Core Insights - The article discusses the investment positions held by the analyst in RITHM, NLY, and AGNC, indicating a beneficial long position in these stocks [1] Group 1 - The analyst has a beneficial long position in RITHM, NLY, and AGNC through stock ownership, options, or other derivatives [1] - The article expresses the analyst's personal opinions and does not involve compensation from any company mentioned [1] - There is no business relationship between the analyst and the companies whose stocks are discussed [1]

Market Position and Performance - As of December 31, 2025, Newrez ranks among the top five lenders and servicers in the U.S., based on total funded volume of originations and total unpaid principal balance serviced, respectively[35]. - The estimated total U.S. mortgage origination volume for 2025 was $2.0 trillion, an increase from $1.7 trillion in 2024, with a forecast of $2.2 trillion for 2026[40]. - The conforming loan limit for 2026 is set at $832,750, up from $806,500 in 2025, reflecting adjustments for high-priced real estate markets[38]. - Mortgage rates ranged between approximately 6% and 7% throughout 2025, contributing to affordability pressures in the housing market[40]. - The company employs approximately 7,240 employees as of December 31, 2025, with 5,630 in Origination and Servicing[161]. - The company ranks among the top five lenders and servicers in the U.S. based on total funded volume of originations and total UPB serviced as of December 31, 2025[64]. Revenue Generation and Financial Strategies - The company generates revenue through servicing and sales of residential mortgage loans, with profit margins per loan varying by channel; Direct to Consumer typically has the highest margins[67]. - Servicers derive income from contractual servicing fees and ancillary revenue, which are influenced by the size of the servicing portfolio and delinquency rates[42]. - The company earns tiered subservicing fees based on delinquency status and performance requirements, which contributes to ancillary income on each loan serviced[69]. - The company finances investments in MSRs and MSR financing receivables with short- and medium-term bank and capital markets notes, which may bear fixed or variable interest rates[70]. - The company utilizes warehouse financing to fund loans at origination through the sale date, indicating a reliance on short-term financing[67]. - The company charges interest rates on loans ranging from approximately 4% to 17%, with terms typically between 6 to 120 months[82]. - The company earns revenues from management fees and incentive income based on AUM or invested capital[90]. Asset Management and Investment Strategies - The Asset Management segment managed approximately $63 billion in AUM as of December 31, 2025[87]. - The asset management industry is highly competitive, affecting the ability to raise and retain assets under management (AUM) and deploy capital on attractive terms[46]. - Investment performance, investor capital inflows, and market conditions significantly affect asset management results, with poor performance potentially reducing AUM and profitability[49]. - The company’s strategy emphasizes disciplined capital allocation and diversification of earnings across fee-based and balance sheet-oriented activities[61]. - The Asset Management segment offers investment management and advisory services across various alternative investment strategies[88]. - The company invests in government-backed securities to hedge its MSR portfolio and meet REIT requirements[74]. - The company finances construction, renovation, and bridge loans using a warehouse credit facility and revolving securitization structures[78]. Regulatory Compliance and Risk Management - Regulatory compliance is extensive, with the company subject to numerous federal, state, and local laws governing its mortgage lending and servicing activities[121]. - The company is subject to extensive regulatory requirements under the Securities Exchange Act of 1934 and is regulated by the SEC, with certain subsidiaries registered as investment advisers[125]. - The company must comply with risk retention and related regulatory requirements applicable to securitizations, which may require retaining a portion of securities issued in certain transactions[126]. - The company is governed by various data privacy laws, including the CCPA and GDPR, which impose obligations on the collection and security of personal data[127]. - Risk-based capital laws assess the minimum capital needed to support the company's operations, with increasing regulatory intervention as the capital ratio decreases[142]. - The company intends to qualify as a REIT, which requires distributing at least 90% of taxable income to avoid federal income tax[144]. - The company monitors its asset composition to ensure compliance with the 40% test under the Investment Company Act of 1940, avoiding registration as an investment company[146]. Competitive Landscape - The residential transitional lending industry is competitive, influenced by housing fundamentals, financing costs, and borrower execution capabilities[45]. - Competition in the residential mortgage market includes banks, REITs, private equity firms, and technology-enabled platforms, with many competitors having greater access to capital[156]. - The asset management industry is highly competitive, affecting the ability to raise and retain assets under management (AUM) and deploy capital on attractive terms[159]. Strategic Initiatives - The company may pursue acquisitions or other strategic initiatives in response to market conditions and regulatory developments[62]. - The company treats interests in certain subsidiaries as non-investment securities to maintain its exclusion from registration under the 1940 Act[150]. - Adoor LLC focuses on acquiring and managing SFR properties, involving purchasing, renovating, and leasing high-quality residential properties[98]. - The company pursues opportunistic investments in the commercial real estate sector, typically structured through joint ventures[108].

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Core Insights - Rithm Capital Corp. (NYSE:RITM) is identified as a high-growth, low P/E stock with strategic progress made in 2025, resulting in 19% of earnings available for distribution to equity holders [1] - The company reported strong fourth-quarter and full-year results, highlighting durable momentum from acquisitions and a diversified alternative asset management platform, ending the year with over $100 billion in investable assets [2] - Net income for the fourth quarter was $53.1 million, or $0.09 per share, while earnings available for distribution totaled $418.9 million, or $0.74 per share; for the full year, net income reached $567.2 million, or $1.04 per diluted share, with earnings available for distribution of $1.3 billion, or $1.4 per common share [3] Strategic Positioning - As Rithm enters 2026, it is well-positioned for growth due to strategic investments across asset management, Newrez, Genesis, and its investment portfolio, providing a strong foundation to capture opportunities for clients and shareholders [4] - The company operates as a global asset manager and Real Estate Investment Trust (REIT), focusing on real estate, credit, and financial services sectors, managing investments in mortgage servicing rights, residential loans, commercial real estate, and consumer loans [5]

Core Insights - Rithm Capital Corp. (NYSE:RITM) is recognized as one of the best stocks for real estate investing for beginners [1] - UBS and Piper Sandler have recently adjusted their price targets for Rithm, with UBS lowering it to $15 and maintaining a Buy rating, while Piper Sandler reduced it to $15 from $15.50 but kept an Overweight rating, citing solid operating results [2] - The company reported fourth-quarter revenue of $1.29 billion, exceeding the consensus estimate of $1.24 billion, and highlighted a 19% return on equity for the full year [3] Financial Performance - Rithm Capital's management described 2025 as a year of strategic progress, emphasizing acquisitions that expanded its alternative asset management platform to over $100 billion in investable assets [3] - The company noted "durable momentum" in the fourth quarter, with closed transactions and an expanded client franchise contributing to solid earnings [4] Business Structure - Rithm Capital operates as an asset manager with exposure to real estate, credit, and financial services, structured across various segments including Origination and Servicing, Investment Portfolio, Residential Transitional Lending, and Asset Management [5]

Core Viewpoint - KBRA has assigned preliminary ratings to 10 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2026-NQM3, a $475.8 million non-prime RMBS transaction sponsored by Rithm Capital Corp [1] Group 1: Transaction Details - The total size of the transaction is $475.8 million [1] - The underlying mortgages in the pool were primarily originated by NewRez LLC, accounting for 57.5% of the loans [1] - All loans in this transaction will be serviced by New [1]

Core Viewpoint - The article discusses the investment potential of Rithm Capital Corp.'s preferred shares, particularly RITM-D, highlighting their attractive dividend yields and the likelihood of being called when the call protection period ends. Group 1: Investment Performance - RITM-D has shown strong performance with total returns ranging from 21.96% to 49.52% depending on the purchase date and share allocation [3][4][10] - The preferred shares currently offer a dividend yield of approximately 7.07% and a yield to call of about 8.3%, which was higher at around 9.5% earlier in the year [3][4] - The shares have been trading around $24.76, reflecting a 1% increase recently, which has impacted the yield to call significantly [10][11] Group 2: Call Risk and Strategy - There is a significant chance that RITM-D shares will be called when the call protection ends, with a projected increase in the dividend rate based on the five-year Treasury rate plus a spread of 6.223% [4][10] - The strategy suggests exiting the position if the worst cash-to-call falls to around negative $0.15, indicating a cautious approach to managing call risk [8] - The shares are viewed as moderately attractive for new investors, especially if the price declines by about 1.5%, which would enhance the yield to call [12] Group 3: Market Context and Comparisons - Rithm Capital has outperformed many peers in the mortgage REIT sector, particularly in protecting dividends and book value, leading to superior total returns [17] - The preferred shares have shown resilience, recovering from market volatility and maintaining steady returns despite fluctuations in Treasury rates [15][24] - The article emphasizes the importance of preferred shares and baby bonds in a diversified investment strategy due to their lower volatility compared to common equity [24]

Core Viewpoint - Rithm Capital Corp. (RITM) has demonstrated a strong ability to generate earnings available for distribution (EAD) that exceed its ongoing dividend payouts, establishing itself as a core holding in the mortgage REIT sector as it continues to expand its platform [1] Group 1: Company Performance - RITM's significant EAD generation positions it favorably within the mortgage REIT market, indicating robust financial health and growth potential [1] Group 2: Market Strategy - The equity market serves as a mechanism for wealth creation or destruction over the long term, with Pacifica Yield focusing on long-term wealth creation through investments in undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Core Viewpoint - KBRA has assigned preliminary ratings to 10 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2026-NQM2, a $508.0 million non-prime RMBS transaction sponsored by Rithm Capital Corp [1] Group 1: Transaction Overview - NRMLT 2026-NQM2 is collateralized by a pool of 882 residential mortgages, which have been seasoned for approximately two months [2] - The borrowers in NRMLT 2026-NQM2 have a weighted average original credit score of 758, with a weighted average original loan-to-value (LTV) of 72.4% and a weighted average combined LTV (CLTV) of 72.4% [2] Group 2: Rating Methodology - KBRA's rating approach involved a loan-level analysis of the mortgage pool using its Residential Asset Loss Model (REALM), third-party loan file due diligence, cash flow modeling analysis, and reviews of key transaction parties [3]