RKT ipo’d at $19 back in August. The Gilford family spent 35 year building them into the largest mortgage orginator in the world. They survived every downturn even the ’07 Mortgagepocolypse, each time growing and taking share.
They didn’t need no cash, they came public to establish themselves in the public market and begin planning for the some day when death taxes require the family to settle up with the irs.
The Gilfords built a $50 Billion company from scratch, its a story right up there with Buffet and Bezos but this family gets no respect. They should.
Banks make loans, sometimes they make the mortgage thing to apes who have “civilized” and live in house things. I sleep in the woods and swing from trees, but many of my so called ‘evolved’ cousins like this house living bullshit. Well banks only have a handful of people in house who loan house mortages (i know weird). They rely on these fly by night boiler rooms who send emails and call you unexpectedly, you think its about your car warranty or solar but this is that other sales call about Refi-Cash-Out into a Fixed Fully Ammortizing 30 year or buying a rental with a 5/1 ARM Fixed-Floating with rolled in closing costs.
Its really a bunch of bullshit, mortgages, roofs, solar panels. I like bananas, but I like this stonk called RKT.
Morgages are hard, they want paperworks, bank statements, adp payroll slips. The business comes in waves. When rates are cheap and banks full of new dollar tokens given to them by JPOW, there is a long line of house living apes trying to mortage their paychecks from 30 years on so they can install a pool or move to a neighborhood with a country club. So the banks call on these boiler rooms to make all the paper mortgage calls happen.
These ‘orginiators’ are typically like circus pop up tent companies. They hire a bunch of unemployed used car saleman and maniacs froms the sober house to call the leads and take the applications. They hire Amanda and Britney who couldn’t succeed as beauticians to do the document reviews and processing. Simply put its the cast of heros you used to see on episodes of COPS where the call was a ‘domestic.’
But the Gilfords had a vision: build software that runs on devices that make it so easy to apply, qualify and process a mortgage that even Rodney with 5 days outa rehab and Britney ‘I told your ass to send me that already’ couldn’t screw it up and the customer gets their house money fast and easy right from the app on their handheld glowing glass screen.
Hedge funds don’t understand how good this software is. No one else bothered to build it because bankers are not creative, they live by screwing others. And the other circus freaks pushing mortgages are in it for next week commish check so they can coke and hookers.
Stonk is at $26
The Hedges shorted 40 mil shares on a 115 mil float. And index fund already bought 11 mil shares (invesco). The original fund managers who bought the ipo sold it out during the last blast up to $43. They sold, bc they saw morgage rates go up a 1/2 point and figured the circus is over and all these pop up freak show mortgage boiler rooms are going under. They didn’t bother to look at rkt. They have a 90% repeat business rate: meaning 9/10 customers who do a mortgage with rocket, will use rocket if they do another. typicall number in bankin is 1 or 2 out of 10. RKT app is number 1 in the catagory, and as Mamma Cathy Wood teached me smooth ape brain: innovation is a winner take all game.
RKT builds back better each downturn, and every mortgage boom brings in startup circus creeps that don’t know how to code, analyst customer data (data science) and deliver good service. Why should they? they believe its a churn and burn business. They are running flee market stores, RKT is runnnin and Amazon of mortgages and now getting into car and personal loans
They don’t take credit risk, they lend for banks and investor pools. they “service” the loan which means they bill and collect. so when rates fluctuate they have to adjust the holding value of the collection rights up or down any quarter. Hedgefunds predict that higher rates mean they take a write down. But thats just paper bullshit. the collection rights always are profitable, they just have to ‘discount’ them when banks same interest is worth more. Hedgefunds look for quick profits, not revolutionary businesses that make lives better.
They missed tsla, apple, amzn and countless others the same way. RKT is no diff.
The company minted coin in 2020, about $4.50/share in profit. Thats a PE of like 6. Now no one thinks they will make that in ’21. 2020 was the best mortgage year ever, people sat at home, watched netflix and bought and refinanced houses. They also learned to use their phones and their computers for the first time ever. They can now work and do businness on them, before they didn’t, but covid make them overcome their fear and forced all the boomers to use their phone to get a mortgage. the secular story of waiting for the apes who know how to use an app to move out of mom’s basement to buy a house is over. The boomers learned to use apps and now, all businesses will suceed or fail based on the quality of the app experience. Did i mention RKTs apps are all number 1 or near in their catagories and great reveiws.
Being number 1 and having great reviews in the app store makes it game over. Its winner take all. RKT will clean up in the down turn. they will earn less with less business and higher rates but the long term earnings power of this company is $2-3/share and growing every downturn.
CEO of RKT: This Guy Fucks!
I bet my account the stonk would go up over 28.89 this friday b/c i YOLO’d the mother fucking FDs.