In Wednesday's "Mad Money" program, Jim Cramer checked in with Patti Cook, CEO of Finance of America, the mortgage company that will soon be merging with Replay Acquisition (RPLA) , a special purpose acquisition company.
Cook said that Finance of America isn't yet a household name, but they're a diversified consumer lending business that includes three segments with fee-for-service and portfolio management services.
Home improvement loans are the company's primary driver, Cook noted, as those loans give Finance of America access to sell new mortgages, reverse mortgages and refinance services to those customers.
When asked about the loan environment, Cook said there is still a lot of refinance activity left to go. Cook added that becoming a public company will give her company the name recognition it deserves and as analysts begin covering the company, their stock multiple will improve.
Let's check and see if the charts of RPLA show as much optimism as the CEO believes.
In this daily bar chart of RPLA, below, we do not see an inspiring story. Prices have largely moved sideways for several months. There are two rallies -- July and December -- but they fizzled out. The trading volume has increased since late November but the On-Balance-Volume (OBV) line has weakened since late November and suggests that sellers of RPLA have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is in sell territory.
In this daily Point and Figure chart of RPLA, below, the software is projecting a nearby price target of $11.12. I am not impressed.
Bottom line strategy: Every CEO of every company that has ever gone public is positive about their future potential. Looking at the charts of RPLA (above) I do not share that enthusiasm.