Go to the company website and look at their investor presentations. Among the interesting insights you should gainare:
When interest rates go up, prepayments slow down and the MSRs that they own become more lucrative than anticipated. In each of their quarterly releases over the past year they have noted that prepayments were lower than anticipated, resulting in higher than expected income and they subseuqently increased the dividend.
Maybe I'll add to my position. At least I get a dividend. I haven't seen anything other than a falling stock price that tells me the bottom is going to fall out here with the business. I've been in some really terrible stocks in the past but I try to get out early and don't get too hurt. This next report is going to the the test for me so If there is any weakness to back up the recent stock roll over then I'm out. Too many uptrend stocks to be in one going down.
I actually expect the dividend to grow. I suppose some might be worried mortgage defaults could rise. Competition for MSR's could increase and increase their price. I haven't seen much materialize by way of these concerns. Many of my income producers are performing like HLSS. I still like income and believe the elimination of the payroll tax holiday, sequestration, and a 100 basis point move in interest rates will matter. I do not agree with the popular notion consumers will adjust (translation: take on more debt or dip deeper into savings to offset recent events that reduce spending power) and the economy will pick up in the "2nd half." Until we have a stable federal reserve, legislature, and executive branch volatility and discounts are likely.
I can't comment on the macro but if insiders keep buying and the dividend goes up then this stock is a coiled spring. Even if it stays flat its never dead money. I own some tech that I'm slightly down on and don't want to take a loss, would rather own HLSS for the income. Good luck!
I too am baffled. Only thing I can think of is because mortgage rates are starting to go up people think it is enough to slow down mortgage originations and they may be right, although they are still way below normal.