Join        Login             Stock Quote

Mortgage Buys: Ellie Mae & Pennymac

 May 30, 2012 12:51 PM

by Jim Oberweis, Jr., editor The Oberweis Report

The May 24th edition of the Financial Times just ran a cover story titled "The Death of Equities?", reminiscent of the 1979 Business Week cover story of the same title.   

Similar to today, investors were disgusted with the stock market after sustaining serious losses. But as is often the case after periods of large market declines, the doomsayers all turned out to be wrong.

 By the end of the following year, equities finished up 26%. They rose 54% over the next five years and 1,100% over the next 20 years.

Behavioral psychologists have documented the tendency of human beings to over-extrapolate the recent past in predicting the future.  

After large stock market losses, the future often plays out less badly than anticipated. Buying at peak levels of fear (which usually correlate with extremely inexpensive stock valuations) can lead to fat returns for the courageous few.  

Meanwhile, here's a look at two of our featured recommendations, both involved in the mortgage sector: Ellie Mae (ELLI) and PennyMac Mortgage Investment Trust (PMT). Both stock may be appropriate for risk oriented investors. 

Ellie Mae provides business automation software that helps streamline and automate the process of originating and funding new mortgage loans, increasing efficiency, facilitating regulatory compliance and reducing documentation errors.  

The Ellie May network electronically connects 54,000 mortgage professionals to mortgage
lenders, investors and service providers.

During 2011, approximately one-third of the total U.S. residential mortgage applications were initiated over Ellie May solutions.  

In the company's latest reported first quarter, sales increased approximately 97% to $20.9 million from $10.6 million in the first quarter of last year.  

Ellie Mae reported earnings per share of $0.20 in the latest reported first quarter versus a loss in the same quarter of last year. Clients of Oberweis Asset Management own approximately 157,000 shares.

PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets.  

The company has been focused on investing in distressed mortgage assets which are purchased at discounts that reflect their distressed state or perceived higher risk of default.  

In addition to an interesting growth profile, the stock offers investors a quite attractive approximate 12% yield.  

In the company's latest reported first quarter, revenues increased approximately 170% to $46.6 million from $17.3 million in the first quarter of last year.  

PennyMac reported earnings per share of $0.65 in the latest reported first quarter versus $0.35 in the same quarter of last year. Clients of Oberweis Asset Management own approximately 133,000 shares.



Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageTackling China's Debt Problem: Can Debt-Equity Conversions Help?

China’s high and rising corporate debt problem and how best to address it has received much attention read on...

article imageWill Job Growth Kill The Bear-Market Signal For Stocks?

It’s all about jobs now. Actually, it’s always been about jobs. But the stakes are even higher—perhaps more read on...

article imageAutomating Ourselves To Unemployment

In this current era of central planning, malincentives abound. We raced to frack as fast we could for the read on...

article imageFed: Waiting For June… Or Godot?

The Federal Reserve left interest rates unchanged yesterday, as widely expected. But the possibility of a read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.