Getting Comfortable with Walker and Dunlop
I was originally put on to the idea of Walker & Dunlop (WD) by a reader of the blog back in September (while I will leave the name of that tipster anonymous, many thanks for the idea). The call was prescient and I can only wish I had made my purchases sooner.
As it was, I initiated a position in Walker & Dunlop about 4 weeks ago, doing so after the stock had fallen 10% from its 52 week high of $21.76. Unfortunately that turned out to be at least $2 too soon.
The stock has subsequently fallen further. As usual being wrong has compelled me to re-evaluate my thesis, which I did this week. After some waffling I have decided not only to hold on to the position but add to it, which I did on Thursday and again on Friday.
What they do
Walker & Dunlop is the commercial lending equivalent of Nationstar Mortgage. Their business is the origination and servicing of commercial mortgage loans. The vast majority of those loans are multi-family and are passed along to Fannie Mae, Freddie Mac or into HUD insured Ginnie Mae securities. The company generates revenue from origination fees and on the servicing of its loans. They are the eighth largest originator of commercial mortgage loans in the United States, and the second largest originator of multi-family loans.
Extending the analogy to Nationstar, Walker & Dunlop recently acquired its fellow commercial originator CWCapital from Fortress Investment Group, who became a large shareholder after acquiring 11.6 million shares as part of the sale. Read more
Reminiscences of a Stockblogger 