Cherry Hill Mortgage Investment Corporation (CHMI): history, ownership, mission, how it works & makes money

A Brief History of Cherry Hill Mortgage Investment Corporation (CHMI)

Formation and Initial Public Offering

Cherry Hill Mortgage Investment Corporation (CHMI) was formed on June 9, 2013. The company primarily focuses on investing in and managing a portfolio of residential mortgage-backed securities (RMBS).

CHMI went public on the New York Stock Exchange (NYSE) under the ticker symbol CHMI on October 21, 2013, raising approximately $100 million in its initial public offering.

Financial Performance

As of September 30, 2023, CHMI reported a net income of $2.3 million for the third quarter of the year. The company’s total assets were valued at approximately $1.1 billion.

The company's dividend yield for 2023 stood at 10.2%, with dividends declared amounting to $0.45 per share for the quarter ending September 30, 2023.

Portfolio Composition

CHMI’s investment portfolio includes a variety of residential mortgage assets. As of August 2023, the breakdown of assets was as follows:

Market Challenges and Strategic Responses

Over the years, CHMI has faced market challenges such as interest rate fluctuations and changes in housing market dynamics. In response, the company implemented various strategies including:

• Hedging interest rate risk
• Diversifying the investment portfolio
• Enhancing liquidity management
• Engaging in strategic asset allocation

Recent Developments

In 2023, the company announced the acquisition of additional RMBS worth $100 million to enhance its portfolio resilience amidst evolving market conditions.

Furthermore, CHMI has maintained a focus on increasing shareholder value, reflected in its share buyback program initiated in June 2023, which authorized up to $50 million in shares for repurchase.

Leadership and Governance

The leadership team of CHMI, as of 2023, includes:

• Michael M. Karp, CEO and Chairman
• Andrew S. Herenstein, President
• William E. Brown, CFO

Outlook and Future Plans

Looking ahead, CHMI aims to strengthen its market position by focusing on:

• Expanding investment opportunities
• Improving operational efficiency
• Enhancing financial performance

The company’s long-term strategy remains centered on delivering sustainable returns to its stakeholders while navigating the complexities of the mortgage investment landscape.

A Who Owns Cherry Hill Mortgage Investment Corporation (CHMI)

Current Ownership Structure

The ownership of Cherry Hill Mortgage Investment Corporation (CHMI) is distributed among institutional investors, individual shareholders, and corporate entities. As of the latest filings:

Major Institutional Investors

The following institutions represent the largest shareholders in CHMI:

Insider Ownership

Insider ownership provides insights into the confidence that executives have in the company. Key insiders include:

Recent Stock Performance

As of the latest financial quarter, here are some key financial metrics for CHMI:

Shareholder Engagement

CHMI engages with its shareholders through various means to ensure transparency and address concerns. The recent shareholder meeting highlighted:

• Vote on management proposals.
• Discussion on dividend distributions.
• Plans for future investment strategies.

Comparative Ownership Trends

Comparing ownership trends over the past five years:

Conclusion on Ownership Dynamics

The ownership distribution of Cherry Hill Mortgage Investment Corporation reflects a stable structure with strong institutional backing and modest insider participation. The trends demonstrate a gradual increase in institutional ownership over the years. As such, the dynamics of ownership could influence future performance and strategic directions.

Cherry Hill Mortgage Investment Corporation (CHMI) Mission Statement

Overview

Cherry Hill Mortgage Investment Corporation (CHMI) focuses on generating attractive risk-adjusted returns by investing primarily in residential mortgage-backed securities (RMBS) and other mortgage-related assets. The company's mission statement emphasizes its commitment to delivering value to its shareholders while maintaining a strategy that prioritizes safety and soundness.

Core Objectives

• Investment Strategy: To primarily invest in RMBS that are issued or guaranteed by government-sponsored entities.
• Shareholder Focus: To provide consistent dividends and capital appreciation to shareholders.
• Risk Management: To minimize risks associated with mortgage investments through strategic asset selection and diversification.

Financial Data

As of the latest financial report, CHMI reported the following figures:

Investment Approach

The company adopts a disciplined investment approach characterized by:

• Research-Driven Decisions: Relying on market analysis to identify attractive investment opportunities.
• Asset Quality Assessment: Focusing on high-quality mortgage assets with lower default risks.
• Portfolio Diversification: Investing across various sectors within the mortgage market to mitigate risks.

Market Position

CHMI operates within the competitive landscape of real estate investment trusts (REITs) and mortgage investment companies. As of Q2 2023, the company maintained a market capitalization of approximately $390 million and is strategically positioned to leverage emerging trends in the housing and mortgage markets.

Commitment to Transparency

Cherry Hill Mortgage Investment Corporation prides itself on its transparency and communication with shareholders, regularly updating them on financial performance, strategic initiatives, and market conditions.

How Cherry Hill Mortgage Investment Corporation (CHMI) Works

Business Model

Cherry Hill Mortgage Investment Corporation (CHMI) operates as a real estate investment trust (REIT), primarily focusing on investing in and managing a diversified portfolio of residential mortgage-related assets. This includes agency mortgage-backed securities (MBS) and other mortgage loans.

Investment Strategy

The company’s investment strategy revolves around generating income through interest income, driven primarily by the spread between the yield on its investments and the cost of funding. As of Q2 2023, CHMI had approximately $1.1 billion in total assets.

Portfolio Composition

As of the latest financial reports, CHMI’s portfolio composed of:

Funding Strategy

CHMI typically finances its investments using a combination of equity and leverage. The company had approximately $800 million in financing facilities as of the end of Q2 2023. The weighted average interest rate on borrowed funds was approximately 3.5%.

Financial Performance

For the second quarter of 2023, CHMI reported:

• Net income: $8.2 million
• Earnings per share (EPS): $0.30
• Dividend declared: $0.23 per share
• Return on average equity: 10.1%

Risk Management

CHMI employs several risk management strategies, including:

• Interest rate hedging to manage the risk of rate fluctuations
• Diversification of its portfolio to mitigate credit risk
• Regular stress testing of its financial models

Market Environment

The macroeconomic environment, including interest rates and housing market trends, significantly influences CHMI’s performance. According to the Federal Reserve, the average 30-year mortgage rate was at approximately 6.8% in September 2023.

Outlook

CHMI’s management remains focused on maintaining a resilient portfolio and adapting to changing market conditions. The company aims to achieve an annualized dividend yield of around 8.5% based on common stock price as of Q3 2023.

Conclusion of Data

CHMI continues to explore growth opportunities within the residential mortgage market while managing risks associated with its portfolio. The incorporation of dynamic asset management practices positions the company for sustainable future performance.

How Cherry Hill Mortgage Investment Corporation (CHMI) Makes Money

Investment in Mortgage-Backed Securities

Cherry Hill Mortgage Investment Corporation primarily invests in mortgage-backed securities (MBS). As of Q2 2023, the company had approximately $1.3 billion in assets, focusing on residential MBS.

Income Generation

The income generated from these investments is primarily characterized by the interest income received on the MBS. In Q2 2023, the interest income was reported at $25 million, reflecting an increase compared to $22 million in Q2 2022.

Net Interest Margin

CHMI maintains a net interest margin that was approximately 2.58% for Q2 2023. This is defined as the difference between the interest earned on MBS and the interest paid on borrowings.

Leverage Strategies

The company employs leverage to enhance returns. As of mid-2023, CHMI’s leverage ratio stood at approximately 6.5x, allowing it to amplify the income generated from its investments.

Table of Financial Data

Management Fees

Cherry Hill also earns management fees from managing its REIT operations, which were about $3 million in 2022.

Dividends

In Q2 2023, CHMI declared a dividend of $0.15 per share, representing an annualized yield of approximately 10%.

Servicing Income

The company generates additional income through loan servicing activities. As of Q2 2023, servicing income was approximately $1.5 million, contributing to the overall revenue stream.

Table of Revenue Breakdown

Market Conditions Impact

The profitability of CHMI is influenced by prevailing interest rates. In 2023, the Federal Reserve's benchmark interest rate was set between 5.25% and 5.50%, affecting the company's borrowing costs and investment yields.

Capital Raising Activities

Cherry Hill raises capital through equity offerings and debt financing, maintaining a flexible capital structure. In 2022, CHMI raised approximately $200 million through an equity offering to support its investment strategy.