Tomahawk, WI 8/15/2013 (Basicsmedia) – When you want residential mortgage loans, in addition to other mortgage related assets, the best place to go would be PennyMac Mortgage Investment Trust (NYSE:PMT). This is a company which operates as a Real Estate Investment Trust, more commonly abbreviated as REIT. The company has been profitable more than its competitors and this has forced the rest to ape a few things which it does right in the hope that this will boost its financial performance and help to push it much higher.

In this article, we discuss the company’s profitability and whether this will continue into the foreseeable future or not.


Image shows PMT’s revenue, net income and profit margin from 2012-2013.

Image is from

The company has been at the forefront in terms of doing things which its competitors are unwilling to try out. It is a pioneer on many fronts and this is perhaps one of the reasons as to why its revenue and net income levels are just but the envy of many others. One has to understand that many REITs were unable to post remarkable or admirable positive returns through their latest financial results. PMT, on the other hand, was able to post profits, not just results which are meant to impress investors when in the real sense, they are of no value.

How Did PMT Post Profits in an Industry Which reported Losses?

The main reason why PMT was able to perform much better than its competitors was because of the decision to diversify. Most REITs reported major damages on their book value, but PMT and Two Harbors (NYSE: TWO) reported results which appear to suggest the opposite. PMT’s decision to establish correspondent lending business has brought huge gains to the company. The revenues the company raised form this venture, increased by around 42%, only for the recent quarter in which the PMT’s latest financial results were announced.

The income the company received from its mortgage servicing fees was quite substantial and is one of the reasons why there was a major increase in the profits. In Q1 2013, the company raised around $6.6 million, which rose to $7.9 million in Q2 2013 from the fees it charged for servicing mortgages. The company is confident enough that this will continue for quite some time, especially now hat reports indicate that there will be a rise in interest rates. Investors in PMT stock have every reason to be confident and even bullish about what the future has in store.

What Do I Think of PMT Stock?

I believe that PMT is set to enjoy better returns going forward if its decision to go into the jumbo business is anything to go by. The company continues to show its ability to diversify rather than depend on one source of income or revenue, and this is perhaps one reason which will work well for it. Currently, it has plans to buy prime jumbo loans to the tune of $393 million, and then sell after securitizing them. Securitization of jumbo loans is one area which will prove to be quite profitable to PMT, and this is the sort of news which investors love hearing about.

Therefore, let me say confidently that the company will move forward and continue in its path of profitability form quite some time, primarily because it sees sense in diversification.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.