Walter Investment (WAC +4.7%).
- Previously: Specialty servicers on the move as Lawsky looks to be exiting
Nov. 18, 2014, 7:19 AM| Comment!
Nov. 11, 2014, 10:55 AM
- No one has come forward to deny yesterday's NY Post story leaking the imminent departure of Ben Lawsky from his job leading the New York Department of Financial Services.
- Hoping for a friendlier regime at DFS, Ocwen Financial (OCN +6.9%) continues a move higher which began when the story broke yesterday afternoon.
- Among competitors (also with regulatory issues, but maybe not at Ocwen's level): Walter Investment (WAC +4%) and Nationstar Mortgage (NSM -1.8%). Also of interest in the sector is PennyMac Financial Services (PFSI).
Nov. 6, 2014, 12:47 PM
Nov. 6, 2014, 12:31 PM
- Amid an earnings miss and lowered guidance, Walter Investment (WAC -20.2%) discloses inquiries from a number of state agencies into its Green Tree Servicing unit.
- Previously: Walter Investment reports sizable decline in earnings
- Earnings fell at Nationstar Mortgage (NSM -20.6%), but in a bit of good news, the company did say it entered into commitments for $43B in new MSR acquisitions.
- Finally, there's lesser-followed Stonegate Mortgage (SGM -15.9%), which went public just more than a year ago, missing estimates by a wide margin with CEO Jim Cutillo noting "industry headwinds and interest rate volatility." The company's servicing portfolio ended Q3 with $17.7B UPB, up 48% this year and up 82% Y/Y.
- New Residential (NYSE:NRZ) - a specialty servicer, but with a somewhat different business model than the other three - reported solid results today and is flat on the session.
Nov. 6, 2014, 9:14 AM
- Gainers: PLNR +74%. PESI +24%. SWIR +20%. MEET +13%. RVLT +11%. COT +11%. DATA +11%. ACAS +10%. NDLS +9%. KATE +8%. KATE +8%. WFM +9%. HZNP +6%. CECO +6%. DRYS +5%. TRUE +5%.
- Losers: AEZS -51%. SZYM -47%. SNMX -26%. GNW -24%. WWWW -22%. CSOD -19%. PHMD -17%. GERN -14%. MCP -12%. GNRC -11%. WAC -9%. QCOM -7%. Z -7%. PBR -5%.
Nov. 6, 2014, 8:09 AM
- Q3 adjusted after-tax earnings of $36.2M or $0.96 per share vs. $70.1M and $1.86 in Q2 and $58.4M and $1.55 a year ago.
- Total expenses of $389.5M up 4% Y/Y thanks to increased legal expenses of $37.3M, offset by a decline in other expenses of $22M.
- Servicing segment revenues of $152.5M falls 27% Y/Y. Ended quarter with about 2.2M accounts serviced with a UPB of $229.6B. Net disappearance rate of 14.1% about the same as that of Q2.
- Originations segment revenue of $132.8M off 21% Y/Y. Expenses of $84.4M falls 27% as the company cut staff to reflect the mortgage origination reality.
- Full-year adjusted EBITDA now expected at just $650M and $5 per share.
- Conference call at 10 ET
- Previously: Walter Investment misses by $0.07, misses on revenue
- WAC flat premarket
Nov. 6, 2014, 7:07 AM| Comment!
Oct. 22, 2014, 11:06 AM
- Bank of America and Evercore Partners throw in the towel on Ocwen Financial (OCN -8.5%), downgrading to Neutral/Hold, following yesterday's letter from Ben Lawsky's NY Dept. of Financial Services and the company's bungled response.
- Is it time to start thinking about a takeout? Sitting on Ocwen's board and presumably still a sizable shareholder is Wilbur Ross (NASDAQ:WLRH) who sold his Homeward Residential Holdings to Ocwen in 2012.
- Altisource Portfolio Solutions (ASPS -9.6%), Home Loan Servicing Solutions (HLSS -5.3%), Altisource Asset Management (AAMC -4.3%), Altisource Residential (RESI -4.5%).
- Other industry players: Nationstar Mortgage (NSM), Walter Investment (WAC +0.5%), New Residential (NRZ +0.1%), PennyMac FInancial (PFSI -0.4%).
- Previously: Moody's downgrades Ocwen following DFS allegations
Oct. 21, 2014, 12:25 PM
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WAC vs. ETF Alternatives
Walter Investment Management Corp is a fee-based business services provider to the residential mortgage industry. It also provides residential loan servicing that focuses on credit-sensitive residential mortgage assets located in the United States.
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