Magazine article American Banker

Home Loan Stocks Get More Attention

Magazine article American Banker

Home Loan Stocks Get More Attention

Article excerpt

With originations continuing to soar, mortgage banking stocks have getting more attention from Wall Street. Analysts initiated coverage on three last week. The score: one "buy," one "neutral," one "sell."

Gordon Gray at PaineWebber Inc., New York, weighed in with opinions on Fleet Mortgage Group, a "buy," and Countrywide Credit, "neutral." He sees a buying opportunity in Fleet following its recent writedown of servicing rights. On Countrywide he is biding his time, waiting for the market to fully discount an expected slowdown in refinancings. He expects to make Countrywide a "buy" if that should happen.

A |Sell' Rating

At Mabon Securities in San Francisco, Gareth Plank kicked off coverage of Margaretten & Co. with a "sell."

Said Mr. Plank: "It's a fine company, but in retrospect the price on their acquisition of servicing from NationsBank was a bit too lofty. They bought $7 billion with a weighted average coupon of 9.5%. I see a tremendous refinancing drain coming. The premium paid will have to be adjusted downward."

And if rates rise? "Mortgage bank stocks will be shunned by investors in that environment, as they have been historically."

One mortgage company that took some lumps last week was Imperial Credit Industries, Santa Ana Heights, Calif. It was given a "sell" rating by Sy Jacobs, an analyst in New York with Alex. Brown & Sons, Baltimore. Mr. Jacobs had previously been neutral on the stock. The reason for the change: a rising stock price despite a decline in originations. …

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