A minority shareholder at LoanDepot has called for the company to rethink its management and consider courting acquirers, citing concerns around a long period in which it has traded just above $1 per share.
Randian Capital also specifically recommended a new approach to the company's mortgage servicing rights portfolio, which the company reported had an unpaid principal balance of more than $120 billion in
That portfolio "may command a premium value in a strategic transaction," Randian suggested in a letter to LoanDepot's board while pointing to
Randian's letter asks the board to reconsider LoanDepot's current strategies and top executive Anthony Hsieh's leadership.
"While the mortgage industry has faced significant macroeconomic headwinds, those factors alone do not explain LoanDepot's prolonged underperformance," the investor wrote. "Many competitors have adapted their cost structures and strategic positioning. LoanDepot has yet to demonstrate a sustainable path."
Randian Capital reports it has exposure to over 250,000 shares of LoanDepot. Hsieh holds far more at over 100 million shares, according to a
A LoanDepot spokesperson declined to comment on the letter.
The company's current conditions
LoanDepot's approach to its servicing portfolio, which the company has gradually grown from $117 billion in UPB during last year's first quarter, has been to use it for the recapture and retention of lending customers.
"We have focused on fully leveraging our unique assets and strategy, including one of the most differentiated customer acquisition and retention business models in the marketplace," Hsieh said during the company's first-quarter earnings call.
LoanDepot has reported relatively high recapture and retention rates of 73% and 75%, representing an uptrend from a year ago, when the company's respective numbers were 65% and 67%.
(The company calculates consumer-direct recapture based on organic refinances of loans on the same property with full repayment in situations where the company is consistently the lender, divided by the servicing portfolio's UPB. Due to a lag in when external data is available the latest numbers were considered current as of April 20. The other metric is calculated based on the origination amount sold servicing retained during a quarter divided by the total sold volume.)
In addition to learning on servicing for customer recapture and retention, company also plans to use its
"We are now three quarters into the rebuild of our company and I believe that all of our hard work will soon be reflected in our financial performance," Hsieh said during the company's earnings call. "We spent the most recent quarter focused on a series of long-term growth initiatives that we expect will accelerate our momentum in coming months."
Broader market activity
Some other large nonbank mortgage companies also have shares trading in the single digits, including United Wholesale Mortgage, Fannie Mae and Freddie Mac, the last two of which are government-sponsored enterprises held in conservatorship.
Prolonged trading below $1 per share
Relatively lower stock prices can generate analyst and investor interest if there's confidence that a company's shares have upside potential. On a scale on which 1 is a buy and 5 is a sell, S&P Capital IQ's analyst consensus during midday trading was that LoanDepot's stock was at 3.75.
There have been multiple servicing-related acquisitions due in part to market conditions that have increased recapture's importance, notably a recent bidding war between UWM and retail home mortgage giant CrossCountry over Roundpoint Mortgage Servicing's owner, Two Harbors.
