NSM

Nationstar Mortgage Holdings Inc.

Finance/Real Estate


Presented:07/08/2013
Price:$38.71
Cap:$3.51B
Current Price:$18.27
Cap:$1.79B

Presented

Date07/08/2013
Price$38.71
Market Cap$3.51B
Ent Value$3.51B
P/E Ratio10.73x
Book Value$13.70
Div Yield1.6%
Shares O/S90.57M
Ave Daily Vol1,180,000
Short Int8.88%

Current

Price$18.27
Market Cap$1.79B
Nationstar Mortgage Holdings Inc. operates as a residential mortgage loan servicer in the United States. It operates in two segments, Servicing and Originations. The company services loans as the owner of the mortgage servicing rights (MSRs) and also services loans on behalf of other MSRs or mortgage owners. Its loan servicing primarily involves the calculation, collection, and remittance of principal and interest payments; administration of mortgage escrow accounts; collection of insurance claims; administration of foreclosure procedures; management of real estate owned (REO); and disbursement of required protective advances. It also offers various ancillary services, such as providing services for delinquent loans; managing loans in the foreclosure/real estate owned process; and providing title insurance agency, loan settlement, and valuation services on newly originated and re-originated loans. In addition, the company engages in the origination, packaging, and sale of single-family conforming mortgage loans to government-sponsored entities or other third-party investors in the secondary market. Nationstar Mortgage Holdings was founded in 1994 and is headquartered in Lewisville, Texas.

Highlights

The presenter is bearish on the outlook for gain on sale companies, and believes there are a number of headwinds facing the likes of Nationstar, Ocwen, and Home Loan Servicing (among others competing in the mortgage servicing space). His primary concerns include the extreme level of “over-earning” these companies exhibit on the back of an arbitrage, and their accounting practices are generally awful, in his opinion. He sees the potential for NSM, which is presently trading at just over 4x BV, to revert to a more modest premium to book value, and noted OCN is trading at nearly 4x BV, but added that subprime is less of an issue for them (HLSS was also discussed briefly as another potential way to play the trends discussed below)

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Idea Discussion

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