Two Harbors Investment Corp. (TWO-PC)

Price$25.37Cached quoteAs of 2026-09-25 04:12 UTC

AI: Overvalued

Price checkThis preferred share trades slightly above the fixed amount holders are set to receive at closing.

The shares recently traded near their fifty-two-week high, less than one percent above the $25 amount the company has contracted to pay preferred holders when the CrossCountry acquisition closes. Redemption simply means the company buys the shares back at that preset price. Because the latest quarterly payout already went to earlier holders, a buyer today would likely receive $25 and little more, locking in a small loss. Upside is capped because the company can buy back at $25 whenever it wants now the payout floats. Paying above a known exit price leaves no margin of safety, supporting an overvalued call.

Big pictureThe whole company is being bought for cash, so these shares are now a short waiting game.

A mortgage lender affiliated with CrossCountry Mortgage agreed this spring to buy Two Harbors, initially offering less before a rival bid from UWM Holdings pushed the price to twelve dollars per common share. Holders approved the sale about seven weeks ago, and all three series of preferred stock — shares standing ahead of common owners for payouts — including this one, will be redeemed at twenty-five dollars once the deal closes. The buyer even covered a large breakup fee owed to UWM. Value now depends almost entirely on closing mechanics rather than on how the mortgage portfolio performs.

Business strengthUnderlying profits improved lately, but years of losses left the cushion beneath preferred holders thinner than before.

After a $454 million loss last year that reversed a $298 million profit the year before, results stabilized: second-quarter comprehensive income, which includes paper gains and losses on investments, reached $47.9 million, and earnings available for distribution were $0.28 per common share against a $0.34 dividend. Company-wide equity has shrunk from about $3.1 billion five years ago to roughly $1.8 billion, while borrowings near $8.3 billion make leverage high even for a mortgage real estate investment trust. The servicing-rights portfolio looks healthy, with delinquencies under 1%, but preferred holders ultimately rely on the deal closing, not on rebuilding lost capital.

What could change the storyFinal regulatory approval and the closing date decide nearly everything; a collapse would reopen downside risk.

The deal needs one remaining state approval, and the company said it expects to close this month, later than its earlier target. Until then, holders keep accruing a floating quarterly payout worth about nine percent annually at the current rate. If closing slips further, that income partially compensates for the wait. If the transaction somehow fails, the preferred would remain outstanding at a company carrying heavy leverage, and comparable mortgage-investor preferred shares often trade a few percent below their redemption value. Watch for the closing announcement or any court development in the UWM lawsuit.

AI: News

Stockholders approve CrossCountry saleInvestors voted to accept the cash buyout, clearing the biggest hurdle for redeeming these preferred shares.

At a special meeting about seven weeks ago, common shareholders approved the merger with the CrossCountry affiliate at twelve dollars per share in cash. The agreement confirms that all preferred series will be redeemed at twenty-five dollars after closing, plus any declared unpaid payouts. Antitrust clearance had already arrived, leaving only some state approvals. The common stock has hovered just under the deal price since, and this preferred has drifted steadily up toward its redemption value, suggesting markets treat completion as very likely.

UWM lawsuit adds frictionThe former bidder sued the company, creating a small chance the closing gets delayed past expectations.

About ten days ago, Two Harbors publicly dismissed as baseless a lawsuit filed by UWM Holdings, whose own takeover pursuit collapsed this spring. UWM recently disclosed a six-hundred-million-dollar derivatives loss, and its stock has fallen most of its value this year. Two Harbors says the acquisition will close once the final state approval lands, expected this month. The preferred price kept climbing after the suit became public, hinting investors see little threat, though attribution is uncertain and a prolonged legal fight could stretch out the timeline.

Second-quarter results stay steadyQuarterly profits turned positive again, keeping preferred payouts covered while the buyout heads to the finish line.

Reported about three weeks ago, second-quarter comprehensive income reached $47.9 million after a weak first quarter, and book value per common share, essentially accounting net worth divided by shares, edged up to $10.68. The company added $186.5 million of new servicing rights, and the portfolio showed delinquencies under 1% and slow prepayments. Management also declared the next round of common and preferred dividends, with this series now paying a floating rate near nine percent annually. Solid results matter mainly because they keep the company stable until redemption rather than changing long-term prospects.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009
Revenue	$115.1M	$510.7M	$31.8M	$407.2M	—	—	—	—	—	—	—	—	—	—	—	—	—
Operating expenses	—	—	—	—	—	—	—	—	—	—	—	—	—	$17.7M	$9.7M	$4.6M	$12.2M
Net income	−$454.3M	$298.2M	−$106.4M	$220.2M	$187.2M	−$1.63B	$324.0M	−$44.3M	$348.6M	$353.3M	$492.2M	—	—	—	$127.4M	$35.8M	−$8.7M
Net profit margin	−394.84%	58.38%	−334.66%	54.09%	—	—	—	—	—	—	—	—	—	—	—	—	—
Basic EPSper basic share	-$4.88	$2.41	-$1.60	$2.15	$1.72	-$24.94	$3.72	-$2.12	$7.40	$16.24	$21.60	$7.36	$26.40	$19.36	$20.64	$25.60	-$6.24
Diluted EPSper diluted share	-$4.88	$2.37	-$1.60	$2.13	$1.72	-$24.94	$3.72	-$2.12	$7.24	$16.24	$21.60	$7.36	$26.40	$19.20	$20.64	$25.60	-$6.24