Interest rates play a large role when it comes to investing and can impact the direction of the stock market significantly. As someone who has decades of experience in investment management and mortgages, Michael Nierenberg has seen a lot of changes in rates and has helped the companies he has worked with to get past any challenges that these fluctuations have presented. Currently, Michael Nierenberg plays several roles with New Residential Investment Corp as their CEO, Chairman of the Board, and President. The Real Estate Investment Trust is publicly traded on the NYSE and uses several strategies depending on the situation at hand.
When it comes to fixed-rate securities, there is an inverse relationship between them and interest rates. This is based on the “scarcity value” of the securities such as bonds. Michael Nierenberg gives an example of a bond that costs $1,000 would end up going up in value if interest rates declined because it could no longer be purchased at this price any longer. If the rates went up, the value of the bond would subsequently decrease as new bonds could be purchased that hold a higher interest rate.
In order to make a profit off of these changes, Michael Nierenberg and other investors must balance the different elements of their portfolios. This can be difficult as there is no way to be precise about the timing of certain events that impact the stock market. The focus of New Residential is on investments such as residential mortgage-backed securities, mortgage servicing assets, and other opportunistic investments. In order to maximize revenue, they use 4 different approaches: active management, asset specialization, new acquisitions, and undervalued assets. The companies that New Residential have allowed them to facilitate more decisions when it comes to mortgages for potential homeowners.
Since 2013, Michael Nierenberg has been the President and CEO of New Residential and was named their Board Chairman in 2016. New Residential is approved by Freddie Mac and Fannie Mae as a servicer and as of 2018 have mortgage servicing or origination available in-house. They are qualified everywhere in the United States to be the owner of mortgage servicing rights.