TWO - Two Harbors stock dives most among mortgage REITs as Q1 results disappoint
2023-05-02 14:57:03 ET
Two Harbors Investment Corp. ( NYSE: TWO ) stock plunged 9.1% in Tuesday afternoon trading, approaching its 52-week low reached last October, as investors digested the mortgage REIT's first-quarter results that were hampered by increased hedging costs and widened spreads .
The bearish price action also came in the midst of a risk-off day across the broader stock market. Most mREITs changed hands in negative territory, though TWO was easily the biggest loser, as renewed banking jitters spurred a flight to longer-dated Treasury bonds.
At the same time, concerns about the U.S. government running out of money by as early as June 1 sent Treasurys at the shortest end of the curve substantially lower.
On Monday, Two Harbors ( TWO ) highlighted that its book value fell to $16.48 per share at March 31 from $17.72 at Dec. 31, 2022, hurt by "the violent move lower in rates arising from the banking crisis as our portfolio had a slight short duration bias heading into March," CEO Bill Greenberg said during the company's Q1 earnings call on Tuesday.
"As more regional bank headlines hit the tapes, rate volatility continued to be elevated, which caused increased hedging costs and mortgage spread widening," he added.
Still, "prepayments on our MSR remain slow and we don't expect delinquencies to materially increase. Taken together, we believe that these dynamics are a benefit to our paired RMBS + MSR strategy," TWO chief investment officer Nick Letica said in a statement Monday.
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Two Harbors stock dives most among mortgage REITs as Q1 results disappoint