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Core Insights - Cherry Hill Mortgage (CHMI) reported quarterly earnings of $0.09 per share, missing the Zacks Consensus Estimate of $0.11 per share, representing an earnings surprise of -18.18% [1] - The company posted revenues of $3.3 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 22.22% [2] - Cherry Hill shares have declined approximately 11% year-to-date, contrasting with the S&P 500's gain of 15.6% [3] Earnings Performance - Over the last four quarters, Cherry Hill has exceeded consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is $0.12 on $3 million in revenues, and $0.50 on $10.4 million in revenues for the current fiscal year [7] Market Outlook - The company's stock performance in the near term will largely depend on management's commentary during the earnings call [3] - The Zacks Rank for Cherry Hill is currently 3 (Hold), indicating expected performance in line with the market [6] - The REIT and Equity Trust industry, to which Cherry Hill belongs, is currently in the top 37% of Zacks industries, suggesting a favorable industry outlook [8]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported GAAP net income applicable to common stockholders of $2 million, or $0.05 per diluted share, with comprehensive income of $4.5 million, or $0.12 per diluted share [14][15] - Book value per common share increased to $3.36 from $3.34 as of June 30, 2025, reflecting a slight growth [5][15] - Earnings available for distribution (EAD) were $3.3 million, or $0.09 per share [15] Business Line Data and Key Metrics Changes - The MSR portfolio had an unpaid principal balance (UPB) of $16.2 billion and a market value of approximately $219 million, representing about 41% of equity capital [10] - The RMBS portfolio stood at approximately $782 million, up from $756 million in the previous quarter, indicating a strategic shift towards lower and middle-of-the-coupon stack mortgages [12] - The net interest spread for the RMBS portfolio was approximately 2.87%, higher than the previous quarter, driven by increased asset purchases [12] Market Data and Key Metrics Changes - The 10-year yield ended the quarter marginally lower at 4.15%, with mortgage rates hovering around 6% [4][7] - The average net CPR for the MSR portfolio was approximately 5.9%, consistent with the previous quarter, while the RMBS portfolio's prepayment speeds held steady at 6.1% CPR [10][11] Company Strategy and Development Direction - The company adjusted its dividend to $0.10 per share, aligning it with earnings power for sustainability [6] - A strategic partnership with Real Genius LLC was highlighted, focusing on enhancing the digital mortgage experience, which is expected to accelerate growth as mortgage rates decrease [6][8] - The company aims to monitor the economic environment closely while seeking investment opportunities that are accretive to its business [8] Management's Comments on Operating Environment and Future Outlook - Management noted a reduction in macro volatility and anticipated continued easing from the Fed, which could lead to higher prepayment speeds for high coupon mortgages [4][5] - The company expressed optimism regarding the potential for accelerated growth due to lower mortgage rates, which may encourage refinancing and home purchases [8] Other Important Information - Financial leverage remained consistent at 5.3 times, with $55 million of unrestricted cash, indicating a solid liquidity profile [5] - Operating expenses for the quarter were reported at $3.8 million [16] Q&A Session Summary Question: Regarding the Real Genius partnership, was it opportunistic, or can more partnerships be expected? - Management indicated that while they are not prepared to forecast, they are open to exploring interesting and creative opportunities that align with their skill set [19][20] Question: Thoughts on expenses going forward, particularly G&A and compensation? - Management acknowledged a 12.5% sequential rise in G&A and compensation, attributing it to personnel changes and professional fees, but anticipates costs to decrease moving forward [25][28] Question: Update on current book value? - Management reported that the book value per share as of October 31 was up about 1.2% from September 30, before any fourth-quarter dividend accrual [33]

Financial Performance - The company reported a total quarterly economic gain of 3.6%[5] - GAAP net income was $0.05 per share[5] - Earnings Available for Distribution (EAD) was $0.09 per share[5] - Book value per common share increased by 0.6% to $3.36, net of the quarterly dividend[7] - A dividend of $0.10 per share was declared and paid[7] Portfolio Metrics - The leverage ratio for the aggregate portfolio was 5.3x[6] - Net interest spread for RMBS was 2.9%[6] - RMBS experienced a Constant Prepayment Rate (CPR) of 6.1%[6] - MSRs had a net CPR of 5.9%[6] MSR Portfolio - Investments in MSRs totaled $218.7 million related to approximately $16.2 billion in UPB of underlying Fannie Mae and Freddie Mac loans as of September 30, 2025[20] - Recapture rate on conventional MSRs was 0.3% in the quarter[20] RMBS Portfolio - The RMBS portfolio had a fair market value of $781.539 million and a par amount of $781.032 million[26] - The weighted average coupon (GWAC) for the total RMBS portfolio was 5.8%[26] - The weighted average loan age (WALA) for the total RMBS portfolio was 25.39 months[26] - The RMBS portfolio experienced a 1-month CPR of 6.5% and a long-term CPR of 11.0%[26] Financing and Hedging - The average REPO cost was 4.3% with a weighted average days remaining to maturity of 27 days[35] - The company has borrowings with 14 financing counterparties[35] - The weighted average "haircut" on repurchase agreements was 4.4%[35] - The company utilized payer swaps with a total notional value of $712.7 million and a weighted average pay rate of 1.41%[38] - The company utilized receiver swaps with a total notional value of $116 million and a weighted average receive rate of 3.42%[38]

Financial Performance - Cherry Hill reported GAAP net income applicable to common stockholders of $2.0 million, or $0.05 per share for Q3 2025[6] - Earnings available for distribution (EAD) attributable to common stockholders were $3.3 million, or $0.09 per diluted share[5] - Comprehensive income attributable to common stockholders was $4.48 million for Q3 2025[9] Dividends - The declared regular common dividend was $0.10 per share, resulting in an annualized common dividend yield of 17.0%[6] Portfolio Metrics - The common book value per share was $3.36 as of September 30, 2025[6] - The aggregate portfolio leverage stood at 5.3x as of September 30, 2025[6] - The unpaid principal balance for the MSR portfolio was $16.2 billion, with a carrying value of $218.7 million[10] - The RMBS portfolio had a book value of approximately $1.2 billion, with a weighted average coupon of 4.98%[11] Risk Management - The company held interest rate swaps with a notional amount of $828.7 million to mitigate duration risk[12] Strategic Goals - The company is committed to strategically growing its portfolio while delivering attractive risk-adjusted returns for shareholders[4]

Financial Performance - Net income applicable to common stockholders was $1,955 thousand for the three months ended September 30, 2025, a recovery from a loss of $14,792 thousand in the same quarter of 2024[51]. - Comprehensive income for the three months ended September 30, 2025, was $7,076 thousand, compared to $3,956 thousand in the same period of 2024, indicating a positive trend[54]. - Net income for the nine months ended September 30, 2025, was a loss of $916,000 compared to a profit of $396,000 for the same period in 2024[58]. - The company reported a net operating loss (NOL) of $84.7 million as of September 30, 2025, which can be carried forward indefinitely[243]. - The provision for corporate business taxes for the nine months ended September 30, 2025, is $1,578, reflecting an effective tax rate of 238.5%[242]. Assets and Liabilities - Total assets increased to $1,521,487 thousand as of September 30, 2025, up from $1,491,175 thousand at December 31, 2024, representing a growth of 2.0%[48]. - Total liabilities increased to $1,286,028 thousand as of September 30, 2025, compared to $1,257,553 thousand at December 31, 2024, an increase of 2.3%[48]. - The accumulated deficit increased to $(271,979) thousand as of September 30, 2025, from $(249,643) thousand at December 31, 2024, indicating a growing financial challenge[48]. - Cash and cash equivalents increased to $55,447 thousand as of September 30, 2025, compared to $46,313 thousand at December 31, 2024, a growth of 19.5%[48]. - Total cash and cash equivalents and restricted cash at the end of the period was $64,651,000, up from $54,654,000 in the previous year[58]. Income and Revenue - Net interest income improved to $3,300 thousand for the three months ended September 30, 2025, compared to $109 thousand for the same period in 2024, marking a significant increase[51]. - Interest income rose to $15,643 thousand for the three months ended September 30, 2025, up from $14,327 thousand in the same quarter of 2024, reflecting a year-over-year increase of 9.2%[51]. - Servicing fee income for the nine months ended September 30, 2025, was $32,670,000, which is consistent with the previous year's figure of $36,921,000, showing a decrease of about 11.5%[106]. - The company reported a realized loss on RMBS of $10,496 thousand for the three months ended September 30, 2025, compared to a loss of $7,987 thousand in the same period of 2024[51]. - The company reported a comprehensive income of $7,076,000 for the three months ended September 30, 2025, compared to $3,956,000 for the same period in 2024, indicating an increase of about 78.5%[106]. Stock and Dividends - The company declared common dividends of $0.15 per share during the reporting period[58]. - Dividends paid during the nine months ended September 30, 2025, were $22,497,000, compared to $20,833,000 in 2024[58]. - The Company has authority to issue up to 100,000,000 shares of preferred stock, with 2,781,635 shares classified as Series A and 1,604,103 shares as Series B[138]. - The Series A Preferred Stock pays cumulative cash dividends at a rate of 8.20% per annum, equivalent to $2.05 per share[139]. - The Series B Preferred Stock has an initial dividend rate of 8.250% per annum, equivalent to $2.0625 per share, transitioning to a floating rate after April 15, 2024[140]. Investments and Market Risks - The Company is subject to credit and market risks primarily related to its investments in RMBS and Servicing Related Assets[69]. - The Company’s investments in MSRs are recorded at fair value, with fluctuations reported in net income[79]. - The Company’s derivative transactions include swaps and TBAs, primarily for interest rate risk management purposes[82]. - The Company’s two reportable segments are investments in RMBS and investments in Servicing Related Assets, which are the primary revenue-generating assets[103]. - The Company has determined that no reserves for unrecoverable advances are necessary as of September 30, 2025, and December 31, 2024[81]. Share-Based Compensation - The Company recognized share-based compensation expenses of approximately $226,000 and $231,000 for the three-month periods ended September 30, 2025, and September 30, 2024, respectively[162]. - As of September 30, 2025, there was approximately $861,000 of total unrecognized share-based compensation expense related to unvested LTIP-OP Units and RSUs, expected to be recognized over the next two years[162]. - The 2023 Equity Incentive Plan allows for the issuance of up to 2,830,000 shares of common stock through various equity-based awards[149]. - The Company granted a total of 181,942 restricted stock units (RSUs) under the 2023 Plan on May 30, 2024, with each RSU vesting ratably over a three-year period[155]. - The Company reported a net loss of $12,444,000 for the same period in 2024, compared to a net income of $4,515,000 for the three months ended September 30, 2025[167]. Derivatives and Hedging - The notional amount of interest rate swaps decreased to $828,700,000 as of September 30, 2025, from $1,171,750,000 at the end of 2024[176]. - The total notional amount of derivatives as of September 30, 2025, was $435,425,000, down from $809,275,000 at the end of 2024[176]. - The company reported a realized loss on derivatives of $15,254,000 for Q3 2025, compared to a loss of $16,831,000 in Q3 2024[186]. - The fair value of interest rate swaps as of September 30, 2025, was $13,676,000, with a weighted average pay rate of 1.82% and receive rate of 4.27%[176]. - The company utilized U.S. Treasury futures with a total notional amount of $180,400,000 as of September 30, 2025[182].

Core Insights - Cherry Hill Mortgage Investment Corp. (CHMI) is positioned to benefit from anticipated Federal Reserve rate cuts through 2026, making it a noteworthy investment opportunity [1][5] Company Overview - Cherry Hill operates as a dual-sleeve strategy REIT, with a portfolio that includes 77% agency residential mortgage-backed securities (RMBS) and 23% mortgage servicing rights (MSRs) as of Q2 2025 [2] - The business model is sensitive to market interest rate changes, which can impact asset valuation positively in favorable conditions [3] Risk Management - Cherry Hill actively manages interest rate risks by utilizing a natural hedging relationship between MSRs and RMBS to mitigate volatility [3] Financial Performance - The company has fully internalized its operating structure, aiming for better alignment between management incentives and shareholder interests, which is expected to lead to annualized cost savings [4] - Cherry Hill anticipates core earnings growth from $12.1 million in 2024 to $20.2 million in 2026, supported by a strong dividend yield of 16.2% [4] Market Opportunities - With the Fed's first rate cut initiated for 2025, further cuts are expected, which will lower borrowing costs, improve refinancing costs, and enhance asset valuations for Cherry Hill [5] - Currently, Cherry Hill trades at a discount across several key valuation metrics, presenting an opportunity for investors before broader market recognition [5]

Core Viewpoint - Four real estate stocks have shown significant declines in momentum despite the Federal Reserve entering a rate-cutting cycle, indicating persistent challenges in the sector's risk appetite and investor sentiment [2][9]. Group 1: Stock Performance - Cherry Hill Mortgage Investment Corp. (CHMI) saw its momentum score decrease from 10.68 to 10.50, a drop of 0.18 percentile points, with a year-to-date decline of 3.82% and a 30.58% drop over the past year [8]. - National Storage Affiliates Trust (NSA) experienced a momentum percentile slip from 10.68 to 9.35, a decrease of 1.33 points, with an 18.98% decline year-to-date and a 37.14% drop over the year [8]. - Sachem Capital Corp. (SACH) also saw its momentum score fall from 10.68 to 9.35, mirroring NSA's decline, with an 11.11% year-to-date drop and a 55.56% decline over the year [8]. - Smith Douglas Homes Corp. (SDHC) had its ranking decrease from 10.11 to 9.01, a reduction of 1.10 percentile points week-on-week, reflecting uncertainty around housing starts and affordability [7]. Group 2: Market Context - The underperformance of these four realty stocks is notable as rate reductions by the Fed typically stimulate the real estate sector by lowering capital costs and boosting demand [9]. - The decline in momentum rankings suggests that company-specific risks, such as credit quality and supply imbalances, are currently outweighing macro-level benefits [9].

Core Viewpoint - Cherry Hill Mortgage Investment Corporation has declared a dividend of $0.10 per share for the third quarter of 2025, payable on October 31, 2025, to shareholders of record as of September 30, 2025 [1] Company Summary - The Board of Directors of Cherry Hill Mortgage Investment Corporation has announced a cash dividend of $0.10 per share on its common stock for Q3 2025 [1] - In addition to the aforementioned dividend, the company has also declared a dividend of $0.5125 per share [1]

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, which sparked a long-lasting interest in markets and the economy [1] - Recently, the author has been combining long stock positions with covered calls and cash secured puts, indicating a strategic approach to investment [1] - The investment philosophy is fundamentally long-term, with a primary focus on REITs and financials, along with occasional insights on ETFs and other stocks influenced by macroeconomic trends [1]