$UWMC Due Diligence – Don't knock it til you read it, or don't I'm a reddit post not a cop.
By now most of us are familiar with UWMC and its +23% run in the past week. A stock with a massive dividend. A stock trading with a very low P/E of and income growth of 4,200%.
So why is this stock still a buy and hold for me right now?
The CEO is positioning them to increase shareholder value, but also position the company to weather any reduction in the refi market. (65% of the business)
There are major catalysts that have been driving the increase in price that goes beyond the attention gained on WSB.
- Announced NET earnings of $860M in the first quarter, with huge margins.
- Reaffirmed a continued dividend, the next ex-dividend date is 6/9/2021.
- Announced a $300M stock buyback, representing as much as 40% of the free float at the current prices.
- Russell index inclusion was missed last quarter due to confusion about their PREVIOUS status as a SPAC. It is expected that they will be reconsidered for Russell Index inclusions in the yearly reconstitution. While not the biggest catalyst, this is a sign of reputation and long-term stability for the stock. The prelim list publishes 6/4/2021.
- Creation of a jumbo mortgage product. The average loan origination in the market is ~410,000, indicating that the non-conforming section of the mortgage market is exploding. This is a very profitable sector of loan origination.
Other fundamentals driving a buy recommendation:
- Small float. 90M float, of which only about 60M is freely trading.
- This stock is not persistently pressured down quite as hard as others due to low share availability, but it appears based on the last two weeks it's trading the small waves of this stock to try to push it down under dangerous strike prices. A wave of positive sentiment could strangle this position in the stock. I don't have a Bloomberg terminal, but based on the evidence over the last several days, the indication is the 13.1% SI has grown.
- Exceptional open option interest for tomorrow 5/21/2021. The options expiring tomorrow have been documented elsewhere so I won't belabor them, but the open interest at the $9, and $10 strike represent almost 10% of the free float.
- Not a new startup, they have been in this business since 1986, making them almost as old as a fossil like me. They clearly survived the 2008 storm. This company isn't going anywhere anytime soon.
- STILL forecasting growth in Q2, whereas many of its competitors are not.
This post is NOT financial advice, but as someone who has ridden the waves of this stock since it was about $9, I see this position turning positive and the outlook through July for this position has high sentiment. Even if the mortgage market slows down as expected, I will hold these shares for years to come for the dividends and general stability of the organization.
My position 8000 shares @ 7.65 and 45x 6/18 8c. You can go stalk the fuck out of me if you want to see that I've been talking about this stock for some time and been saying the same thing about the strength and targets of their position since March. I am also the guy that tells you when you unintentionally reveal personal info on your yolo screenshots!
TLDR: UWMC should garner close attention for value investors looking for undervalued positions.
can't stop the work.
Jump To The Original Source