Mr Cooper Group Inc fka COOP

[JusticeWillWin]

=======>HIGHLIGHTS from the $COOP Q1 earnings call<======

Q1 earnings call transcript (04/29/21): https://www.fool.com/earnings/call-transcripts/2021/04/30/mr-cooper-group-inc-coop-q1-2021-earnings-call-tra/

Webcast: https://edge.media-server.com/mmc/p/7dkfg7gq

* exceptionally strong quarter with $561 million and fully tax affected net income or $5.92/share
* generated a record $363 million and pre-tax operating income
* positive $373 million mark-to-market on the MSR
* tangible book value rose 22% to $31.97/share
* if mortgage rates rise further, additional positive marks on the MSR that would build book value
* additional $400 million in cash when the sale of Title365 closes in Q2
* mark up of DTA by nearly $350 million or about $4/share in tangible book value if corporate tax rate rises to 28%
* during the quarter, they won three small bulk deals totaling $9 billion in UPB, which should close in the second quarter
* only 4% of the customers are still on forbearance (down from a peak of 7.2%)
* cash outlook is very promising

From the Q&A part:

Chris Marshall - Vice Chairman and CFO:

We ended the quarter at $654 million. But we expect $400 million from Title 365, we expect to be cash flow positive through the year. So you can do the math and say it's easy to see us having in excess of $1 billion by the end of the year or even toward the middle of the year and, of course, we've got to hold some of that cash just for normal operating, but it's certainly a number if it's not $1 billion, it's in that $750 million, $800 million range that's available for investment, whether it's investment in growing the company, which again is our priority. But if we can't put it all to work and we're sitting here with a stock that's $34 and, almost under any scenario, tangible book is going to grow to 40 or more just on the basis of consensus earnings absence from massive mark-to-market impact, negative mark-to-market impact, which I don't think anyone expects, it doesn't consider further positive mark-to-market.

So I think based on the Fed's comments yesterday on inflationary pressures, I think everyone's expecting over the long term for rates to go up, which means more positive marks on our book. And it doesn't include any change in the tax rate. Those things all say the stock could be well into the '40s. So if we're sitting here with a lot of cash toward the end of the year and the stock that's trading where it is now, it seems to be a no-brainer that we want to buy back our shares in a much higher level just given where tangible book is.

Now, given the consistent profitability we've been earning, you would think we'd be trading at a premium to those levels. And hopefully, the stock is there, but if not, then we'll have considerable amount of capital to fund buybacks.

Lee Cooperman - Omega Family Office - Analyst:

And then the last question, if you will be willing to answer it, but what is your view of the value of the equity, I mean you've been very right for quite some time now about saying the equity very mispriced. And, but I'm curious. Basically, what's your view of the value of the equity?

Jay Bray - Chairman and CEO:

Well, if you think of that. I'll answer this one. If you think of our tangible equity is largely the value of our MSR and we could sell that at market prices is that book value, value of our business is nothing. Well, I think that's ridiculous.
We've already said the Title 365 is with was worth $500 million of book value is almost nothing. Same thing with our exchange business and it's hard to make a case for it with the moratorium, but that business earned $60 million a year, year-in year-out or more. So what's it worth is another $500 million, $600 million that has no book value. So I wouldn't put an exact price, I think our stock is materially undervalued when you think of the earnings power of this business but separate and distinct from the value of the MSR portfolio.