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Latest Posts
Ford: I Was Misinformed
February 20, 2018 6:00 am|Comments (0)

Back in my last article on Ford Motor Company (F), I made the argument that the company would continue to yield a competitive advantage over rivals such as General Motors (GM) thanks to its exposure to the full-size truck sales market.

For instance, we see that within this segment, Ford saw growth of 9.3% in F-Series sales for 2017, which was significantly higher than that of 1.9% for GM’s Chevrolet Silverado:

Source: Ford Motor Co. 4Q 2017 and Full Year Earnings Review and 2018 Outlook

However, since October, we also see that Ford has fallen to a price of $ 10.76 at the time of writing:

The reception to my last article was lukewarm and not without good reason. It is hardly news that Ford is the dominant player when it comes to the full-size truck industry and no indication that it will cease to be so. However, there has been a significant shift in sales in the past year. When we consider more recent sales, growth for the F-Series is only up by 1.3%, while that of the Silverado is up by 25%.

While I had chosen to focus on full-size truck sales – making the argument that Ford is a dominant player in this sector and that higher-priced vehicles have the potential for higher margins – this viewpoint ignores shortcomings in other areas.

For instance, we see that for FY 2017, overall sales in North America are down due to macroeconomic factors such as higher commodity prices and a lower volume and higher cost associated with the Expedition/Navigator launch:

Source: Ford Motor Co. 4Q 2017 and Full Year Earnings Review and 2018 Outlook

Moreover, revenue also took a very significant hit in Europe due to adverse exchange rates as a result of Brexit, higher commodity prices, and a lower than expected volume on Fiesta sales:

Source: Ford Motor Co. 4Q 2017 and Full Year Earnings Review and 2018 Outlook

Therefore, while truck sales may have been increasing, they have been doing so at a lower rate, and this has not been enough to offset macroeconomic pressures in other areas.

As a result, EBIT margin on an adjusted basis has continued to move lower as well:

Source: Ford Motor Co. 4Q 2017 and Full Year Earnings Review and 2018 Outlook

On the SUV side, while Expedition and Lincoln Navigator vehicles have been witnessing rising demand, it doesn’t necessarily mean that the company will be able to meet that demand. Ramping up production is going to entail higher costs, and if rising fuel prices or adverse market conditions persist, then the demand for these vehicles could ultimately prove to be quite fickle.

I overestimated Ford’s ability to thrive based on truck sales alone. The macroeconomic environment is proving quite competitive for the automotive industry at this point in time. Currently, Ford’s dividend yield stands at 5.58%:

Source: dividend.com

However, note the dividend payout itself stands at $ 0.60 per share, so this stock is clearly not as attractive as a stock that is trading at a higher price but also paying a respectively higher dividend to bump up the yield.

If you’re a long-term investor in Ford Motor Company, then I would stick with the stock. In a long-term context, this company will still remain a leader in the American automotive industry in spite of short-term pressure. However, I would not buy this company for capital appreciation purposes. Margins have been coming under pressure, and truck sales by GM are proving to pose a competitive threat. Additionally, if demand in the SUV market should fade as a result of adverse macroeconomic conditions, then this stock will be set to stay low for the foreseeable future.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Posted in: Cloud Computing|Tags: ,
An 11.8% Yielding Stock That's Growing Like A Weed And Hiking Its Dividend Every Year
February 19, 2018 6:42 pm|Comments (0)

Source: imgflip

My high-yield retirement portfolio’s goals are maximum safe yield (5%) with strong (7% a year) but sustainable long-term payout growth. That means most of the time my focus is on low to medium risk dividend stocks. I generally avoid high-risk industries that have a poor history of sustaining payouts during all economic, market, and interest rate environments.

However, I do allow for a handful of high-risk stocks, but as small (2.5%) stakes. That’s if I believe that the company’s fundamentals, and quality management are potentially capable of sustaining double-digit yields over the long term, or better yet potentially growing them over time.

New Residential Investment Corp. (NRZ) is the only mREIT I own, because its management team has, thus far, proven to be supremely competent at minting money from investing in higher risk, but amazingly profitable loan portfolios.

More importantly, unlike most mREITs, especially residential ones, which are struggling in the current interest rate environment, New Residential is thriving. Let’s take a look at how NRZ killed it, yet again, in 2017, and looks to be set up for another record year in 2018.

In fact, things are going so well that I fully expect we may see more dividend hikes or special dividends. And not just this year, but for as long as the economic expansion lasts, which is looking like it might be for several years.

Another Blowout Year For The Best Management Team In This Niche Industry

New Residential is a highly specialized residential mREIT that was spun off from Fortress Management Group in 2013. It specializes in various higher risk loans, including:

  • Excess Mortgage Servicing Rights (MSRs);

  • Servicer advances;

  • Non-agency residential backed securities; and

  • Associated call rights

The key to its success is good risk management, specifically analyzing the risks of loan defaults and paying a low price for its investments. This creates the potential for the company to generate impressive 12% to 25% returns on investment.

Source: NRZ investor presentation

More impressive than its high profitability is the pace at which management has been able to put capital to work over the years and keep growing the mREIT at a breakneck pace. All while seemingly not sacrificing its rigorous quality/risk standards.

Source: NRZ investor presentation

For example, in 2017, NRZ invested $3.3 billion into new loans, including $1.6 billion in MSRs and excess MSRs that it paid an average of just 0.7 cents on the dollar. In fact, in the last two quarters, it purchased $103 billion in excess MSRs from Ocwen Financial (OCN) for just 0.3 cents on the dollar.

Metric

2017 Growth

Net Interest Income

50.6%

Core Earnings

90.1%

Shares Outstanding

27.6%

Core EPS

32.2%

Dividend

7.6%

Core EPS Payout Ratio

70.0%

Book Value

17%

Source: NRZ earnings release

This all led to another record year for NRZ, which saw its dividend continue to rise, but core EPS rise even higher, creating the lowest payout ratio in the industry.

However, note that $0.50 of NRZ’s core EPS gain in 2017 was due to the Q2 accounting change represented by the $440 million Ocwen deal. That’s where NRZ took a large stake in one of its largest subservicers, bailing it out from financial trouble. That deal will drastically lower its subservicing costs in the future.

Management decided to move the cost savings to Q2 of 2017, resulting in that quarter’s monster 100% earnings growth and 50% earnings beat. If you exclude that one-time benefit (real but not ongoing), then NRZ’s core EPS grew at 8.9% in 2017 (still great for a mREIT) and its payout ratio fell to 85%.

The book value of the mREIT (estimated net asset value) grew an impressive 17%, up from 7% in both 2015 and 2016. Of course, some of that can be attributed to the one-time earnings benefit of the Ocwen deal, but NRZ continues to show an impressive ability to grow its book value per share far better than most mREIT rivals.

Chart

NRZ Tangible Book Value (Per Share) data by YCharts

This is due to the industry’s best interest rate sensitivity.

Source: NRZ investor presentation

For example, the average residential mREIT struggles during a time of rising rates. That’s because the value of residential mortgage bonds declines when long-term rates increase. However, the same isn’t true for mortgage service rights, which benefit from rising rates in two ways.

First, default risk declines because rates usually only rise during a strong economy. Second, higher mortgage rates mean that early repayment risk declines because consumers are less able to refinance at lower rates to pay off existing loans.

This means that the mortgage remains an income producing stream for NRZ, whose core business model is exceptionally profitable.

Source: NRZ investor presentation

Specifically, that’s because its excess MSR portfolio means it can outsource its mortgage servicing to third parties, and the remaining cash flow represents a very low, high margin stream of income. Of course, banks (which own about 74% of all mortgage service rights) sell them because they want to unload their higher risk MSRs to decrease risk.

This means that risk management is very important, but fortunately, NRZ has proven very skilled at doing just this.

Source: NRZ investor presentation

For example, while true that its average MSRs have lower FICO scores than the industry average, at 709, they are slightly above the US average of 700. More importantly, the conditional prepayment rate (refinancing to pay off mortgage early) or CPR rate has usually been much lower than the industry average.

Source: NRZ investor presentation

NRZ has also been benefiting in other ways from the strong and long economic expansion. Specifically, its call rights portfolio has been increasing in value thanks to a steep drop in delinquencies. The same is true for the consumer credit portfolio. All of which drives steady growth in book value per share, indicating shareholder wealth creation.

But best of all? NRZ’s short- to medium-term future growth continues to look good thanks to management continuing to be able to raise accretive equity growth capital and put it to work buying highly profitable assets.

NRZ Keeps The Acquisition Train Rolling

At the end of 2017, NRZ announced it was purchasing mortgage originator and servicer Shellpoint Partners for $190 million. That acquisition will be financed with existing cash on the balance sheet.

Source: NRZ investor presentation

Management estimates that this deal will allow it to grow its MSR and call rights business by 23% and 11%, respectively.

In addition, the mREIT recently announced that it was doing a secondary offering of 28.75 million shares (including broker option to sell more shares) at close to $17. That does represent about 9.3% dilution, but keep in mind two things.

First, all mREITs fund growth through equity sales. What matters is whether or not it’s at an accretive price. In this case, NRZ’s tangible book value per share is $15.26, meaning that NRZ likely got an 11% premium on its shares. Basically, that means selling $1 in assets for $1.11, with the $.11 per share representing “free money” that management can use to fund future highly profitable growth.

Q1’s core EPS might take a temporary hit assuming management doesn’t put all of that $475 or so million to work (net of underwriting fees) right away. But in the long term, NRZ has proven that it knows how to invest shareholder capital very profitably, with strong growth in earnings, book value, and dividends.

In other words, NRZ looks poised for another record year in 2018, and is likely to raise its dividend for a fifth straight year.

Dividend Profile Remains High Risk, But Highly Attractive

Stock

Yield

Adjusted 2017 Payout Ratio

Projected 10-Year Dividend Growth

Potential 10-Year Annual Total Return

New Residential Investment Corp.

11.8%

85%

0% to 3.4%

11.8% to 15.2%

S&P 500

1.8%

50%

6.2%

8.0%

Sources: earnings release, FastGraphs, CSImarketing, Multpl.com

Ultimately, investing in any mREIT is about one thing and one thing only, the sky-high dividend. And since my goal is to avoid dividend cuts whenever possible, the thing I look most closely at is the dividend profile. This consists of three things: yield, dividend safety, and long-term payout growth prospects.

Now at its current, post correction levels, NRZ is indeed trading at an attractive price (more on valuation in a bit). In fact, with a yield this high, I don’t even necessarily look for dividend growth, though NRZ has a great history of that too.

Source: NRZ investor presentation

Specifically, what I want is dividend that’s very well covered by core EPS. In this case, the 2017 payout ratio is 85%, when backing out the Ocwen one-time earnings benefit. That may seem high but remember that legally mREITs are required to payout 90% of taxable net income (not same as GAAP EPS or core EPS) as dividends. So this means that all mREIT payout ratios are high. In fact, most are 90% to 100%, with many being over 100%, indicating unsustainable payouts that are likely to be cut soon.

NRZ’s low payout ratio means that not only is the dividend highly secure (for now) but likely to rise once again in 2018. That may be in the form of a regular dividend hike, or a supplemental (special) dividend. I actually hope that NRZ goes the special dividend route because it means that it makes it more likely that the regular dividend can be maintained during an economic downturn. That would make NRZ a better long-term income stock for lower risk investors.

But here’s what I especially like about NRZ. The reported core EPS figure is one that investors can have relatively more confidence in compared to rivals.

That’s because all mREITs make lots of financial adjustments to net income in order to get to “core” EPS, which is what is supposed to pay the dividend. However, often the things that get added back in include actual cash expenses that result in inflated core EPS figures and payouts that are far less secure than what investors think.

Metric

2016

2017

Q4 2017

Net Income (GAAP)

$504.5 million

$957.5 million

$226.1 million

Core Earnings

$510.8 million

$861.4 million

$199.3 million

Difference

+1.2%

-10%

-11.9%

Source: NRZ earnings release

In contrast, NRZ has a history of being better than most mREITs in not twisting its numbers around. For example, in 2016, core EPS was just 1.2% higher than net income, while in 2017, it was actually far below. This indicates that NRZ’s 85% payout ratio might be conservative, further solidifying my confidence in the payout and its potential future growth.

Source: Achilles Research

Best of all? NRZ’s track record, while short (it IPO’d in 2013) is generally one of disciplined dividend growth that allows it to maintain a payout ratio of 70% to 95%. So this means that NRZ’s low adjusted payout ratio of 85% (one of the best in the industry) isn’t a fluke, but rather in line with management’s long-term philosophy.

This is why I own NRZ. Because while the residential mREIT industry is a high risk minefield (more on this in a moment), I believe that NRZ will be able to maintain its dividend at present levels in the long term.

Just don’t necessarily expect the same kind of 9.6% CAGR dividend growth we’ve seen in the past. If NRZ can safely raise its regular dividend at $0.01 or $0.02 per quarter annually, then I will consider that a huge success. Similarly, if management decides to fix the regular dividend at $0.50 per quarter and pay out all legally required marginal earnings as a supplemental (but steadily growing) dividend, then NRZ’s effective yield on cost will still rise.

Basically, all NRZ needs to do to beat the market is keep paying the current dividend over time. No actual payout growth (which is likely in the short to medium term) or share price appreciation is necessary to generate market beating total returns.

Valuation: NRZ’s Sweet Spot Share Price Worth Buying Today

Chart

NRZ Total Return Price data by YCharts

NRZ has had a great year, beating the market for most of the year, and managing to not underperform during the correction. In fact, the recent pullback makes NRZ a potentially good buy.

P/Core EPS

Historical P/Core EPS

Price/TBV

Historical P/TBV

Yield

Historical Yield

6.0

7.3

1.11

1.17

11.8%

11.2%

Sources: earnings release, FastGraphs, Gurufocus

That’s because, whether you look at the P/Core EPS, price to tangible book value, or yield, they are all trading at significant discounts to their historical norms.

Now, I should note that some mREIT investors will take issue with ever buying a stock at a premium to book value. Many would rather buy at a discount, because theoretically that means you are buying $1 in assets for less than a dollar.

BUT remember that an mREIT’s assets are nothing but its loan book. Those loans roll off over time and must be replaced. Thus, I don’t actually view the book value as important as long as its growing over time. In fact, I only ever buy mREITs or BDCs that have a track record of trading at a premium to book value for two reasons.

First, it represents the market (which is forward looking) having strong confidence that management can grow shareholder value over time. In other words, NRZ has historically traded at a 17% premium to book because investors are willing to pay $1.17 for $1 in assets because the industry leading management team at Fortress is likely to grow that value over time (along with its dividends).

The second reason is more fundamental to the mREIT industry. Recall that all mREITs must frequently sell new shares to keep growing. Well, if I know that I’ll be diluted over time, I want to make sure that the mREIT I own is able to sell those shares at accretive prices.

That means that the shares are expensive enough to ensure that book value per share, and more importantly, core EPS will rise over time. That’s because the cash raised by those share sales will ultimately be invested into highly profitable income producing assets.

Finally, I should note that backwards looking value metrics can only tell us so much. After all, profits and dividends only occur in the future. This is why I like to also use a forward looking, long-term dividend discount model to estimate the fair value of a stock.

This basically means valuing NRZ purely on the value of its future dividends, discounted back to the present value.

Forward Dividend

Projected 10-Year Dividend Growth

Projected Dividend Growth Years 11-20

Fair Value Estimate

Dividend Growth Baked In

Margin Of Safety

$2.00

0% (conservative case)

0%

$18.13

-1.6%

7%

1% (like case, analyst consensus)

0%

$19.32

13%

2% (bullish case)

1%

$20.91

19%

3.4% (best case scenario)

2%

$23.29

27%

Sources: earnings release, FastGraphs, Gurufocus

I use a 9.1% discount rate because since 1871, this is the total return a low cost S&P 500 ETF would have generated, net of expense ratio. Thus, I consider this the opportunity cost of invested money, since a low cost S&P 500 ETF is the best default alternative for most investors.

Of course, there is a major caveat with all DDMs, and that is that we don’t know for sure that NRZ can maintain its payout over time. Up to this point no mREIT has ever done so and the market is currently pricing in future dividend cuts. But assuming that NRZ is set to become the only SWAN (sleep well at night) stock in its industry, I assumed a range of what I consider realistic dividend growth rates to come up with fair value approximations.

Even if NRZ never raises its dividend over the next 20 years, the $40 in dividends is worth $18.13 today. This indicates that NRZ is about 7% undervalued.

If the mREIT can indeed keep growing the payout over time, even at 1%, then it’s 13% undervalued. And in a best case scenario, where we get $0.02 per quarter annual increases, then it would be 27% undervalued.

The bottom line is that, assuming you trust management to keep the current dividend safe over an entire economic cycle, then NRZ is trading in its sweet spot. A price that is below fair value but also high enough to allow it to continue growing strongly in the years to come.

However, never forget that these figures are all based on the assumption that NRZ can, and will, avoid a future dividend cut. In reality, that may be asking too much of any mREIT, even one as well run as this one.

Risks To Keep In Mind

Good dividend investing is not about avoiding risks but recognizing and managing them (as NRZ has been so good at doing thus far). This is why I rate every stock I own by its dividend safety rating and also add an outlook based on the probability of a safety downgrade.

Dividend Risk Ratings

  • Ultra low risk: (Limited to ETFs with proven histories of steadily growing dividends over time); max portfolio size 15% (core holding).

  • Low risk: High dividend safety and predictable growth for 5+ years, max portfolio size 10% (core holding).

  • Medium risk: Dividend safe and potentially growing for next two to three years, max portfolio size 5%.

  • High risk: Dividend safe and predictable for one year, or inherently high risk industry, max portfolio size 2.5%.

  • Ultra High Risk: Dividend cut is likely in the next year or two (like WPG), max portfolio size 1%. Note that I personally do not invest in ultra high risk dividend stocks.

Outlooks

  • Negative: Fundamentals in industry and/or company deteriorating, business model might be broken, safety downgrade possible.

  • Stable: Fundamentals in industry and/or company stable and growing, safety downgrade unlikely.

  • Positive: Fundamentals in industry and/or company improving, safety upgrade possible

I consider NRZ to be a high-risk stock, not because the dividend is at risk anytime soon, but rather because the mREIT industry is one where stable and steadily growing dividends are almost impossible to come by. In fact, no mREIT I’m aware of has been capable of maintaining its dividends across a full economic cycle.

Chart

NLY Dividend data by YCharts

For example, Annaly Capital (NLY) the biggest and oldest mREIT in America. It has managed to generate 786% total returns vs. the S&P 500’s 322% since 1997, all while having an incredibly volatile dividend. This means that the share price has also been gut wrenchingly volatile, and to get those returns over the past 20 years would have required holding onto shares and DRIPing the dividends throughout.

Now, as I explained, NRZ has a rather unique business model, one that is far less rate sensitive than most residential mREITs. However, at the end of the day, it’s still a highly complex “black box” financing company. One that happens to be run like a hedge fund (management gets paid 1.25% of assets and 25% of profits).

And we can’t forget that NRZ’s assets are all relatively short lived, generally existing on the balance sheet for only two to five years. This means that wildly profitable investments in the past, like the Spring Castle consumer credit portfolio (89% returns), will roll off and need to be replaced with newer loans.

Source: NRZ investor presentation

However, as the economy has improved, the ability to find supremely discounted loan portfolios has declined, and some of NRZ’s more recent investments have not had nearly as attractive return profiles.

Source: NRZ investor presentation

For example, the Prosper consumer portfolio has thus far only generated 16.1% internal rates of return. That’s within the 15% to 20% target the company has for these kinds of loans, but the point is that there is no guarantee that NRZ can continue its amazing success in the future.

In fact, it may be that NRZ’s early success, especially its fantastic growth rates prove a fluke. After all, it IPO’d in 2013, well into the economic recovery, but with a core portfolio of legacy loans that were created during the financial crisis. That meant NRZ bought them at fire sale prices, which have not been repeated as the economy recovered and default rates declined steadily.

So this presents a challenge to income investors. On one hand, we all want safe and growing dividends, which NRZ has a short, but very impressive track record of. However, in order to be able to make the same kind of wildly profitable investments in the future will require a recession to increase riskier loan default rates and thus make them trade at bargain prices once again.

However, NRZ has not yet had to experience a recession. So the question is whether or not management’s risk management skills will be able to sustain continued safe dividends while picking up the kind of bargain loans that can drive strong earnings and dividend growth when the economy enters its next expansion period.

Now, the reason I own NRZ is because I have high confidence in the management team. In fact, I believe that the strong dividend coverage means that NRZ MIGHT prove to ultimately become the first SWAN in its industry.

After all, BDCs are also notoriously challenged when it comes to preserving payouts (and growing them over time), especially during economic downturns. But Main Street Capital (MAIN) has managed to prove it can be done, not just maintaining but also growing its dividend during the financial crisis.

However, it’s critical that investors understand that NRZ’s strengths over the past year, including its impressive growth in book value, earnings, and dividends, has been largely due to strong economic fundamentals beyond management’s control.

So that means that NRZ’s dividend remains highly secure, and likely to grow, but perhaps only during an economic expansion. During the next recession, rising default rates will both hit its cash flow and book value, which could make it very hard to grow profitably. Because remember that NRZ has grown like a weed thanks to its historical premium share price allowing management to raise accretive equity capital at a prodigious rate.

However, the stock market is very fickle, especially in mREITs, where institutional ownership is very low (58% of NRZ shares owned by retail investors). This means that NRZ might end up cut off from cheap growth capital when the economy hits the skids.

The good news is that the economy actually appears to be accelerating, with little risk of a recession anytime soon.

Source: New York Federal Reserve

For example, the New York Federal Reserve estimates that the US economy is growing at 3.1% right now. That continues a trend of accelerating economic growth that we’ve seen recently.

  • 2016 economic growth: +1.5%

  • 2017 economic growth: +2.3%

  • Q4 2017 economic growth: +2.6%

  • Projected Q1 2018 economic growth: +3.1%

Meanwhile, a meta analysis of leading economic indicators shows that the risks of a recession beginning in the next four and nine months are about 0.5% and 15%, respectively.

Source: Jeff Miller

In addition, the improving economic conditions mean that the bond market is expecting higher inflation (a bullish sign on the economy). This has caused the 2-10 year Treasury yield curve to start rising, ending its long and disturbing downward trend of the past year.

Source: St. Louis Federal Reserve

Remember that the yield curve has been the best predictor of recession since the 1970s. The reason for this is that if the bond market believes that economic growth will be strong in the future, then that also likely means higher inflation.

So bond investors will demand higher yields from long duration bonds (such as 10- and 30-year treasuries) compared to short duration ones (like 2-year treasuries).

This also has a fundamental effect on the economy because financial companies generate their profits from borrowing at short-term rates, and lending out at longer-term, higher yields. In other words, the spread or difference between short- and long-term rates is what matters, not the actual rates themselves.

If the yield curve inverts (10-year yield falls below 2-year yield), then it means that the bond market expects weak growth ahead. This is why an inverted curve has usually come 12 to 18 months before a recession. For the curve to now be headed higher is a very bullish sign for the economy, even if it can cause stocks to enter a correction in the short term.

So the bottom line is that NRZ’s earnings should continue to boom for as long as the economy remains growing, which might be for another few years. That means that its short-term dividends are secure, and likely to grow along with its core EPS. Across an entire economic cycle, however, the sustainability of the payout remains to be proven.

If any mREIT can manage to avoid cutting its dividends over the long term, I believe it might be NRZ. If it can achieve this feat, then it will earn an upgrade to medium risk, and if it can do so over two recessions, then it will get another upgrade to low risk status.

However for now, I plan to maintain NRZ at a range of 2% to 2.5% of my portfolio. Specifically, that means only buying more shares at a good (undervalued) price, once its percentage of my holdings declines to a level where I can top it back up to my max safety cap.

Bottom Line: This High Risk mREIT Continues To Execute Masterfully… At Least For Now

NRZ is the most impressive mREIT I’ve ever seen, thanks to a management team that has well earned its hedge fund like compensation. The mREIT continues to perform masterfully, with strong capital allocation acumen and, at least thus far, excellent risk management performance.

I fully expect NRZ to continue to boom for as long as the economy does. Which bodes very well for high-yield investors who are likely to see continued dividend growth, either regular or supplemental ones.

However, given that it’s impossible to tell how much of NRZ’s stunning success is due to economic luck, it remains a high-risk dividend stock. So make sure you only own it if you are comfortable with the complex and economically volatile nature of its financial black box business model. And even then only as part of a well diversified portfolio, so you can sleep soundly at night.

Disclosure: I am/we are long NRZ.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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UberEATS Driver Fatally Shoots Customer in Atlanta, Police Say
February 19, 2018 6:18 pm|Comments (0)

Atlanta police say a driver for UberEATS, the ride-hailing company’s food delivery service, shot and killed a customer in the city’s posh Buckhead neighborhood late Saturday night.

The victim was identified by a local NBC affiliate as 30-year-old Ryan Thornton, a recent Morehouse College graduate. According to NBC’s report, Thornton and the UberEATS driver exchanged words after the delivery was made. The driver then allegedly shot Thornton several times and fled in a white Volkswagen vehicle.

Thornton was taken to a local hospital, where he later died from his wounds. The alleged shooter was still on the run from police early this morning.

An Uber spokesperson said the company was “shocked and saddened” by the event, and are cooperating with Atlanta police in the investigation.

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One Buckhead resident told the television station that he would be more cautious about using Uber services after the shooting. Uber drivers have been implicated in violence in the past, and the company’s approach to screening its drivers has been criticized for some of its legal and public relations problems.

The most damaging case was likely that of an Indian passenger who was raped by an Uber driver in 2014. In court documents, the passenger alleged that Uber executives wrongfully obtained her medical records with apparent plans to discredit her. The driver was sentenced to life in prison, and Uber settled the civil suit brought by the victim late last year.

Last November, two women filed a class-action lawsuit against the company in the U.S., alleging that its failure to screen drivers has led to thousands of incidents of sexual harassment and even rape of female passengers. In one example, an Uber driver was arrested for the rape of a passenger last December, also in Atlanta. Just days later, an Uber driver in Lebanon confessed to murdering a British Embassy staffer there.

Under former CEO Travis Kalanick, Uber fought hard against certain driver-screening rules. In one case, Uber shut down its operations in Austin, Texas in 2016 after spending millions of dollars to defeat a background-check rule there, and failing. It returned to the city after state legislators overturned the local ordinance. Safety concerns were also among the reasons London has barred Uber from operating there.

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