TWO - Two Harbors Q4 Earnings Leave Something To Be Desired
2024-01-29 18:13:46 ET
Summary
- Two Harbors Investment Corp. accounting gets more and more complex in terms of assessing dividend coverage.
- The acquisition of RoundPoint Mortgage Servicing LLC is expected to add $25-30 million to earnings in 2024.
- The company's dividend coverage is uncertain due to losses in earnings available for distribution and market-driven changes in value.
- Heavy reliance on MSR, while MBS spreads have been crushed.
- Two Harbors book value is stabilizing.
When we last covered Two Harbors Investment Corp. ( TWO ) we hold-rated it, but noted stabilization in operations. We saw rates stabilizing as a benefit for the company. The yield curve has been un-inverting, making mortgage real estate investment trust, or mREIT, operations more stable. The transition can cause pain, but a normal yield curve supports operations. In our experience, mREITs can handle a normal yield curve which much less need to engage in complicated hedging and swap techniques....
Two Harbors Q4 Earnings Leave Something To Be Desired