Nationstar (NSM) Aims to Build on Ocwen (OCN) Momentum

 

Ocwen Financial (OCN) shares rose more than 4% Thursday after it reported a 51% spike in Q4 revenue, to $236.4 million, and adjusted earnings of 51 cents, up 82% from the year earlier. Now investors are turning their sights to another major special mortgage servicer, Nationstar Mortgage (NSM), which will report on Thursday, Investor’s Business Daily reported.

Analysts expect Nationstar, which went public last March, to post $306 million in Q4 revenue and per-share profit of 69 cents. Nationstar shares rose 1.7% to 39.18 Friday. The company's stock has soared 180% since it went public in March 2012.

Nationstar's management has said they expect to originate at least $16 billion in loans this year, more than double the annualized run rate through the third quarter of 2012.

Ocwen outbid Nationstar in a bankruptcy auction in October. Nationstar went on to win $215 billion in loan servicing rights from Bank of America, bringing its servicing portfolio to $425 billion.

OCN and NSM are Cabot Top Ten Trader stocks.

Related page: Aggressive Growth Stocks for Retirement

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Hostess is making news today as it is issuing $1.23 million in term loans—most of which will go toward paying $905 million in a special dividend to its private shareholders—which I may add, is also more than two times what the buyers paid for this tasty snack business, and triples the company’s debt. According to Bloomberg, these types of deals grew to nearly $16 billion in the second quarter, the highest level in the past 12 months. I’m not making a judgment for or against this action. I just want to make a point that this debt, or leverage recapitalization—spurred by low interest rates—is increasingly becoming a method in which private equity holders get their money back—without selling the business. But it does burden the company with additional debt, which isn’t going to fund company expansion or operations.Read More >