Savvy Trades and Investments

[researcher59]

NRZ -.04 to 9.05, has gotten very cheap for seemingly no good reason. They had great Q1 numbers thanks to big gains in their MSR portfolio. As of 3/31 book value was $12.56, but on the conf call they reported that on 5/3 book value had risen further to $13.50. So based on 13.50 the stock is now trading at a historically unprecedented 33% discount to book value.

Core earnings may weaken in the coming quarters as mortgage originations drop sharply, but that should be more than offset by gains on the MSR portfolio.

There was a good article on SA yesterday -

https://seekingalpha.com/article/4518245-why-mortgage-reits-plunged

conf call -

During the quarter, our book value increased to $12.56. Currently, our book value sits at approximately $13.50. We have interest rate hedges in place, which protect our long duration assets, along with our MSR portfolio, which should only help to increase our book value as we go forward based on expected Fed actions. We have increased our cash and liquidity levels to $1.7 billion. We will be patient as we look for opportunistic investments across the financial services sector. We believe patience will be rewarded in these markets and the first quarter was a great example of our diversified business.