Core Insights - T2 Metals Corp is participating in two significant mining conferences in Munich, Germany, to showcase its North American gold and copper assets [2][4] - The MK Investment Conference on October 1st is an exclusive event aimed at connecting resource and technology companies with strategic investors [3] - The Munich Mining Conference on October 3rd and 4th will feature over 100 companies and attract an audience of more than 1000 investors from Europe [5] Company Assets - T2 Metals will present its key projects, including: - **Shanghai Project, Yukon**: A newly acquired gold and silver project located in the Tombstone Gold Belt, near other significant assets [6] - **Sherridon Project, Manitoba**: A historical mining area in the Flin Flon Greenstone Belt, containing two former mines and five historical copper resources, situated 70 km from HudBay Minerals' Lalor gold mine [6] - **Cora Project, Arizona**: A porphyry copper target known for its thick intersections of oxide copper and a notable geophysical anomaly [7] Company Overview - T2 Metals Corp is focused on enhancing shareholder value through exploration and discovery in the copper and precious metals sector, with a particular emphasis on the Sherridon, Shanghai, and Cora projects [8]

Group 1 - Two Harbors Investment's preferred shares have shown mixed performance compared to the iShares Preferred and Income Securities ETF in 2025 [1] - The Series A shares currently offer a specific yield, although the exact figure is not provided in the text [1] - The investment strategy includes a focus on REITs, preferred stocks, and high-yield bonds, indicating a long-term fundamental approach [1]

Core Viewpoint - T2 Metals Corp has initiated exploration activities at the Shanghai gold-silver project located in Yukon's Tombstone Gold Belt, targeting high-priority gold and silver anomalies to leverage the geological potential of the area [1][2]. Group 1: Project Overview - The Shanghai project spans 27.4 square kilometers and is strategically located 12 km west of Hecla Mining's Keno Hill silver mine, amidst several other significant gold deposits [1][2]. - The Tombstone Gold Belt is recognized as one of North America's most active mining districts, with recent exploration efforts indicating potential for major gold discoveries [2][19]. Group 2: Exploration Activities - The initial field program will utilize a helicopter-supported team to collect rock chip and soil samples around previously identified geochemical anomalies [4]. - Historical workings targeting high-grade silver-base metal veins will also be sampled, with notable past results including 9.1 m at 1182.8 g/t Ag, 8.2% Pb, and 7.2% Zn [5][18]. Group 3: Target Areas - Exploration will focus on two main zones: Zone 1, which includes the Keno Hill Quartzite and historical silver mine workings, and Zone 2, which shows multi-element and gold soil anomalies suggesting intrusion-related gold mineralization [7][10]. - Historical trenching has revealed high-grade mineralization, with samples showing 1.1 oz/t Au and 790.5 oz/t Ag, indicating significant potential for Keno Hill-style polymetallic mineralization [9][8]. Group 4: Infrastructure and Logistics - The proximity of the Shanghai project to existing infrastructure and other mining operations facilitates efficient exploration logistics, with a Class 3 permit already in place for immediate drilling and camp establishment [6][4]. - The project is held under an option agreement with noted explorer Shawn Ryan, enhancing its credibility and potential for discovery [6][28].

Core Viewpoint - T2 Metals Corp has secured an option to acquire the Shanghai gold-silver project in Yukon's Tombstone Gold Belt, a region known for its rich mineral potential and proximity to advanced mining projects [1][4]. Company Summary - T2 Metals Corp signed an Option Agreement to earn a 100% interest in the 27.4 sq km Shanghai project located in the Mayo Mining District, Yukon Territory [1]. - The project is strategically positioned 12 km west of Hecla Mining's Keno Hill silver mine and near several resource-stage gold projects [1][6]. - The company aims to enhance its portfolio by acquiring high-potential gold projects, with the Shanghai project being held by renowned explorer Shawn Ryan for over 20 years [5][6]. - T2 Metals plans to conduct additional surface sampling and local geophysics, followed by drilling in 2026 [13]. Industry Summary - The Tombstone Gold Belt is recognized as one of North America's most active and gold-rich mining districts, with significant exploration activity from various companies [4][28]. - Recent exploration efforts in the region have indicated the potential for major new gold discoveries, with T2 Metals joining the search supported by Shawn Ryan, a successful explorer in the Yukon [6][20]. - The geological setting of the Shanghai project is similar to major discoveries in the area, which enhances its exploration potential [7][9]. - The project has a Class 3 permit that allows for drilling, road construction, and camp installation, facilitating immediate exploration activities [2][13]. Financial Terms - T2 Metals will acquire the Shanghai project for a total consideration of $500,000 in cash and 3,000,000 common shares, with payments made over a seven-year period [14]. - The company is required to incur a minimum of $1,800,000 in exploration expenditures over six years, including an initial $100,000 by November 15, 2026 [18].

Core Insights - The individual has a B.Tech degree in Mechanical Engineering and nearly twenty-five years of experience in the oil and gas sector, primarily in the Middle East [1] - The investment strategy is informed by traits of efficiency, carefulness, and discipline developed through professional experience [1] - There is a sustained interest in U.S. equity markets, focusing on technology, energy, and healthcare sectors [1] - The investment approach has evolved from growth investing to a blend of value and growth, emphasizing the understanding of business economics and competitive advantages [1] - The individual believes in the importance of allowing time and compounding to enhance investment returns, particularly in high-quality businesses [1] - A moderately conservative orientation is adopted, with a focus on minimizing downside risk as retirement approaches [1] - Recent rebalancing towards income-generating assets such as dividend-paying equities and REITs reflects a shift in investment priorities [1] - Investing is viewed as a means to achieve peace of mind, not just high returns [1] - The individual joined Seeking Alpha to engage with a community of investors interested in real-world business fundamentals and intelligent investing [1] - There is a commitment to investing in ecologically sensitive businesses, as represented by the chosen icon [1]

Core Viewpoint - Two Harbors Investment (TWO) experienced a significant decline in book value (BV) during Q2 2025, attributed to legal losses and hedging decisions, leading to a recommendation of "hold" on shares [1][8][10]. Performance Summary - The actual quarterly BV decrease for TWO was 17.2%, which was worse than the projected 14.8% decline, indicating a severe underperformance [2][8]. - A unique legal dispute with the previous external manager negatively impacted TWO's BV during the quarter [2][10]. - Hedging decisions made by TWO had a negative effect on BV but positively influenced core earnings/EAD [3][7]. Portfolio Management - TWO maintained the size of its on-balance sheet fixed-rate agency MBS/investment portfolio, contrary to expectations of asset shedding due to legal issues [4][10]. - The company made bulk purchases of $6.4 billion in MSRs, resulting in a $2.0 billion increase in UPB, which was contrary to the anticipated decrease [5][10]. - The derivatives sub-portfolio underperformed expectations, primarily due to the lack of asset sales and an increase in the hedging coverage ratio from 77% to 85% [6][14]. Earnings Performance - Core earnings/EAD for TWO modestly outperformed expectations, driven by lower net interest expenses and higher net servicing income [7][8]. - The reported core earnings were $29.594 million, exceeding the projected $24 million, marking a 23.48% beat [18]. Valuation and Recommendations - TWO's current valuation is deemed appropriate, with a hold recommendation due to the ongoing legal matters and the need for spread stabilization [22][23]. - The company’s dividend yield stands at 15.45%, with a payout ratio of 107% [20].

Group 1 - Two Harbors Investment Corp. is a mortgage REIT that has issued a baby bond known as CAL 30 (NYSE: TWOD) [1] - The article discusses the recent financial performance of Two Harbors, highlighting its focus on providing transparency and analytics in capital markets [1] - Binary Tree Analytics 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]

Company Overview - Two Harbors Investments Corp (TWO) is currently rated with a Zacks Rank 1 (Strong Buy) and has a Value grade of A, indicating strong potential for value investors [4][6] - The stock has a P/E ratio of 7.8, which is lower than the industry average P/E of 8.06, suggesting it may be undervalued [4] Valuation Metrics - TWO's Forward P/E has fluctuated between a high of 191.36 and a low of -21.91 over the past 12 months, with a median of 14.53 [4] - The P/B ratio for TWO is 0.7, which is attractive compared to the industry's average P/B of 1.02, indicating a favorable valuation [5] - Over the past 52 weeks, TWO's P/B has ranged from a high of 0.97 to a low of 0.66, with a median of 0.81 [5] Investment Outlook - The combination of TWO's strong earnings outlook and favorable valuation metrics suggests that the stock is likely being undervalued at the moment, making it an impressive value stock [6]

Financial Data and Key Metrics Changes - The company experienced a total economic return of negative 14.5% for the second quarter, and negative 1.4% excluding a loss contingency accrual of $1.92 per share [5][16] - The book value decreased to $12.14 per share, reflecting the impact of the loss contingency accrual [16] - A comprehensive loss of $221.8 million or $2.13 per share was reported, which would have been $21.9 million or 21¢ per share without the accrual [16] Business Line Data and Key Metrics Changes - First lien originations increased to $48 million UPB in Q2, up 68% from $29 million UPB in Q1, outpacing the nationwide trend of 16% [8] - Second liens brokered amounted to $44 million UPB, with the company beginning to originate second liens in its own name [9] Market Data and Key Metrics Changes - The 30-year fixed mortgage rate rose from 6.6% to a high near 6.9%, stabilizing in the 6.7% to 6.8% range by the end of the quarter [6][7] - The volume of MSR available in the bulk market has decreased by about 30% year over year [26] Company Strategy and Development Direction - The company is enhancing its direct-to-consumer originations platform to recapture loans in its portfolio that may refinance [8] - Significant investments in AI technologies are being made to improve efficiencies and customer experiences [11][12] - The core strategy focuses on low coupon MSR paired with agency RMBS to benefit from stable prepayments and wide agency spreads [31] Management's Comments on Operating Environment and Future Outlook - The management noted ongoing tariff threats and geopolitical tensions as potential market weighers, but also highlighted opportunities in the current environment [30] - The company expects RMBS and MSR portfolios to respond positively if the Federal Reserve cuts rates later in the year [7] Other Important Information - The company issued $115 million in senior notes due in 2030 for net proceeds of $110.8 million, part of which will be used for refinancing [19] - The economic debt to equity ratio increased to 7x, which is within the historical leverage range of 5 to 8 [20] Q&A Session Summary Question: Is the current leverage level a new standard? - Management confirmed that the leverage of 7x is within the historical range and reflects current market conditions [34][35] Question: Update on economic return performance in July? - The company reported an economic return of about 1.5% for July [36] Question: Differences between expected returns and EAD metric? - Management explained that EAD is based on historical purchase yields, while expected returns reflect forward-looking market conditions [43] Question: Thoughts on financing strategy and shift from repo to unsecured? - The issuance of a baby bond was primarily to prefinance the maturity of existing convertible debt [63] Question: Impact of steepening yield curve on the portfolio? - Management indicated that a steepening yield curve could have counterbalancing effects on MSR values, affecting both float income and prepayment assumptions [70] Question: Plans for second liens in the investment portfolio? - The company is open to retaining second liens if yields are attractive, but will also consider selling them [55] Question: Expense structure and AI investment impact? - Most AI-related expenses will be recognized as operational expenses rather than capitalized, affecting the expense ratio [88][92]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for Two Harbors Investment Corp. as of June 30, 2025, highlighting a $259.0 million net loss for Q2, driven by a $199.9 million loss contingency accrual, and total assets increasing to $13.0 billion [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$12,959,138** | **$12,204,319** | | Available-for-sale securities, at fair value | $8,320,757 | $7,371,711 | | Mortgage servicing rights, at fair value | $3,015,643 | $2,994,271 | | Cash and cash equivalents | $657,816 | $504,613 | | **Total Liabilities** | **$11,073,112** | **$10,081,810** | | Repurchase agreements | $8,782,622 | $7,805,057 | | Revolving credit facilities | $1,011,871 | $1,020,171 | | Loss contingency accrual | $199,935 | $— | | **Total Stockholders' Equity** | **$1,886,026** | **$2,122,509** | - Total assets increased to approximately **$13.0 billion** as of June 30, 2025, from **$12.2 billion** at December 31, 2024, primarily due to an increase in available-for-sale securities[10](index=10&type=chunk) - A significant loss contingency accrual of **$199.9 million** was recorded as of June 30, 2025, which was not present at year-end 2024[10](index=10&type=chunk) [Consolidated Statements of Comprehensive (Loss) Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) Key Income Statement Data (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest expense | $(19,619) | $(38,254) | $(39,951) | $(80,471) | | Net servicing income | $155,968 | $171,540 | $309,630 | $330,754 | | Loss contingency accrual | $(199,935) | $— | $(199,935) | $— | | **Net (loss) income** | **$(259,041)** | **$56,336** | **$(338,096)** | **$259,924** | | **Comprehensive (loss) income** | **$(208,568)** | **$12,263** | **$(130,451)** | **$112,773** | | **Diluted (loss) earnings per share** | **$(2.62)** | **$0.43** | **$(3.51)** | **$2.16** | - The company reported a **net loss of $259.0 million** for Q2 2025, a significant shift from a **net income of $56.3 million** in Q2 2024, primarily driven by a **$199.9 million** loss contingency accrual[13](index=13&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total Stockholders' Equity decreased from **$2.12 billion** at December 31, 2024, to **$1.89 billion** at June 30, 2025[15](index=15&type=chunk) - The decrease in equity during the first six months of 2025 was primarily due to a **net loss of $338.1 million** and common and preferred dividends totaling **$114.6 million**, partially offset by **$207.6 million** in other comprehensive income[15](index=15&type=chunk)[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $211,025 | $134,982 | | Net cash used in investing activities | $(1,198,638) | $(73,751) | | Net cash provided by (used in) financing activities | $968,269 | $(69,242) | | **Net decrease in cash, cash equivalents and restricted cash** | **$(19,344)** | **$(8,011)** | - Financing activities for the six months ended June 30, 2025, were dominated by proceeds from repurchase agreements of **$25.4 billion** and principal payments of **$24.4 billion**[24](index=24&type=chunk) [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) - The notes provide detailed explanations of the company's accounting policies and breakdowns of financial statement line items, including specifics on investments, financing, derivatives, and a significant legal contingency[26](index=26&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, market conditions, and strategy, noting a $199.9 million loss contingency accrual led to a net loss and a decrease in book value per share to $12.14, while the debt-to-equity ratio increased to 5.4:1.0 - Book value per common share decreased to **$12.14** at June 30, 2025, from **$14.47** at December 31, 2024, primarily due to the **$199.9 million** loss contingency accrual, net mark-to-market losses, and dividends[268](index=268&type=chunk) - The company's core strategy is to pair **Mortgage Servicing Rights (MSR)** with **Agency Residential Mortgage-Backed Securities (RMBS)** to deliver more stable performance across different market environments[232](index=232&type=chunk)[227](index=227&type=chunk) - Management notes that while **Agency RMBS spreads** remain historically wide, the **MSR market** is well-supported with declining supply, which benefits the company's existing portfolio[257](index=257&type=chunk)[255](index=255&type=chunk) Debt-to-Equity Ratios | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Debt-to-Equity Ratio | 5.4:1.0 | 4.3:1.0 | | Economic Debt-to-Equity Ratio | 7.0:1.0 | 6.5:1.0 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, including interest rate and prepayment, and hedging strategies, with a 50 basis point rate increase estimated to decrease total net asset value by $39.4 million - The company's primary market risks are **interest rate risk** and **prepayment risk**, employing a strategy of pairing **MSR (negative duration)** with **Agency RMBS (positive duration)** and using derivatives to mitigate these risks[327](index=327&type=chunk)[331](index=331&type=chunk)[347](index=347&type=chunk) Interest Rate Sensitivity Analysis (as of June 30, 2025) | Change in Interest Rates | Change in Annualized Net Interest Income (in thousands) | Change in Value of Financial Position (Total Net Assets) (in thousands) | | :--- | :--- | :--- | | +50 bps | $(2,167) | $(39,361) | | +25 bps | $(1,123) | $(10,146) | | -25 bps | $1,138 | $(8,806) | | -50 bps | $2,211 | $(40,072) | - Liquidity risk is managed through daily monitoring and forecasting, with principal sources of cash being borrowings, asset payments, and operating results, maintaining master repurchase agreements with **34 counterparties** to diversify funding sources[309](index=309&type=chunk)[314](index=314&type=chunk)[354](index=354&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report (June 30, 2025)[357](index=357&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[358](index=358&type=chunk) [PART II - OTHER INFORMATION](index=76&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) This section updates on ongoing litigation with PRCM Advisers, where a May 23, 2025, court ruling granted partial summary judgment to plaintiffs, finding no basis for termination for cause, leading to a loss contingency accrual - The company is involved in **ongoing litigation** with its former manager, **PRCM Advisers**, following the termination of the Management Agreement for "cause" in July 2020[361](index=361&type=chunk) - On May 23, 2025, a court overruled the company's objections to a magistrate's report, granting **summary judgment** to the plaintiffs on the issue that the company **lacked a basis to terminate the agreement for cause**, with parties agreeing to mediation[361](index=361&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been **no material changes** to the risk factors previously disclosed in the company's 2024 Form 10-K[362](index=362&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the status of the company's stock repurchase programs, noting no common or preferred shares were repurchased during the three months ended June 30, 2025 - The company has authorized repurchase programs for up to **5,000,000 shares of preferred stock** and **9,375,000 shares of common stock**[363](index=363&type=chunk)[364](index=364&type=chunk) - **No common or preferred shares were repurchased** during the three months ended June 30, 2025[363](index=363&type=chunk)[364](index=364&type=chunk) [Item 3. Defaults Upon Senior Securities](index=77&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities during the reporting period - None[365](index=365&type=chunk) [Item 4. Mine Safety Disclosures](index=77&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports that this item is not applicable - None[366](index=366&type=chunk) [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) This section discloses that on May 22, 2025, CFO William Dellal adopted a Rule 10b5-1 trading plan to sell shares for tax liabilities from future equity compensation vesting - On May 22, 2025, CFO William Dellal adopted a **Rule 10b5-1 plan** to sell shares to cover tax liabilities from future vesting of equity awards[367](index=367&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, debt indentures, and CEO/CFO certifications - A list of exhibits filed with the Form 10-Q is provided, including **certifications by the CEO and CFO** pursuant to the Sarbanes-Oxley Act[369](index=369&type=chunk)[372](index=372&type=chunk)