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Why Nationstar Mortgage's Shares Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mortgage servicer Nationstar Mortgage (NYSE: NSM  ) were heading higher today, gaining as much as 10% in intraday trading after the company reported strong second-quarter results.

So what: For the quarter ending in June, Nationstar's pro forma earnings per share -- which excludes certain acquisition expenses -- were $0.44, which was flat with the first quarter but better than the average Wall Street analyst estimate of $0.38. On the top line, the company saw revenue more than double from last year to $200 million. That also topped Wall Street's $172 million expectation.

Now what: If we can say one thing about Nationstar, it's that the company is aggressively targeting growth. In June, it closed on the acquisition of the Aurora portfolio, a $63 billion servicing portfolio that had been part of Lehman Brothers. The company also is in hot pursuit of the $371 billion in mortgage servicing rights from the bankrupt ResCap -- formerly part of Ally Financial (which was previously GMAC). The ResCap transaction is something for investors to keep an eye on in the second half of the year, as CEO Jay Bray called it a "primary objective for the second half of 2012."

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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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DocumentId: 1984501, ~/Articles/ArticleHandler.aspx, 6/19/2013 2:09:42 AM

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Related Tickers

6/18/2013 4:03 PM
NSM $43.12 Up +0.92 +2.18%
Nationstar Mortgag… CAPS Rating: ***

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