Rithm Capital (US:RITM)2024-04-30 14:15Financial Data and Key Metrics Changes - The company reported a GAAP net income of $262 million, or $0.54 per diluted share, with earnings available for distribution at $233 million, or $0.48 per diluted share [41] - Cash and liquidity at the end of Q1 was $2 billion, with a total economic return for Q1 of 4.5% [41] - The book value is currently around $12.30 to $12.40, with expectations of stability in earnings and book value due to hedging strategies [30][15] Business Line Data and Key Metrics Changes - The servicing business grew 15% year-over-year in terms of UPB, with total owned servicing at $572 billion, of which 99% of the portfolios added money [19][10] - Genesis Capital achieved record originations of $840 million in commitments, with a first-quarter ROE between 13% and 15% [20] - The company’s origination business grew overall by 21% quarter-over-quarter, driven by the correspondent channel [104] Market Data and Key Metrics Changes - The company has $857 billion of total servicing, with expectations of closing the SLS acquisition in the second quarter, adding an additional $149 billion of owned and subserviced MSRs [46][111] - The credit markets are viewed as having some of the most attractive risk-reward levels seen in years, with high-yield indexes around 360 [115][110] Company Strategy and Development Direction - The company aims to grow its alternatives business, focusing on excellent risk-adjusted returns for shareholders and LPs, while also looking to tap into retail and institutional markets [7][15] - There is a strategic focus on modernizing customer and employee experiences through digital and AI initiatives [11] - The company is evaluating strategic acquisitions and partnerships to enhance its market share and operational capabilities [22][78] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market providing opportunities to deploy capital and generate outsized returns, particularly in light of recent rate changes [4][5] - The company is focused on maintaining operational excellence and cost management, even after significant growth in its servicing portfolio [47] - Management noted that performance will drive more AUM back to the platform, indicating a stable outlook for growth [94][110] Other Important Information - The company completed a $500 million rated securitization in the quarter, lowering its cost of funds by approximately 150 basis points [16] - The Sculptor platform has $32 billion of AUM, with a strong focus on performance across credit, real estate, and multi-strat funds [8][110] Q&A Session Summary Question: Update on book value quarter-to-date - The book value is around $12.30 to $12.40, with expectations of stability in MSR values as market conditions evolve [30] Question: Thoughts on potential spin-off timing - The company is assessing capital needs and market conditions, with no immediate plans for a spin-off but remains open to opportunities [53] Question: Incremental returns on MSRs - The company evaluates MSR investments based on total return, considering both organic production and market purchases [69] Question: Update on Genesis business and sponsor demand - The Genesis business is seeing increased sponsor demand as banks retreat, with a broader sponsorship base now compared to when the business was acquired [71] Question: Dividend level considerations - The company aims to outperform its dividend, focusing on capital deployment at higher returns compared to the dividend yield [75] Question: Acquisitions in alternative asset management - The company is open to highly accretive acquisitions but currently has all necessary pieces in place for growth [78]