Commercial real estate finance company experiences explosive growth


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The motley fool

Walker & Dunlop is a small but impressive finance company that has been around since the 1930s and provides all kinds of finance for commercial real estate. One of the largest commercial real estate lenders in the country, it issues commercial mortgages with a specific concentration in multi-family properties (including apartment buildings and military and student housing). It is also the eighth largest commercial mortgage service in the United States, with a service portfolio of $ 107.2 billion at the end of 2020.

Walker & Dunlop has experienced explosive growth since its IPO in 2010. Over the past decade, its shares have climbed over 900%, with average annual growth of over 26%. In its latest annual report, it posted 29% year-over-year growth in trading volume, 33% revenue growth and a 41% increase in diluted earnings per share. The company has doubled its turnover in the past five years and is looking to double it again in the next five years.

Investors can expect continued growth over the long term, as well as dividend income, with the company’s payout having recently returned 1.55%. (The Motley Fool owns stock and recommends Walker & Dunlop.)

Ask the fool

From TW in Muskegon, Michigan: What is a company’s “market capitalization”?

The madman replies: The term is the abbreviation for market capitalization, which reflects the total value of the company in the stock market. It is calculated by multiplying the total number of shares outstanding by the current share price.

Consider Apple, for example, which was recently trading at around $ 150 a share. To find out the total of its outstanding shares, you can consult its latest financial statement. Or check out websites like Yahoo! Finances that include the outstanding shares among the statistics of the company they offer. Multiply the recent number of Apple stocks of $ 16.5 billion by $ 150 and you will arrive at its recent market cap – around $ 2.5 trillion. This number can give you an idea of ​​whether the company is overvalued or undervalued, whether you compare it to past levels or to its peers.

From FE to Abilene: If I had invested $ 1 in the stock market after the crash of 1929, what would I have today?

The madman replies: The crash of 1929 unfolded over several months and continued beyond 1929. The Dow Jones Industrial Average peaked in early September 1929 at 381. It first fell in October, falling 12.8% on October 28, then by 11.7% on October 29. , when it closed at 230. It recovered slightly but continued its long descent, dropping to 41 in July 1932. At this point it was down about 89% from its high. It took 25 years, from 1929 to 1954, for the Dow Jones to again reach its previous high of 381.

With the Dow Jones recently around 35,800, it has risen 86,800% from that low of 41, which is enough to turn your $ 1 into $ 869, at an average annual growth rate of around 7.9%. . And that doesn’t even include dividends!

School of fools

It is not news that general managers are generally well paid. How highly paid? Well, according to the Economic Policy Institute, “In 2020, a CEO of one of the 350 largest companies in the United States was paid $ 24.2 million on average” – that’s a huge increase of 18 , 9% compared to the level of the previous year, largely due to stock awards and stock options.

To put it in perspective, it helps to compare the salary of CEOs to that of their employees. According to the EPI, the CEO-to-typical worker pay ratio was 61: 1 in 1989, jumped to 307: 1 in 2019, then increased by 14% to reach 351: 1 in 2020. Between 1978 and 2020, CEO compensation (including stock awards and options) jumped 1,322%, while typical workers saw their pay rise only 18%.

Those who earn a disproportionate salary, and those who pay it, will say that you have to pay for good performance. But there are studies showing that many companies pay for underperformance. The research agency MSCI, for example, studied CEO compensation and company performance for 429 companies in the MSCI USA index over the 10 years between 2006 and 2015; it found that “the bottom fifth of companies by stock incentive award outperformed the top fifth by almost 39% on average over a 10-year cumulative basis.”

Why are so many CEOs collecting so much cash and stocks when they don’t deliver particularly strong corporate performance? Well, corporate boards set CEO compensation, and CEOs are often in the room – and even on compensation committees! – when they do. CEOs can also influence who gets appointed to the board, and as Warren Buffett joked, “When looking for directors, CEOs aren’t looking for pit bulls. It is the cocker spaniel that is brought home.

Shareholders have their say: they can express their dissatisfaction by voting against the proposed compensation for the CEO. (These votes are currently non-binding in the United States, although that may change.)

My dumbest investment

From MA, online: My dumbest investment? I sold Shopify for $ 80 due to pricing issues.

The madman replies: There are different schools of thought in the investing world, and your actions make perfect sense for one of them – value investors – looking to buy into companies for less than their fair price. value. Value investors may become uncomfortable owning stocks when they appear to be highly valued, as it suggests that they may soon lose value.

The opposing school of thought is that of growth investors, who focus less on a stock’s valuation than on its growth prospects. Growth investors are often willing to pay higher prices for high performing companies, expecting them to meet – and exceed – these values ​​over time.

So while a value investor might never invest in a fast growing stock like Shopify, a growth investor would, perhaps pointing out that companies like Amazon.com and Apple often seemed overvalued and then hit new highs on several occasions.

Shopify’s stock has grown by over 3,400% over the past five years, enough to turn a $ 10,000 investment into over $ 350,000. The ecommerce software specialist recently had a total market value of $ 183 billion, with many expecting it to be worth much more than that in the future. Others, however, wonder if the stock has gained ground.

Who am I?

My roots go back to 1873 when a used book business was opened in Wheaton, Illinois. In 1932, I opened a retail store on Fifth Avenue in New York City, which in 1974 was named “the world’s largest bookstore” by Guinness World. Recordings. I bought B. Dalton Bookseller in 1987, Doubleday Book Shops in 1990, and Borders and Waldenbooks in 2011. I launched my NOOK e-readers in 2009, and my NOOK store has over 4.5 million digital books. I’m the world’s largest retail bookseller, recently with 632 stores in 50 states. Who am I?

Can’t remember last week’s trivia question? Find it here.

Trivia response from last week: Levi Strauss & Co.

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