Jim Cutillo — co-founder and CEO of Stonegate Mortgage (SGM), a non-bank residential mortgage operator that pulled off its IPO today — says real estate is “at an inflection point.”
Stonegate’s IPO wasn’t an easy deal. SGM priced at $16 — below the $20 to $22 range — but shares did make up for lost ground in early trading, up about 17.5% as of this writing. Still, Cutillo is optimistic about the broader real estate environment pushing Stonegate Mortgage forward.
“We think we are at an inflection point,” Cutillo said today in an interview with InvestorPlace. “Both the housing market and the U.S. economy are poised for growth.”
And Stonegate Mortgage is in a nice position to benefit.
During the past eight years, Jim has created a fully integrated mortgage platform that includes origination, servicing and securitization. He also has invested heavily in proprietary technology — Stonegate Mortgage’s core system essentially uses multiple data sources and analytics to mark the risks on loans. This probably explains why Stonegate has never invested in subprime loans.
Cutillo also isn’t overly concerned with the current interest-rate environment.
“The only assumption for me is that interest rates will increase over the next couple years,” he said. “But our service portfolio, which is over $9.5 billion, is a natural hedge. In Q3, even though there was a spike in interest rates, we continued to grow.
“It also helps that we focus mainly on home purchases, not refinancing.”
Of course, the U.S. budget fight is another issue. While comments out of Washington today hinted toward a modicum of progress, risk still is a concern in the short-term:
“We will not be impacted if there is a resolution in short order,” Cutillo said. “But if not, the uncertainty will lead people to ask: ‘Should I buy a home now?’ So it is really important to get clarity in D.C.”
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.