PennyMac Financial Services, Inc. (NYSE:PFSI) Sees Significant Growth in Short Interest

Key Points

• Short interest surged: Short interest rose 27.9% in April to 2,461,598 shares (about 5.6% of shares short) with a short‑interest ratio of 4.5 days.
• Earnings miss and market reaction: PennyMac missed the quarter (EPS $1.97 vs. $3.23 estimate; revenue $538M vs. $639.8M), shares fell to $89.37 (down ~2%), and several brokers trimmed price targets while the consensus rating remains a "Moderate Buy" with an average target of $127.25.
• Insider and institutional activity: A director bought 2,250 shares while the CFO sold 2,925, insiders sold 51,280 shares in the quarter but still own 15.8% of the company, and institutions hold about 57.9% of shares.

PennyMac Financial Services, Inc. (NYSE:PFSI - Get Free Report) was the recipient of a large increase in short interest during the month of April. As of April 15th, there was short interest totaling 2,461,598 shares, an increase of 27.9% from the March 31st total of 1,924,779 shares. Based on an average daily trading volume, of 547,579 shares, the short-interest ratio is currently 4.5 days. Approximately 5.6% of the company's shares are short sold.

Analyst Ratings Changes

Several brokerages recently weighed in on PFSI. Weiss Ratings lowered PennyMac Financial Services from a "buy (b-)" rating to a "hold (c+)" rating in a research report on Tuesday, January 20th. BTIG Research restated a "buy" rating on shares of PennyMac Financial Services in a research note on Friday, January 30th. Wells Fargo & Company cut their price objective on PennyMac Financial Services from $135.00 to $110.00 and set an "overweight" rating on the stock in a report on Thursday, April 9th. Piper Sandler decreased their target price on PennyMac Financial Services from $137.00 to $122.00 and set an "overweight" rating for the company in a report on Thursday, April 2nd. Finally, Keefe, Bruyette & Woods raised shares of PennyMac Financial Services from a "market perform" rating to an "outperform" rating and set a $115.00 target price for the company in a research report on Monday, March 16th. Six equities research analysts have rated the stock with a Buy rating and four have given a Hold rating to the stock. Based on data from MarketBeat.com, the company currently has an average rating of "Moderate Buy" and an average price target of $127.25.

Insiders Place Their Bets

In other PennyMac Financial Services news, Director Patrick Kinsella purchased 2,250 shares of the stock in a transaction on Thursday, February 12th. The stock was bought at an average price of $89.15 per share, for a total transaction of $200,587.50. Following the acquisition, the director directly owned 34,210 shares of the company's stock, valued at $3,049,821.50. This represents a 7.04% increase in their ownership of the stock. The purchase was disclosed in a filing with the SEC, which is available at this link. Also, CFO Daniel Stanley Perotti sold 2,925 shares of the stock in a transaction dated Tuesday, February 17th. The stock was sold at an average price of $93.30, for a total transaction of $272,902.50. Following the transaction, the chief financial officer owned 213,550 shares in the company, valued at approximately $19,924,215. The trade was a 1.35% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders sold a total of 51,280 shares of company stock valued at $4,630,853 in the last quarter. Corporate insiders own 15.80% of the company's stock.

Institutional Inflows and Outflows

A number of institutional investors have recently made changes to their positions in the company. AQR Capital Management LLC grew its holdings in PennyMac Financial Services by 3.8% during the 1st quarter. AQR Capital Management LLC now owns 24,012 shares of the real estate investment trust's stock valued at $2,404,000 after purchasing an additional 875 shares in the last quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. lifted its holdings in PennyMac Financial Services by 4.6% in the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 15,923 shares of the real estate investment trust's stock worth $1,594,000 after buying an additional 706 shares in the last quarter. Intech Investment Management LLC boosted its position in PennyMac Financial Services by 5.8% in the 1st quarter. Intech Investment Management LLC now owns 15,382 shares of the real estate investment trust's stock valued at $1,540,000 after buying an additional 840 shares during the last quarter. Strs Ohio acquired a new stake in shares of PennyMac Financial Services during the first quarter valued at about $30,000. Finally, Prudential Financial Inc. grew its stake in shares of PennyMac Financial Services by 82.8% during the second quarter. Prudential Financial Inc. now owns 4,084 shares of the real estate investment trust's stock valued at $413,000 after acquiring an additional 1,850 shares in the last quarter. 57.87% of the stock is owned by institutional investors and hedge funds.

PennyMac Financial Services Stock Down 2.0%

Shares of PFSI traded down $1.81 during midday trading on Wednesday, reaching $89.37. 604,215 shares of the company were exchanged, compared to its average volume of 784,716. PennyMac Financial Services has a 1-year low of $82.65 and a 1-year high of $160.36. The stock has a 50-day moving average price of $89.57 and a 200-day moving average price of $114.32. The company has a current ratio of 0.34, a quick ratio of 0.34 and a debt-to-equity ratio of 3.32. The company has a market cap of $4.66 billion, a price-to-earnings ratio of 9.61, a P/E/G ratio of 0.53 and a beta of 1.52.

PennyMac Financial Services (NYSE:PFSI - Get Free Report) last posted its earnings results on Thursday, January 29th. The real estate investment trust reported $1.97 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $3.23 by ($1.26). The company had revenue of $538.01 million during the quarter, compared to analyst estimates of $639.81 million. PennyMac Financial Services had a net margin of 24.48% and a return on equity of 10.20%. PennyMac Financial Services's quarterly revenue was up 14.4% compared to the same quarter last year. During the same quarter last year, the business posted $1.95 EPS. Research analysts expect that PennyMac Financial Services will post 11.88 earnings per share for the current year.

PennyMac Financial Services Company Profile

PennyMac Financial Services, Inc NYSE: PFSI is a leading mortgage banking company based in Westlake Village, California. The firm operates through two primary business segments: Production and Mortgage Servicing Rights (MSR). In its Production segment, PennyMac originates residential mortgage loans through retail, wholesale and correspondent channels, focusing on both purchase and refinance transactions. The MSR segment involves the acquisition and servicing of mortgage loans, whereby the company earns fees for managing loan portfolios on behalf of investors.

Since its founding in 2008, PennyMac has grown through a combination of organic origination and strategic acquisition of servicing rights, positioning itself as one of the largest residential mortgage loan servicers in the United States.

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