GPMT

Granite Point Mortgage Trust($GPMT) Directors Aggressively Buy 56,000 Shares Near Bottom - Betting on Stock Trading at 81% Discount to Asset Value

05/22/2025 21:14

Shares of Granite Point Mortgage Trust ($GPMT) have experienced a significant decline in recent months, with a particularly steep drop beginning in early April 2025, bottoming at a 52-week low of $1.61 on April 21st. However, the stock has shown signs of recovery in May, now trading in the $2.30 range. What's particularly noteworthy amidst this volatility is the aggressive buying activity from the company's directors. According to recent SEC filings, Granite Point director Patrick Halter purchased 29,000 shares on May 15th at approximately $2.38 per share, totaling $69,020. Even more striking is the consecutive large-scale buying from director Lazar Nikolic. Between May 20th and 22nd, Nikolic acquired a total of 55,953 shares worth approximately $138,302 in just three days. His largest purchase came on May 21st, when he bought 47,408 shares at an average price of $2.36. These purchases aren't isolated events. Both directors also made substantial share acquisitions in February. Halter bought 34,001 shares for about $95,203 on February 25th, while Nikolic made several purchases from late February through early March. This pattern suggests strong conviction in the company's long-term value despite recent market challenges. Nikolic's role as a Managing Member of JPL Opportunity Fund LP adds another layer of significance to his purchases. His buying activity may reflect not just personal conviction but a professional investment perspective that views Granite Point as an attractive opportunity. Such persistent buying from industry professionals can serve as a positive signal for retail investors. Granite Point is a Real Estate Investment Trust (REIT) focused on commercial real estate mortgages, currently facing headwinds in the commercial property market. In its Q1 2025 earnings, the company reported a loss of $0.57 per share, which was better than analysts' expected loss of $0.73. The company currently manages a loan portfolio of approximately $2.8 billion with a relatively conservative average loan-to-value (LTV) ratio of around 64%. However, financial challenges are evident. The company has recorded consistent losses in recent quarters and holds approximately $690 million in non-accrual loans. Its debt-to-equity ratio stands at a concerning 230%. Despite these difficulties, the company maintains about $85.7 million in cash, ensuring short-term liquidity. In this context, the substantial insider buying takes on special significance. Insiders typically possess more comprehensive information about the company's internal situation and future prospects than the average investor. Their buying activity suggests they believe the current stock price undervalues the company's actual worth. Indeed, Granite Point's price-to-book (P/B) ratio of just 0.19 indicates the market value is heavily discounted compared to the book value of the company's assets. Wall Street analysts maintain a predominantly 'Hold' rating on Granite Point, with a median price target of $2.38, roughly in line with the current trading price. However, the aggressive insider buying suggests a more optimistic outlook than the analyst consensus. The commercial real estate market continues to face challenges from high interest rates and structural changes such as remote work trends. Particularly, decreased demand for office space will likely continue to pressure lenders in this sector. However, recent improvements in U.S. inflation data have increased the likelihood of Federal Reserve rate cuts, which could provide a positive catalyst for the real estate market. Granite Point's stock has rallied about 50% since early May, though it remains down from its early 2025 levels. The aggressive insider buying may signal confidence in a bottom formation and future recovery, with Nikolic's consistent large-scale purchases potentially having significant impact on a small-cap company like Granite Point. The company paid a dividend of $0.05 per share in Q1 2025, resulting in a current yield of approximately 8.58% – quite attractive for income-focused investors. However, the sustainability of this dividend warrants careful monitoring given the company's ongoing losses. In conclusion, Granite Point's insiders are leveraging the recent stock weakness as a buying opportunity, suggesting potential value that the market may be overlooking. While challenges in the commercial real estate market and the company's financial issues remain significant risk factors, the confident insider buying represents a positive signal that investors should note. Though making investment decisions solely based on insider activity carries risks, the consistent and substantial buying pattern at Granite Point suggests there may be something the market is missing.

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