Riding the Mortgage Market Tailwinds

Have a new one for you all in the consumer finance space. A name many of you may know, but most probably don’t. To sum it up succinctly, here’s the smooth brain thesis.

Smooth Brain Thesis:

A mortgage play that isn’t overpriced (like others) and benefits if rates don’t go down as much as “The Dot Plot” says or if the Mortgage Basis stays somewhat wide. They like making money and in Jerome’s no recession soft landing they should make more money. Tailwinds + operating performance + EPS growth. Current price mid 90s, 2025 target 125 to 128.

The information provided is NOT financial advice. I am not a financial adviser, accountant or the like. This information is purely from my own due diligence and an expression of my thoughts, my opinions based on my personal experiences, and the way I transact. This information is provided for general informational purposes only and should not be considered as personal advice. Your money, your outlay, your risk. This presentation does not provide investing advice in any way shape or form. You will be solely responsible for any decisions you make. If you need to seek any advice, speak to your advisers, accountants or other professionals who you may be relying on for your wealth creation journey. Please do your own due diligence.

A Mortgage Play Biased Towards Servicing:

Mr. Cooper (COOP) is the artist formerly known as Nationstar Mortgage. Founded in 1994 in Colorado, the Company moved to Texas in the early 2000s. Led by Jay Bray, a former Wall Streeter from asset backed securitizations and secondary marketing operations (read as: true professional) COOP is a beast in the servicing space. They were a relatively smaller player pre-GFC but seized on opportunity (I love this) during the mortgage meltdown that many in the Finance industry weren’t even around for now. They acquired a big portfolio of troubled loans (estimated around $40-$50 billion) from Fannie Mae when the world was blowing up and established themselves as a major player.

To paraphrase Bain in Batman, Mr. Cooper was born in the dark.