Waterfall Asset Management boosts Millrose stake as homebuilders outsource land risk

Waterfall Asset Management has disclosed a significant increase in its investment in Millrose Properties, acquiring 219,984 shares during the first quarter of 2026. According to a May 8 filing with the US Securities and Exchange Commission, the estimated value of this transaction was $6.62 million, calculated using average closing prices from January through March. This acquisition raised Waterfall's stake to 5.09 per cent of its reportable assets under management as of 31 March.

The investment is viewed by market observers as a vote of confidence in the continued viability of Millrose's Homesite Option Purchase Platform. This model allows homebuilders to expand their controlled land positions with minimal upfront capital, effectively outsourcing land risk and preserving cash in an environment where margins remain under pressure. Waterfall's decision suggests a belief that builders will prefer this asset-light approach over loading more inventory onto their own balance sheets.

Financial performance for the period supports the thesis of growing demand for such platforms. Millrose reported first-quarter revenue of $194.9 million, a figure that more than doubled compared to the same period last year. Net income for the quarter reached $122.9 million, reflecting the scaling nature of the business and the stability of the recurring income streams generated by the residential land banking model.

Operational expansion has accompanied the financial growth, with the company expanding its builder network to 17 counterparties during the quarter. This growth included the onboarding of a new top-10 national homebuilder, highlighting the platform's appeal to major industry players. Concurrently, Millrose redeployed nearly $989 million into land acquisitions and development funding, demonstrating the active flow of capital through its ecosystem.

As of 7 May, Millrose shares were trading at $27, representing a gain of 4.4 per cent over the past year. Despite this positive momentum, the stock has significantly underperformed the broader market, trailing the S&P 500's roughly 30 per cent gain in the same period. This divergence underscores the specific nature of the investment, which targets a niche segment of the real estate market rather than general market breadth.

While the institutional buying from Waterfall suggests a long-term bullish outlook, other analysts have not yet included Millrose in their top stock recommendations. The Motley Fool Stock Advisor did not feature the company in its list of the 10 best stocks to buy as of 10 May, noting that the firm's average return has historically outperformed the market significantly. Nevertheless, the strategic positioning of Millrose within the shifting dynamics of residential land banking remains a key focus for investors monitoring the sector.