loanDepot $LDI great upside potential in mortgage space
Loan Depot's price soared after their IPO in February 2021 but has settled deep into "good value" territory.
Research
Research
- TipRanks median price target is $22
- Ignoring the initial spike, price is still down about 38% from the $21 range to $13.09
- Heavily shorted, Yahoo % of Short Float is 15% and their loan rate has been hovering between 10-19% throughout May
- These shorts have been very successful, don't hate the player
- Float for $LDI is seemingly low at 6.6M shares but this is because Anthony Hsieh, the founder and CEO, owns at least 196M shares or exercisable options for shares
- Hsieh is #1205 on Forbes' Billionaires 2021 list
- (Con) Large short interest means price resistance will be painful
- (Con) Mortgage relief and home foreclosure ban extended by Biden until through June 30 so sooner or later a large inventory of homes will hit the market and cause lending volitility
- (Con) Competition is strong from $RKT (who I like but is in "meme stock" territory) and $UWMC (who I also like a lot but will write that up later)
- (Pro) The IPO lockup period for $LDI is 180 days and expires 8/10/2021 so employees and insiders cannot YOLO sell their shares until then
- (Pro) $LDI announced a dividend so they pass the "OK Boomer" test
- (Pro) Their forward PE is 4.58, I know forward projections are always ambitious but if that's not bargain basement I don't know what is
Risk Management
- $LDI correlation coefficient with $QQQ is 0.2 and $SPY is -0.4
- If your portfolio is heavy on Tech, $LDI may not be a good pick since it trends somewhat like a Tech stock
Technical Analysis
- $LDI price is deep into its all-time low range between $12-$13
- RSI at 28.11
- MACD histograms are moving in the right direction as of today (Friday 5/14/2021)
- TMO is very negative at -90 but has nearly reached a crossover with histogram approaching zero
Summary
loanDepot is laser-focused on customer retention -- 60% (2019) of their business was refinancing, and they offer no lender's fees on additional refinancings. The inevitable inventory boom that is coming when the foreclosure ban is lifted will create some chaos in the US real estate market, and $LDI will no doubt have to get competitive on rates. Hsieh is already a billionaire thanks to multiple mortgage industry successess before loanDepot, so I'm not really worried about him cashing out the way other founders might. If $LDI price finds support and continues to accumulate in the $12-$14 range I will enter a position, with price targets at (1) $18, (2) $20, and (3) $23 on the way up.
*Data in research section sourced from Yahoo Finance, Whale Wisdom, Forbes, and LoanDepot's website. - $LDI price is deep into its all-time low range between $12-$13