GPMT

Granite Point Mortgage ($GPMT) Executives Buy 150K Shares as Stock Trades at 19% of Book Value

05/27/2025 20:33

Granite Point Mortgage Trust ($GPMT) executives and directors have been aggressively buying shares over recent months, sending a strong signal to the market about their confidence in the company's prospects. From February to May 2025, insiders including Director Patrick Halter and President John Taylor purchased over 150,000 shares, suggesting significant investment opportunities at current price levels. The most notable move came from President John Taylor, who purchased 42,000 shares on May 22 for approximately $96,000. Director Patrick Halter made two significant purchases in February and May, acquiring a total of 63,000 shares for over $160,000. Lazar Nikolic, Managing Member of JPL Opportunity Fund LP, demonstrated sustained confidence with consistent purchases from February through May. This contrasts sharply with director sales in June 2024, indicating a shift in insider sentiment about the company's outlook. $GPMT is a specialized real estate investment trust (REIT) founded in 2015 that focuses on originating and investing in commercial mortgage loans across the United States. The company primarily provides intermediate-term bridge financing for acquisitions, recapitalizations, and refinancing, concentrating on senior floating-rate loans. Based in New York, the company manages approximately $2 billion in loan commitments with a lean team of 33 full-time employees. The stock currently trades at $2.38, representing just 19% of book value ($8.24), indicating significant undervaluation. While shares are up 10.1% year-to-date, this follows a dramatic decline to $1.61 in April before recovering. Over the past year, the stock has declined 14%, and over three years has plummeted 68%, significantly underperforming the S&P 500. Q1 2025 results showed encouraging signs of improvement. GAAP net loss of $10.6 million ($0.22 per share) represented a substantial improvement from the $77.7 million loss in the prior year quarter. Interest income reached $35.1 million, and the company maintains strong liquidity with $85.74 million in cash. Notably, the company reduced its highest-risk (rating 5) loans from seven at year-end 2024 to three at Q1-end, demonstrating progress in credit risk management. Despite challenges in the commercial real estate market, $GPMT is systematically working through its portfolio issues. The company achieved $161 million in loan repayments and resolutions during Q1, reducing portfolio size while improving quality. Management plans to resolve $150-200 million of high-risk loans in upcoming quarters. The company also repurchased approximately 900,000 shares, increasing book value per share by $0.10 and demonstrating capital discipline. The loan portfolio is well-structured with over 99% senior loans and 98% floating-rate instruments, providing protection during rising interest rate environments. The weighted average loan-to-value ratio stands at 64%, and the realized portfolio yield was 6.8%. Excluding non-accrual loans, the yield approaches 8.5%, demonstrating the underlying profitability of normal operations. While the commercial real estate market faces headwinds from high interest rates and office sector weakness, $GPMT is positioning to capitalize on eventual recovery. Management plans to resume new loan originations in the second half of 2025, with the company's strong liquidity and extended financing facilities providing operational flexibility. The 51% institutional ownership and recent insider buying activity signal confidence in the long-term recovery strategy. The debt-to-equity ratio of 230.59% represents elevated leverage but remains typical for mortgage REITs. While TTM net losses of $154.14 million and 0% profit margins remain concerns, the Q1 improvement trend and aggressive restructuring efforts provide a foundation for future performance recovery. Looking ahead, the 8.4% dividend yield and extreme undervaluation present compelling opportunities for risk-tolerant investors. If GPMT's systematic risk management approach succeeds alongside broader commercial real estate market stabilization, current price levels could offer substantial upside potential for patient investors willing to navigate near-term volatility.

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