I listened to the call. It appears to me that core is not really a metric that we need to care that much about when it comes to determining the dividend. We got that special dividend from what they called " call clearing". Basic allying when the gain on sale from the security happened it generated taxable income. Most of us assumed this would carry over but it was a non reoccurring event. But it did reflect core a little. What is more applicable to us is taxable income that is reported to the IRS. They won't disclose this like other mREITs. I wish they would though. From what they presented unless the SPO then we will see a divvy raise in Q3 if not before. Q1 is done and the divvy has been declared. It's left to interpretation at why they keep so much cash on the books. Very defensive to me.
From the call I have a few takes.
1. They are diversifying servicers for their msr portfolio. Good because this will keep capital on the various fronts of the msr market.
2. The NPL market is the next opportunity. They even mentioned a pipeline of sort.
3. Their relationship with spring leaf as a servicer and a source of deals. They bought a sercurity off them and resold it to refinance it at a later date. They alluded the question of whether this entitles them to the whole loans or not. Something is brewing on this.
4. Call clearing will occur as it presents itself.
5. They are aware of the issue with Fannie and Freddie and are being cautious to which direction to position themselves. Securities will be even shorter in duration.
6. MSR sales will still occur but won't be at sizes seen before. This is different from what OCN discussed with a robust pipeline. I tend to favor what NRZ has to say.
7. The valuation and yield are lower than what they expected but it is more of being new and not having a long enough track record for them to be evaluated. At least they didn't blame it on the weather. I think they can done some more effort on the book value side.
If you sold this stock after its issue and bought QQQ you would have earned 15% more money. That is the reason to sell. QQQ is not creative, just matches the market. There are a ton of Mutual funds that did better than QQQ. DuPont did better for heaven sakes. Almost every stock and mutual fund I own did better. NRZ was my worst performing stock. I just couldn't believe it wouldn't go up.... but you heard the CC. When asked what they were doing to promote capital gains they said they had done a couple of presentations at brokerage houses. That's bull. What they should have done is put out 15 press releases throughout the quarter. They don't even answer their investor relations phone!
This is a plaything for Fortress guys. They'll promote it one day but they aren't doing it now. If I had any inkling that they were taking the idea of capital gains seriously, that it was a priority, I'd be buying not selling.
In spite of the fact that they say they are earning 30% return on capital they are down again. I think this is all attributed to the fact that they don't properly explain themselves to the market. They are really cheap as a stock but I think they are headed down. They won't have any more news until July and the dividend payment will cause another unrecovered drop in the stock. I'm selling out. I'll come back at 5.90. Last post until then.
Yeah it's an easy question to answer. They need to state what is taxable income generated. Even if it is greater than what the divvy is. That's all they have to do. It's always about show me the money. Now they wonder why they are at 11%. Don't they think we can do math. It's a management issue. I'm still holding and if it does go to 5.90 then I'm a buyer too. Basically I'll be reinvesting the divvy but at this point I see no reason to liquidate. These guys are funding my other investments. I bought more newm because I see they have the possibility for share price appreciation.