New Residential Investment Corp also known as Reiz is an investment firm which mainly focuses on real estate’s ventures. It is one of the highly prolific investment firms in the country managed by Michael Nierenberg who is the current Chief Executive Officer. He is also the Chairman of the board of directors of the firm. Michael Nirenberg uses the following strategies in the management of the firm to overcome interest rates fluctuations.
- Specialization of Assets
New Residential Investment Corp has specialized in assets which they venture vastly into. The assets include excess mortgage servicing rights and non-Agency RMBS. These two assets are contrasting with other debt instruments which have fixed rates and they, tend to depreciate in value, and the interest rates accelerate. For example excess MRS increase in cost as when the interest rates depreciate.
- Managing Assets Actively
An elaborate active management of assets if is well conducted is positioned to enable adjustments of the portfolio in case of any changes of circumstances. This dynamic management practised on assets like excess mortgage servicing rights in different forms. The approach used in managing assets like index funds, which is managed passively. New Residential managers are in position on to analyse, monitor, buy, refinance and sell assets when required daily.
- Finding Assets Which Are Undervalued
Michael Nierenberg uses the approach of emphasising on assets which are undervalued and ventures in them. When he finds undervalued assets, he then invests in it and ensures that he makes it to be valuable. A good example is what is practised by banks when they sell mortgage securities like RMBS with the aim of increasing their capital reserves. What is demonstrated by New Residential Investment Corp is that they identify mortgage portfolios which are underperforming then they work on them until they transform them into fulfilling collections.
- New Acquisitions
Michael Nierenberg has helped the investment firm in acquiring new companies which will help them facilitate control of mortgage servicing internally as well as loaning decisions. This helps in reducing the occurrence of uncertainty on future mortgages and helps in smooth running of the company.