Group 1 - Binary Tree Analytics (BTA) focuses on providing transparency and analytics in capital markets instruments and trades, specifically targeting Closed-End Funds (CEFs), Exchange-Traded Funds (ETFs), and Special Situations [1] - The company aims to deliver high annualized returns with a low volatility profile, leveraging over 20 years of investment experience [1]

Core Insights - Rithm Capital Corp. (NYSE: RITM) is experiencing acquisition-driven earnings growth and has a high margin of safety regarding its dividend [1] Company Analysis - The company is positioned as a mortgage real estate investment trust, focusing on growth through acquisitions [1] - There is a strong emphasis on innovation and disruption within the financial sector, indicating a proactive approach to investment opportunities [1] Investment Opportunities - The analysis highlights the potential for growth buyouts and value stocks, suggesting a favorable environment for investors looking for high-tech and early growth companies [1]

Acquisition and Mergers - Rithm Capital completed the acquisition of Computershare Mortgage Services for approximately $731.0 million, including $56.0 billion in unpaid principal balance of MSRs and $98.0 billion of third-party servicing UPB[30]. - The "higher for longer" interest rate environment is expected to lead to increased bank merger and acquisition activity, creating further investment opportunities for Rithm Capital[51]. - The company is exploring various opportunities for acquisitions and dispositions of assets, including equity or debt offerings[62]. Market Trends and Forecasts - The Mortgage Bankers Association estimated total U.S. origination volume for 2024 at $1.8 trillion, a 22% increase from $1.5 trillion in 2023, with 28% of activity related to refinance volume[37]. - The Mortgage Bankers Association forecasts a 15% increase in total mortgage origination volume to $2.1 trillion in 2025, with an 8% increase in purchase volume and a 34% increase in refinance volume[37]. - The current market dynamics show increasing home prices, strong credit quality of loans, and rising yields, enhancing the mortgage market's appeal to investors[56]. - The overall financial position of consumers remains strong, despite a rise in delinquencies among recent loan originations[59]. - The affordability challenges posed by higher mortgage rates have reduced home sales, impacting contributions to prepayment speeds from housing turnover[54]. - The demand for Single-Family Rental (SFR) properties is expected to continue due to a long-term shortage of affordable housing in the U.S.[58]. Company Performance and Financials - Sculptor, a subsidiary of Rithm Capital, managed approximately $34.0 billion in assets under management as of December 31, 2024[46]. - Rithm Capital's total assets as of December 31, 2024, amounted to $46.05 billion, an increase from $24.04 billion in 2023[64]. - The company's investments in residential mortgage loans reached $24.11 billion in 2024, up from $19.01 billion in 2023, reflecting a growth of approximately 27.5%[64]. - Rithm Capital's debt increased to $28.28 billion in 2024, compared to $23.64 billion in 2023, representing a rise of about 19.7%[64]. - The portfolio as of December 31, 2024, includes total assets of $46,048,957 thousand, with investments amounting to $28,665,853 thousand[64]. - As of December 31, 2024, total liabilities stand at $38,162,647 thousand, with debt comprising $28,284,762 thousand[64]. Servicing and Income - Servicing income is influenced by the size of the servicing portfolio, delinquency rates, and cost to service per loan[39]. - The "higher for longer" rate environment continues to benefit MSR investors by generating substantial float income and stable cash flows from the large MSR portfolio[55]. - The company reported that 88.9% of the underlying unpaid principal balance (UPB) of mortgages related to owned MSRs is serviced by Newrez[71]. - Revenues are primarily derived from rents collected from tenants for SFR properties, influenced by macroeconomic factors and local market conditions[86]. Investment Strategy and Portfolio - Rithm Capital's investment landscape includes a diverse range of products, such as residential mortgage loans and Non-Agency RMBS, aimed at attractive risk-adjusted yields[49]. - The investment portfolio consists mainly of residential mortgage loans, SFR properties, consumer loans, Non-Agency RMBS, Excess MSRs, and servicer advance investments[79]. - The company expects to continue financing government-backed securities acquisitions with repurchase agreement financing, which typically bears interest rates over SOFR[76]. - The company has financed investments in consumer loans with securitized non-recourse long-term notes, with stated maturity dates of May 2036 and June 2028 for different loan types[89]. - The company retains risk retention bonds from its Non-Agency RMBS portfolio, which are not consolidated under Dodd-Frank regulations[90]. Operational and Regulatory Compliance - The company is subject to extensive regulation by various federal, state, and local authorities, impacting operational compliance[122]. - Rithm Capital aims to maintain compliance with the 40% test under Section 3(a)(1)(C) of the 1940 Act, ensuring that less than 40% of the value of adjusted total assets consists of "investment securities"[133]. - Rithm Capital's subsidiaries that qualify for exclusion from the definition of an investment company must ensure that at least 55% of their assets comprise qualifying real estate assets[135]. - The company regularly monitors its portfolio to maintain compliance with the 1940 Act exclusions, which may limit investment opportunities[139]. Human Capital and Corporate Governance - Rithm Capital emphasizes a diverse and inclusive workplace, with tailored onboarding and training plans for new employees[147]. - The company provides a competitive compensation and benefits package, including medical, dental, and vision coverage, to attract and retain talent[154]. - Rithm Capital's corporate governance includes a board of directors with a majority of independent members, ensuring ethical business conduct[157]. - Rithm Capital's human capital team focuses on recruitment and development, prioritizing candidates with substantial experience and industry relationships[146]. Technology and Innovation - The company has introduced an AI initiative, Rezi AI, aimed at improving efficiencies in servicing call centers, with a multi-year roadmap for broader applications[67].

Group 1 - Big tech companies are dominating headlines as capital is increasingly directed towards developing A.I. infrastructure [1] - There is a focus on identifying underappreciated market areas that present opportunities for growth and dividend income [1] - The strategy emphasizes creating a portfolio that prioritizes compounding dividend income and growth, with a structure aimed at achieving monthly dividend income through reinvestment and annual increases [1]

Core Insights - Rithm Capital Corp. (RITM) reported strong fourth-quarter results, with shares gaining 4.4% since the announcement on February 6, 2025, driven by improved net servicing revenues and interest income [1][2] - The company's adjusted earnings per share for Q4 2024 were 60 cents, exceeding the Zacks Consensus Estimate by 33.3%, and reflecting a year-over-year increase of 17.6% [2][3] - Total revenues reached nearly $2.1 billion, nearly tripling year-over-year and surpassing the consensus mark by 71% [2][3] Financial Performance - Net servicing revenues were $1.1 billion, significantly up from a negative $7.5 million in the prior-year quarter, beating the Zacks Consensus Estimate by 180.4% [3][6] - Interest income increased by 7.9% year-over-year to $490.3 million, although it fell short of the consensus estimate by 5% [3] - Gain on originated residential mortgage loans rose 105.5% year-over-year to $201.6 million, exceeding the consensus estimate by 15.9% [4] Expense and Income Analysis - Total expenses for the quarter were $1 billion, reflecting a 28.2% year-over-year increase due to higher interest expenses and general administrative costs [4] - Rithm Capital's pretax income was $492.6 million, a significant recovery from a pretax loss of $37.3 million a year ago [5] Segment Performance - In the Origination and Servicing segment, revenues rose to $1.7 billion from $228.8 million year-over-year, with a pre-tax income of $484.7 million compared to a loss of $120.9 million in the prior year [6] - The Investment Portfolio segment saw interest income decline to $72.1 million from $246.9 million year-over-year, resulting in a pre-tax loss of $9 million [7] - Asset Management revenues totaled $268.5 million, with a pre-tax income of $53.4 million in the fourth quarter [8] Financial Position - As of December 31, 2024, Rithm Capital had cash and cash equivalents of $1.5 billion, up from $1.29 billion at the end of 2023, and total assets increased to $45.2 billion from $39.72 billion [9] - Total equity rose to $7.9 billion from $7.1 billion at the end of 2023 [9] Capital Deployment - The company did not repurchase any shares in 2024 but announced a new share repurchase program of $200 million through December 31, 2025 [11] - A quarterly common dividend of 25 cents per share was paid, totaling $130.2 million [11] Full Year Overview - For the full year 2024, total revenues improved by 38.5% year-over-year to $5.2 billion, while adjusted earnings per share rose by 1.9% [12]

Core Insights - The article discusses the impact of mortgage refinancing activity on Rithm Capital (RITM), highlighting that a slowdown in refinancing is beneficial for the company due to its significant holdings in mortgage service rights (MSRs) [3][6]. Company Overview - Rithm Capital has strategically acquired a large stockpile of MSRs, which increase in value as interest rates stabilize or rise [3][6]. - The company recently raised its dividend by 25%, increasing the yield-on-cost from 7.6% to 9.5%, reflecting strong income growth [7]. Financial Performance - RITM reported earnings of $0.60 per share in its most recent quarter, surpassing Wall Street's expectations of $0.44, indicating robust financial health [9]. - The company has provided substantial cash dividends, totaling $3.25 on a purchase price of $10.46, resulting in a total return of 48% over 3.5 years [7]. Market Conditions - Current mortgage rates remain high, above 6%, contributing to a stagnant housing market and reduced mortgage activity, which is favorable for RITM [8]. - The acquisition of Sculptor Asset Management, which manages $34 billion in assets, adds a new revenue stream through fees, enhancing RITM's financial position [9]. Investor Sentiment - Hedge funds have begun to recognize the value of RITM's dividend offerings, adding 2 million shares in the latest quarter, indicating strong institutional interest [10].

Core Insights - Rithm (RITM) reported a revenue of $2.1 billion for the quarter ended December 2024, marking a year-over-year increase of 196.1% and exceeding the Zacks Consensus Estimate by 70.97% [1] - The earnings per share (EPS) for the same period was $0.60, up from $0.51 a year ago, representing a surprise of 33.33% over the consensus estimate of $0.45 [1] Revenue Breakdown - Interest income was reported at $490.26 million, which is a year-over-year increase of 7.9%, but below the average estimate of $515.93 million [4] - Gain on originated residential mortgage loans, held-for-sale, net was $201.64 million, reflecting a significant year-over-year increase of 105.5% and surpassing the average estimate of $173.93 million [4] - Other revenues totaled $55.41 million, slightly below the estimated $58.85 million [4] - Asset management revenues reached $258.87 million, significantly exceeding the average estimate of $101.17 million [4] - Servicing revenue, net was reported at $1.09 billion, far exceeding the average estimate of $390.39 million [4] Stock Performance - Rithm's shares have returned +4.8% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Rithm Capital Quarterly Supplement SUM OF THE PARTS DISCLOSURE. Any information contained in this presentation about sum of the parts and illustrative valuations is "forward-looking" and utilizes hypothetical data and several management assumptions to provide an illustrative sum of the parts analysis and illustrative valuation estimates for Rithm's potential market valuation. It is important for readers to know that this illustrative analysis is not intended to be a prediction of the performance of Rithm, i ...

Financial Data and Key Metrics Changes - The company reported a GAAP net income of $263 million for Q4 2024, translating to $0.50 per diluted share, with a return on equity of 16% [18] - For the full fiscal year 2024, GAAP net income was $835 million or $1.67 per diluted share, with a 14% return on equity [19] - Earnings available for distribution (EAD) for Q4 was $316 million or $0.60 per diluted share, and for the full year, it was $1.05 billion or $2.10 per diluted share [19][18] - The book value at the end of the year was $12.56, unchanged from the prior year [18] Business Line Data and Key Metrics Changes - NewRez, the mortgage company, reported a pretax income of approximately $280 million for Q4, a 12% increase quarter-over-quarter, and a 20% return on equity [41] - The total servicing portfolio for NewRez reached $844 billion, making it the third-largest servicer in the U.S. [41] - Genesis Capital, acquired in December 2021, increased its origination from $2 billion to $3.6 billion, with EBITDA growing from $40 million to around $100 million [76] Market Data and Key Metrics Changes - The company has a combined asset management of approximately $80 billion, with Rithm managing $45 billion and Sculptor managing $35 billion [71] - The company achieved 76% earnings growth since Q1 2021 [72] Company Strategy and Development Direction - The company aims to grow its third-party asset management business while shrinking its balance sheet [82] - Plans to launch a global energy infrastructure platform to supply power to data centers, indicating a focus on energy transition [85] - The company is exploring changes in its capital structure, including the potential listing of NewRez [115][118] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning, emphasizing the importance of performance in driving growth [78] - The company is focused on maintaining operational efficiency and leveraging technology to enhance financial performance [100] - Management noted that the benign credit cycle may eventually turn, which could impact the business [11] Other Important Information - The company has been actively involved in asset-based finance, identifying it as a significant opportunity in the market [84] - The company is positioned to capitalize on dislocations in the commercial real estate market through Rithm Property Trust [83] Q&A Session Summary Question: Could you give us any updated thoughts on the potential listing of NewRez in 2025? - Management indicated that they are not ready to list NewRez yet but are working on segment reporting to provide clarity on its performance [115] - They emphasized the need to grow the REIT and improve the capital structure before considering a listing [117] Question: Is the timeline for the listing likely to extend beyond 2025? - Management expressed a desire to achieve this in 2024 but acknowledged that it may extend to 2025 depending on growth and structural changes [121]

Rithm (RITM) came out with quarterly earnings of $0.60 per share, beating the Zacks Consensus Estimate of $0.45 per share. This compares to earnings of $0.51 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 33.33%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.43 per share when it actually produced earnings of $0.54, delivering a surprise of 25.58%.Over the last four quarters, t ...