Though the principals are not saying much, the news of Capstead Mortgage Corp.'s accumulation of North American Mortgage stock has set tongues wagging in the mortgage industry.
Capstead disclosed Monday that it had been buying North American's shares since February -- racking up 5.06% so far and with authorization from its board to go as high as 9.5%.
Capstead's stated intention is to hold the shares for investment purposes, but few see the Dallas-based real estate investment trust as a passive, longterm investor.
"They are not in it for the dividends," said a mortgage banker.
There were two schools of thought about Capstead's intentions.
Several industry insiders think that Capstead, a real estate investment trust that operates a jumbo loan conduit, may ultimately vie for control of North American. "Its a natural fit," said one mortgage executive. He pointed out that Countrywide Credit has its own REIT and added that there would be some "synergies."
Originations Seen as Factor
Some believe that Capstead, as a purchaser and securitizer of jumbo loans, has been hurt by the lack of an originations unit.
One executive pointed out that Capstead has made several moves in recent months that indicate an interest in having a mortgage originations function. In December the company set up a subsidiary, Capstead Inc., and brought in ex-NationsBanc Mortgage head Christopher Gilson as president.
At that time, Mr. Gilson said, "Over time we plan to expand into more of the traditional mortgage banking and financial service areas through a combination of initiating new operations and opportunistic acquisitions."
The establishment of Capstead Inc. is important because Capstead Mortgage, as a REIT, cannot control more than 10% of the stock of another company and retain its tax advantage.
Some observers think that Capstead has another agenda. Namely, that the Dallas-based REIT is hoping to put the Santa Rosa, Calif., mortgage bank into play.
"They are smart fellows over there," said a bank executive. "They are probably hoping that some big bank will come in and make an offer that will take them out."
If so, the purchase of North American stock in February and March -- before takeover speculation drove up the sector's prices -- was well timed.
