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3. Mr Cooper Group Inc. (NASDAQ:COOP)

Year-to-Date Performance as of October 11: 44.98%

Forward Price-to-Earnings Ratio: 8.06

Number of Hedge Fund Holders: 37

Mr Cooper Group Inc. (NASDAQ:COOP) is a leading provider of mortgage servicing and origination services in the US, offering a range of mortgage solutions, including loan servicing, loan origination, and default servicing. It has a strong focus on customer service and technology, aiming to streamline the mortgage process and provide exceptional experiences to borrowers.

The company exceeded expectations in the second quarter of 2024, reporting earnings per share of $2.52. Revenue for the quarter reached $583 million, representing a 19.96% increase from a year-ago period. The servicing revenue surged by 37% year-over-year, supported by a record-low delinquency rate of just 1%. This combination of efficient operations, a robust servicing portfolio, and a strong financial position places them in a prime position to capitalize on future growth opportunities within the mortgage servicing sector.

The strategic acquisition of Flagstar’s mortgage operations for $1.4 billion significantly bolstered the company’s servicing business. This deal expanded its servicing portfolio to $1.2 trillion, adding $1.2 billion in mortgage servicing rights. The growing sub-servicing mix, now at 52% of the portfolio, strengthens its market position.

Just recently on October 9, it announced several senior leadership updates to further its digital-first strategy and leverage AI. The leadership changes aim to enhance the company’s technology capabilities and provide a more seamless customer experience.

Mr Cooper Group Inc. (NASDAQ:COOP) is committed to shareholder value by actively repurchasing shares, with a 4% reduction in outstanding shares over the past year and an additional $200 million allocated for future buybacks. As the housing market evolves and interest rates fluctuate, its adaptability and proactive approach will remain crucial for sustaining its leadership in the industry.

Diamond Hill Select Strategy stated the following regarding Mr. Cooper Group Inc. (NASDAQ:COOP) in its Q2 2024 investor letter:

“Among our top individual contributors in Q2 were Amazon, Texas Instruments and Mr. Cooper Group Inc. (NASDAQ:COOP). Mortgage-servicing company Mr. Cooper Group is benefiting from a high interest-rate environment, which is supporting increased profitability in the mortgage-servicing business.”