I am the degenerate who was SO WRONG when I took a mortgage on his home to buy shares in this stock when it was trading at $8 (now $3.67, F); so I have a biased interest in making this post; HOWEVER, I also pay regular attention to the stock and its sector. I believe that all the cards are laid out for an explosive move upwards on earnings NEXT TUESDAY (May 10th).
TL;DR - Risk $500 or less for 100 shares. If it spikes after earnings, sell short-dated calls against your position for $0.20+ and lower your cost basis. Then hold and collect dividends and way more profits than I will when my bags get picked up eventually.
If you want to gamble, buy warrants (UWMC-WS) - they're like $11.50 2026 call options.
- The shares pay a dividend of $0.10 per quarter, the yield is currently 10.8%(!).
- Analyst EPS is $0.08, but the rapid rise in interest rates has massively increased the value of their servicing book (MSRs). I think we'll see a surprise EPS higher than $0.20.
- An EPS beat will raise analyst expectations for FY22 and FY23 and should remove any doubt that the dividend is sustainable.
- Short interest is MASSIVE @ 28% of the Free Float (or higher, as buybacks have been regular and ongoing throughout Q1 and Q2). They need to cover those shares.
- The company grew originations Q4 vs Q1 last year, despite every competitor of theirs declining. The total addressable market is huge, they have lots of growth opportunity ahead, despite headwinds.
- Institutional ownership has been increasing steadily.
- Virtuous cycle with their clients (independent mortgage brokers) and their market share.
- The CEO owns 94% of the company and also gets paid dividends on his 1.5B shares.
- The float size is a problem for large institutional investors.
- There's a lot of uncertainty in the housing and financials markets right now.
- Interest rates are still rising rapidly, leading to margin pressure and volatility.
- Revenues are declining off of record years due to refinancing activity drying up.
Positions: I am drowning in shares - underwater on 120k+ shares and more options than I care to admit.