Industry Overview - The mortgage REIT (mREIT) industry faced volatility in 2025 due to macroeconomic uncertainty, with the average rate on a 30-year fixed-rate mortgage starting at 6.72% and remaining in the upper-6% range for most of the year [1] - By December 2025, the Fed implemented a 25-basis-point rate cut, reducing the average mortgage rate to 6.21%, down from a peak of 7.05% in January 2025 [2][9] - The mREIT industry showed signs of recovery as interest rates stabilized and economic conditions improved, with expectations for further declines in mortgage rates in 2026 [3][4] Market Dynamics - U.S. economic growth is projected to accelerate in 2026, with moderating inflation and decreasing unemployment, contributing to lower mortgage rates and favorable refinancing activity [4] - Mortgage spreads have been narrowing as volatility decreases, which is expected to improve book values for mREITs as asset prices rise [5] Investment Opportunities - Investors are encouraged to consider mREIT stocks such as Two Harbors Investments Corp (TWO), NexPoint Real Estate Finance (NREF), and Ellington Financial Inc. (EFC) for potential strong returns in 2026, given their attractive dividend yields and growth prospects [3][6] - The selection of these stocks was based on criteria including an expected earnings growth rate of over 5% for 2026 and a dividend yield exceeding 10% [7] Company Insights Two Harbors Investments Corp (TWO) - TWO's portfolio is primarily composed of residential mortgage-backed securities (RMBS) with a 71.1% exposure to Agency RMBS as of September 30, 2025 [10] - The company reported a net interest loss of $63.5 million for the nine months ended September 30, 2025, an improvement from a loss of $122.8 million in the prior year [12] - TWO's current dividend yield is 12.01%, and it has raised its dividend once in the past five years, with earnings estimates suggesting year-over-year increases of 114.5% for 2025 and 6.7% for 2026 [12][13] NexPoint Real Estate Finance (NREF) - NREF focuses on originating and investing in first mortgage loans and has seen its net interest income rise to $36.1 million in the first nine months of 2025, up from $6.4 million the previous year [18][19] - The company has a current dividend yield of 13.73% and has increased its dividend three times in the past five years, with earnings estimates indicating year-over-year increases of 2.2% for 2025 and 8.1% for 2026 [19] Ellington Financial Inc. (EFC) - EFC invests in a diverse range of financial assets, including residential and commercial mortgage loans, and has a strong momentum in its securitization platform [21] - The company maintains a disciplined approach to risk management, with a current dividend yield of 11.30% and three dividend increases in the past five years, alongside earnings estimates suggesting year-over-year increases of 25.3% for 2025 and 1.6% for 2026 [23]

Core Viewpoint - Two Harbors Investment Corp. CAL 30 (TWOD) is identified as a baby bond from the mortgage REIT (mREIT) Two Harbors (TWO) [1] Group 1: Company Overview - Two Harbors Investment Corp. operates in the mortgage REIT sector, focusing on providing returns through its financial instruments [1] - The company has been analyzed previously, with discussions on its pricing and investment potential [1] Group 2: Investment Strategy - Binary Tree Analytics (BTA) aims to enhance transparency and analytics in capital markets, particularly focusing on closed-end funds (CEFs), exchange-traded funds (ETFs), and special situations [1] - BTA has over 20 years of investment experience, emphasizing a strategy that seeks high annualized returns with low volatility [1]

Core Viewpoint - Two Harbors Investment Corp. CAL 30 (TWOD) is identified as a baby bond from the mortgage REIT (mREIT) Two Harbors (TWO) [1] Group 1: Company Overview - Two Harbors Investment Corp. operates in the mortgage REIT sector, focusing on providing returns through capital markets instruments [1] - The company has been covered previously, indicating ongoing interest and analysis in its financial instruments [1] Group 2: Investment Strategy - Binary Tree Analytics (BTA) aims to deliver high annualized returns with a low volatility profile, focusing on closed-end funds (CEFs), exchange-traded funds (ETFs), and special situations [1] - BTA has over 20 years of investment experience, emphasizing a strong background in finance [1]

Core Viewpoint - Class Action Attorney Juan Monteverde's firm, Monteverde & Associates PC, is investigating the sale of Two Harbors Investment Corp. to UWM Holdings Corporation, questioning the fairness of the deal where Two Harbors shareholders will receive 2.3328 shares of UWM Class A common stock for each share of Two Harbors common stock [1]. Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has successfully recovered millions for shareholders [1]. - The firm operates from the Empire State Building in New York City and specializes in class action securities litigation with a strong track record in trial and appellate courts, including the U.S. Supreme Court [2]. Legal Context - The firm is currently investigating the transaction involving Two Harbors Investment Corp. and is offering free consultations for shareholders who have concerns regarding the deal [3].

Group 1: UWM and TWO Merger - United Wholesale Mortgage (UWM) has entered into a definitive merger agreement to acquire Two Harbors Investment Corp. (TWO) in an all-stock transaction valued at $1.3 billion in equity [5] - This acquisition will enhance UWM's servicing book from $216 billion to $422 billion, moving it from a 18 ranking to 8 in the industry [9] - The merger is part of a broader trend of consolidation in the mortgage industry, with UWM aiming to strengthen its position in both origination and servicing [10][11] Group 2: Industry Trends and Insights - The mortgage industry is experiencing a multi-dimensional restructuring focused on technology-enabled scale and lifecycle monetization, which is essential for resilience across economic cycles [10] - Recent legislative changes, specifically credit trigger legislation, will restrict third-party marketing to borrowers, allowing only originators and servicers to contact them [12] - Major players like UWM and Rocket are strategically acquiring servicing capabilities to maintain direct contact with borrowers, especially during refinancing opportunities [13][14] Group 3: Market Dynamics and Economic Indicators - The capital markets are currently in a wait-and-see mode, with interest rates remaining stable and mortgage bonds trading mixed [17] - Recent economic reports showed lower-than-expected inflation rates, with the November CPI indicating a core increase of 2.6% year-over-year [18] - Upcoming economic data releases, including jobless claims and manufacturing reports, are anticipated to influence market sentiment and investor behavior [18]

Group 1 - The Ademi Firm is investigating TWO (NYSE: TWO) for possible breaches of fiduciary duty and other legal violations related to its transaction with UWM Holdings Corporation [1] - In the transaction, TWO shareholders will receive 2.3328 shares of UWMC Class A Common Stock for each share of TWO common stock, equating to a value of $11.94 per share based on UWMC's closing price as of December 16, 2025 [2] - Upon completion of the transaction, UWM shareholders will own approximately 87% of the combined company, while TWO shareholders will own approximately 13% [2] Group 2 - The transaction agreement imposes significant penalties for TWO if it accepts competing bids, which raises concerns about the conduct of the TWO board of directors and their fiduciary duties to all shareholders [3] - The investigation focuses on whether the board is acting in the best interests of all shareholders, particularly in light of substantial benefits for TWO insiders as part of the change of control arrangements [2][3]

Group 1 - Two Harbors Investment (TWO) is set to be acquired by UWM Holdings Corporation (UWMC), which is the publicly traded indirect parent of United Wholesale Mortgage, the leading mortgage lender in America [1] - The acquisition reflects a strategic move in the mortgage lending sector, potentially enhancing UWM's market position and operational capabilities [1] Group 2 - The article does not provide any specific financial metrics or performance indicators related to the acquisition or the companies involved [2][3]

Core Viewpoint - Two Harbors Investment Corp. (TWO) shares experienced a significant increase of 11.25 percent following the announcement of its acquisition by UWM Holdings Corporation in an all-stock deal valued at approximately $1.3 billion [1]. Group 1: Stock Performance - The stock price of Two Harbors rose to $11.02 from a previous close of $9.91 on the New York Stock Exchange [2]. - Shares opened at $10.84 and fluctuated within a range of $10.73 to $11.24 during the trading day [2]. - The trading volume reached about 13.53 million shares, significantly higher than the average volume of approximately 1.59 million shares [2]. Group 2: Market Position - Two Harbors is currently trading near the upper end of its 52-week range, which is between $9.30 and $14.28 [2].

Group 1 - Halper Sadeh LLC is investigating the fairness of the sale of Two Harbors Investment Corp. to UWM Holdings Corporation [1] - The transaction involves an exchange of 2.3328 shares of UWM Class A Common Stock for each share of Two Harbors common stock [1] - The law firm encourages Two Harbors shareholders to explore their legal rights and options regarding the sale [1]

Group 1: Toro Co Performance - Toro Co reported quarterly earnings of 91 cents per share, exceeding the analyst consensus estimate of 87 cents per share [1] - The company achieved quarterly sales of $1.066 billion, surpassing the analyst consensus estimate of $1.048 billion [1] - Following the earnings report, Toro's shares rose by 7% to $77.82 [1] Group 2: Other Notable Stock Movements - DBV Technologies SA shares increased by 35.5% to $24.36 after meeting primary endpoints in the Phase 3 VITESSE trial [3] - Udemy Inc gained 26.5% to $6.79 due to an all-stock merger agreement with Coursera [3] - Kodiak Sciences Inc jumped 16.7% to $28.16 after announcing a public offering of common stock [3] - Hut 8 Corp rose 16.3% to $42.88 following a partnership to accelerate AI infrastructure deployment and a $7.0 billion lease agreement [3] - Canopy Growth Corp increased by 16.2% to $2.13 amid reports of potential reclassification of marijuana [3] - Recursion Pharmaceuticals Inc gained 13.2% to $4.76 after an upgrade from JP Morgan [3] - Two Harbors Investment Corp surged 13.2% to $11.21 due to an acquisition announcement [3] - Quantumscape Corp gained 7.7% to $11.66 after signing a joint development agreement with a top-10 global automaker [3] - Jabil Inc reported better-than-expected earnings, leading to a 7% increase in shares to $227.50 [3]