Anthony Hsieh’s $16M vote of confidence in LoanDepot

In a vote of confidence in the company he founded, loanDepot CEO Anthony Hsieh has shelled out more than $16 million in recent months to buy shares in his company on the open market — and he wants the world to know it.

Not long after loanDepot reported a sharp drop in fourth-quarter profits, shares in the company sagged to an all-time low of $3.54 on Feb. 3. Since an initial public offering last year priced at $14 a share, shares in loanDepot have traded for as much as $39.85.

Investors are worried that rising interest rates mean the end of a profitable refinancing boom, driven by the Federal Reserve’s efforts to keep interest rates low during the pandemic. Now that the Fed is intent on tightening, mortgage rates are headed back up, meaning mortgage lenders will have to work harder to make less profitable purchase loans to homebuyers.

On a Feb. 1 fourth quarter earnings call with investment analysts, Hsieh argued that loanDepot’s technology and the company’s diverse mix of origination channels will allow it to grow market share in the months ahead, as lenders shift from refinancing loans to serving homebuyers. He also revealed that he saw loanDepot shares as undervalued, and he was buying shares in the open market.

“I am a strong believer in this company,” Hsieh said of the lack of investor confidence. “So much so, that in the last quarter I personally bought $10 million of our shares on the open market. In my opinion, loanDepot represents an incredible value and I’m confident we will continue to accelerate our growth, increase our market share, serve our customers, employees, shareholders and communities, while outperforming in the long term.”

On Thursday, loanDepot sought to publicize the fact that Hsieh has continued to buy up loanDepot Class A common stock, issuing a press release noting that his purchases since Nov. 3 now total 3.15 million shares — more shares than he sold during loanDepot’s February IPO, the company said. On Aug. 17, 2021, Hsieh sold 1.06 million shares of loanDepot Class A common stock for $8.07 per share, which he’d acquired in the IPO.

Hsieh has voting and investment power over hundreds of millions of loanDepot Class C common stock that’s convertible into Class A shares that can be used to compensate executives. loanDepot Chief Revenue Officer Jeff Walsh sold 75,000 shares of class A common stock on Feb. 7 at $3.64 a share. After the sale, he still owned 93,403 Class A shares.

Anthony Hsieh buying loanDepot common stock

Source: U.S. Securities and Exchange Commission filings. 

Regulatory filings show that over the last three months, Hsieh has spent $16.2 million on eight open market purchases of loanDepot Class A common stock, paying an average of $5.13 a share.

“As loanDepot’s founder and largest shareholder, I believe that loanDepot’s current valuation does not fully reflect our strong business potential or our vision for long-term growth, and that’s why I continue to invest personal funds in company shares,” Hsieh said in a loanDepot press release publicizing his recent purchases.

Although shares in loanDepot were trading for as much as $4.44 Thursday afternoon, Hsieh is still in the red on the 1.48 million shares he purchased in four separate transactions during November, when he paid $6.77 a share, on average.

But Hsieh has paper gains on his more recent purchases of 1.68 million shares in February, for which he paid an average of $3.69 a share.

All in all, Hsieh has racked up $2.2 million in paper losses on his vote of confidence in loanDepot — the difference between the $16.2 million he spent to acquire loanDepot shares, and their $14 million value at Thursday’s high of $4.44 a share.

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Email Matt Carter