COOP

Mr. Cooper Group Inc

Finance/Real Estate, Event Driven/Special Sit


Presented:03/27/2023
Price:$39.04
Cap:$2.70B
Current Price:$95.93
Cap:$6.19B

Presented

Date03/27/2023
Price$39.04
Market Cap$2.70B
Ent Value$9.59B
P/E Ratio3.2x
Book Value$58.63
Div Yield0%
Shares O/S69.27M
Ave Daily Vol633,551
Short Int5.78%

Current

Price$95.93
Market Cap$6.19B
Mr. Cooper Group, Inc. engages in the provision of residential loan services. It operated through the following segments: Servicing, and Originations. The Servicing segment consists of collecting loan payments, remitting principal and interest payments to investors, managing escrow funds for the payment of mortgage-related expenses, such as taxes and insurance, performing loss mitigation activities on behalf of investors and otherwise administering mortgage loan servicing portfolio. The Originations segment provides refinance opportunities to the existing servicing customers through direct-to-consumer platform and purchases loans from originators through correspondent channel. The company was founded in 1889 and is headquartered in Coppell, TX.

Publicly traded companies mentioned herein: Mr. Cooper Group Inc (COOP)

Highlights

The presenter is long shares of Mr. Cooper Group Inc (COOP), which he considers the best-in-class mortgage servicer. Like many bank stocks, COOP is down almost 20% from $48 per share earlier this month, and it currently trades at $39 per share (0.68x TB). This sub-1x TB valuation seems unreasonably low given that the company should benefit from the current environment (higher interest rates, banks selling MSRs) and has strong financial metrics (31% Tangible Net Worth/Assets, significant excess capital, 75% MSR hedge position, consistent 10%+ ROE). On top of this, COOP has been aggressively buying back shares and he expects this to continue. COOP’s tangible book value is currently $57 per share, and he sees a near-term path to tangible book value of $78 per share with incremental upside to $98 per share. If COOP can execute on the existing opportunities, the stock can rerate to 1x TB or higher and reach $100 per share. 

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Idea Discussion

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