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Non-QMM REIT Angel Oak Mortgage (AOMR) revealed that it sold $343.4 million of mortgages for just $284.2 million as the company faces short-term headwinds due to market volatility.
In filing the Nov. 18 8-K, a publicly traded company that has sold some residential properties to non-QMM investors – with an average coupon of around 4.5% – and the Purple Orchid Trust.
Total outstanding balances and net book value were $343.4 million and $349.7 million, respectively.
According to a second market player interview with Inside Mortgage Finance, AOMR is ready for a big loss: from 101 to 83, which will hurt them a lot.
On Monday, BofA Securities downgraded Angel Oak Mortgage from “Buy” to “Underperform,” lowering the company’s price objective from $15.50 to $6.50. At press time, AOMR’s stock price fell 6.62% to a new all-time high of $6.21 per share.
According to Benzinga Insights, Angel Oak’s wider credit spread has reduced book value per share (BVPS) while AOMR’s assets are very valuable.
In addition, the violation and dismissal of the securities market have a limited opportunity to obtain permanent, non-monetary income, which has generated money that can be recycled into new purchases.
Although AOMR stocks have outperformed peers and the dividend yield is lower in the fourth quarter, the revenue outlook is lower and he believes that the risk remains on the downside.
We believe AOMR should trade at a discount to its credit-sensitive peers. AOMR’s economic performance has significantly outperformed its credit rating peers and is expected to continue soon.
Reference Source: MPA
