ValueAct Bets Big on Rocket Companies: Is This the Next Level Play or Just Another Bald Bait?

Rockets Mortgages and ValueActs Oh My!

Alright alright alright Asmongold here and today we're diving into some spicy news about Rocket Companies (RKT). Now I know what you're thinking: "Asmongold why are you talking about mortgages? I thought you just complained about Blizzard all day!" Well the thing is money makes the world go round and this is about MONEY. ValueAct Capital these guys are like the whales of the investment world you know? They've swooped in and grabbed almost 10% of Rocket Companies. Seems like they think this stock is more than just a shiny penny.

The Undervalued Rocket: Is This a Hidden Gem or a Fool's Errand?

So what's the deal? ValueAct is saying Rocket Companies is undervalued because of its 'technology first assembly line approach' to mortgages. Apparently they can crank out loans faster and cheaper than the competition. That's like saying they're the 'McDonald's' of mortgages – fast efficient and probably not great for your long term financial health (okay maybe that’s a bit too harsh). They’re saying Rocket stock hasn’t taken off since its IPO because of its weird share structure and the fact that Dan Gilbert the founder controls like 80% of the voting power. Controlled companies don't scare ValueAct though but should they scare you?

Float Like a Butterfly Sting Like a Bee: The Float Problem

One of the big problems ValueAct points out is the tiny public float. That’s the amount of stock available for us the little guys to trade. It’s been super small which means big institutional investors haven't been able to jump in. But here's the kicker – Rocket's float is about to get THICC. It's ballooning from 7% to 35% thanks to some pending acquisitions. This should attract more investors but ValueAct says that this alone isn't enough.

AI to the Rescue? Or Just Another Buzzword?

ValueAct is drooling over the potential of AI. They think Rocket can use AI to supercharge its mortgage process even more. It is like they can add an AI overclock to the machine. Look I am not so sure I have seen enough AI and Crypto companies collapse to know that AI will not solve all the problems. They're talking about Rocket becoming the Tesla or Amazon of the mortgage world. Bold claims but hey gotta dream big right? Plus Rocket has a new CEO who's apparently not afraid of technology. That's a good start I guess. The reality is we are all doomed but I digress!

From Single Digits to Mortgage Domination: Rocket's Ambitious Plan

Here's the ultimate goal: ValueAct thinks Rocket can more than double its market share in the mortgage biz. They're aiming for 15% to 20% organically and maybe even higher with some acquisitions. I mean consolidation is the name of the game these days. Everyone wants to be the big fish in a small pond or at least a medium sized pond with good fishing. ValueAct is painting a picture of Rocket becoming a dominant player in a fragmented industry like some kind of mortgage Monopoly. As long as that does not result in the company becoming a soulless entity!

ValueAct's Due Diligence: Not Just Another Hail Mary

ValueAct ain't just throwing darts at a board alright? They've got experience with AI on both sides of the fence from investing in the companies that build the tech to the ones that use it. They've been in the boardrooms of Microsoft and Salesforce. So they know their stuff. This investment though relatively small for them right now could lead to a board seat down the line. Time will tell if this is the right call but for now ValueAct is betting big on Rocket Companies. Let's see if this gamble pays off or if it ends up being a complete waste of time and money. After all we are all gonna die anyways!