Cherry Hill Mortgage Investment Corp (CHMI) Stock Analysis and Metrics

Cherry Hill Mortgage Investment

NYSE: CHMI

$2.26 ▲ +0.00 (+0.00%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap83.07 Mn

P/E19.12

P/S2.68

Div. Yield0.06

ROIC (Qtr)0.00

Total Debt (Qtr)1.12 Bn

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About

Cherry Hill Mortgage Investment Corporation is a fully integrated, internally managed residential real estate finance company specializing in the acquisition, investment, and management of residential mortgage assets in the United States. The company operates as a real estate investment trust (REIT), focusing on generating attractive current yields and risk-adjusted total returns for stockholders through dividend distributions and capital appreciation. Its portfolio primarily consists of residential mortgage-backed securities (RMBS) and servicing-related assets, which are actively managed to optimize performance in varying market conditions.

The company generates revenue primarily through interest income derived from its investments in RMBS and servicing-related assets, including mortgage servicing rights (MSRs) and excess mortgage servicing rights (Excess MSRs). These assets produce cash flows from mortgage payments, servicing fees, and other related income streams. Additionally, Cherry Hill Mortgage Investment Corporation employs leverage to enhance returns, utilizing repurchase agreements and revolving credit facilities to finance its RMBS and MSR holdings. The company also benefits from hedging strategies to mitigate interest rate and prepayment risks, further stabilizing its income streams.

The company operates through the following segments:

• Investments in RMBS: This segment focuses on the acquisition and ownership of Agency RMBS, including residential mortgage pass-through certificates, collateralized mortgage obligations (CMOs), and to-be-announced (TBA) securities. The company selectively invests in private-label non-Agency RMBS and government-sponsored enterprise (GSE) risk-sharing securities, though these investments are limited by REIT compliance requirements. The RMBS portfolio is financed through repurchase agreements, which provide leverage while allowing the company to retain income and payments from the underlying assets.

• Investments in Servicing Related Assets: This segment involves the acquisition of MSRs and the creation of intercompany Excess MSRs. The company purchases MSRs on a bulk or flow basis and holds them through its licensed mortgage servicing subsidiary, Aurora Financial Group, Inc. Excess MSRs are generated from these acquisitions and transferred to qualified REIT subsidiaries to optimize tax efficiency. The segment also includes the use of dedicated financing facilities, such as the Freddie Mac MSR Revolver and Fannie Mae MSR Revolving Facility, each with a capacity of up to $100 million.

Cherry Hill Mortgage Investment Corporation competes in the highly fragmented residential mortgage finance industry, facing competition from other mortgage REITs, specialty finance companies, banks, insurance companies, and institutional investors. Its competitive advantages include its internally managed structure, which aligns management incentives with stockholder interests, and its focus on actively managing a diversified portfolio of RMBS and servicing-related assets. The company’s ability to adapt its investment strategy to changing market conditions, such as interest rate fluctuations and prepayment risks, further strengthens its position. However, its performance is closely tied to macroeconomic factors, including housing market trends and regulatory changes affecting mortgage financing.

The company’s customer base primarily consists of institutional counterparties, including financial institutions and government-sponsored enterprises. Its RMBS investments are financed through repurchase agreements with multiple banking and financial counterparties, while its MSR acquisitions are sourced from mortgage servicers and originators. The company does not directly service the mortgage loans underlying its MSRs but instead relies on third-party subservicers to handle these functions. Its operations are thus indirectly tied to the broader mortgage lending ecosystem, serving borrowers and lenders within the U. S. residential housing market.

Investment Thesis

▲ Bull case

Cherry Hill Mortgage Investment Corporation (CHMI) is well-positioned to benefit from a stabilization in mortgage spreads following the resolution of the Iran conflict, which management acknowledged as a positive catalyst for agency-focused REITs. While geopolitical volatility caused spread widening in Q1 FY26, the subsequent 2% increase in book value per share by April 30 indicates early market recovery that could accelerate if volatility subsides. The company’s RMBS portfolio, which represents 42% of equity capital and 79% of investable assets excluding cash, generated a net interest spread of 2.9% in Q1 FY26—up from the prior quarter—due to lower repo financing costs (down to 3.78% from 3.99%) and improved dollar roll income. This demonstrates effective balance sheet management in a rising rate environment, and with mortgage rates averaging 6.1% for the quarter (below the prior three-month average), the foundation exists for improved prepayment behavior and spread tightening should rates stabilize. Management’s hedging strategy, using swaps, TBAs, treasury futures, and ERIS SOFR futures with a combined notional of $396 million, remains intact and is designed to capture upside in bull steepening or parallel shift scenarios, which Julian Evans noted could add positive returns. The MSR portfolio, valued at $213 million with a UPB of $15.6 billion, continues to show resilience, contributing 41% of equity capital and providing a hedge against interest rate volatility through its intrinsic value, which improved during the quarter despite broader market stress. These factors suggest that CHMI’s core earnings power is underappreciated by the market, particularly as the company maintains a prudent 5.5x leverage ratio and holds $47 million in unrestricted cash, providing flexibility to deploy capital into accretive opportunities once market clarity returns.

▼ Bear case

Cherry Hill Mortgage Investment Corporation (CHMI) faces persistent headwinds from geopolitical uncertainty and structural shifts in mortgage finance that management downplayed during the earnings call, despite acknowledging ongoing volatility. The company reported a GAAP net loss of $0.05 per diluted share and a 6.1% quarter-over-quarter decline in book value to $3.23, with economic return negative at 3.2%, reflecting sustained pressure from rising rates and spread volatility that erased January’s temporary gains. While management cited improved MSR valuation as a buffer, the MSR portfolio’s net CPR averaged only 4.5% and recapture rates remain de minimis due to the portfolio’s high loan rates, limiting its ability to generate meaningful cash flow or benefit from refinancing activity—especially as the mortgage universe is only 14% refinanceable at current 6.4% rates, far below the 30% potential at 5.5% pre-war levels. This structural constraint undermines the long-term value of the MSR asset class, which CHMI relies on for 41% of its equity capital, suggesting overreliance on a segment with diminishing returns in a higher-for-longer rate environment. Furthermore, Julian Evans’ assertion that RMBS returns could reach mid-to-high teens on a levered basis appears optimistic given the portfolio’s 8% CPR prepayment speed and the persistent drag from tighter SOFR spreads, which negatively impacted performance throughout the quarter. The hedging strategy, while intact, relies on instruments like ERIS SOFR futures that may not fully capture curve dynamics in a volatile, non-parallel shift environment, and the company’s avoidance of hedge accounting for derivatives introduces earnings volatility through mark-to-market fluctuations. With leverage steady at 5.5x and no clear path to meaningful volume growth or margin expansion, CHMI’s ability to generate sustainable distributable earnings is questionable, particularly as the Iran conflict’s resolution remains uncertain and broader mortgage supply remains constrained by higher rates, limiting the technical improvement management hopes for.

Cherry Hill Mortgage Investment Corporation (CHMI) faces persistent headwinds from geopolitical uncertainty and structural shifts in mortgage finance that management downplayed during the earnings call, despite acknowledging ongoing volatility. The company reported a GAAP net loss of $0.05 per diluted share and a 6.1% quarter-over-quarter decline in book value to $3.23, with economic return negative at 3.2%, reflecting sustained pressure from rising rates and spread volatility that erased January’s temporary gains. While management cited improved MSR valuation as a buffer, the MSR portfolio’s net CPR averaged only 4.5% and recapture rates remain de minimis due to the portfolio’s high loan rates, limiting its ability to generate meaningful cash flow or benefit from refinancing activity—especially as the mortgage universe is only 14% refinanceable at current 6.4% rates, far below the 30% potential at 5.5% pre-war levels. This structural constraint undermines the long-term value of the MSR asset class, which CHMI relies on for 41% of its equity capital, suggesting overreliance on a segment with diminishing returns in a higher-for-longer rate environment. Furthermore, Julian Evans’ assertion that RMBS returns could reach mid-to-high teens on a levered basis appears optimistic given the portfolio’s 8% CPR prepayment speed and the persistent drag from tighter SOFR spreads, which negatively impacted performance throughout the quarter. The hedging strategy, while intact, relies on instruments like ERIS SOFR futures that may not fully capture curve dynamics in a volatile, non-parallel shift environment, and the company’s avoidance of hedge accounting for derivatives introduces earnings volatility through mark-to-market fluctuations. With leverage steady at 5.5x and no clear path to meaningful volume growth or margin expansion, CHMI’s ability to generate sustainable distributable earnings is questionable, particularly as the Iran conflict’s resolution remains uncertain and broader mortgage supply remains constrained by higher rates, limiting the technical improvement management hopes for.

Segments Breakdown of Revenue (2016)

Peer Comparison

Companies in the REIT - Mortgage

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	NLY	Annaly Capital Management Inc	16.30 Bn	9.22	-	1.10 Bn
2	AGNC	AGNC Investment Corp.	11.85 Bn	9.10	-	87.62 Bn
3	STWD	Starwood Property Trust, Inc.	5.99 Bn	15.58	3.09	18.85 Bn
4	RITM	Rithm Capital Corp.	5.01 Bn	8.35	1.00	-
5	BXMT	Blackstone Mortgage Trust, Inc.	2.78 Bn	26.92	-7.87	0.78 Bn
6	EFC	Ellington Financial Inc.	1.63 Bn	12.97	3.93	0.26 Bn
7	DX	Dynex Capital Inc	1.56 Bn	10.91	-	-
8	ARR	Armour Residential REIT, Inc.	1.42 Bn	4.98	-	19.44 Bn

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Investment Thesis

Segments Breakdown of Revenue (2016)

Segments Breakdown of Revenue (2016)

Peer Comparison

Research Tools

Developers

About

Investment Thesis

Segments Breakdown of Revenue (2016)

Segments Breakdown of Revenue (2016)

Peer Comparison

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