Rithm Capital (RITM) Plunge 2.23% to 2025 Low as Paramount Acquisition Sparks Investor Caution

Rithm Capital (RITM) shares fell 2.23% on Monday, marking a third consecutive day of declines and pushing the stock to its lowest level since July 2025. The intraday drop of 2.39% underscored growing investor caution as the company navigates a complex mix of strategic moves and external uncertainties.

The most significant development driving RITM’s stock performance in September was its $1.6 billion all-cash acquisition of Paramount Group, a New York City and San Francisco-based office REIT. The deal, approved by both companies’ boards, is expected to close by Q4 2025 and adds 15 Class A office properties to Rithm’s portfolio. While analysts view the expansion as a strategic bet on urban office demand recovery, Paramount’s 12% post-announcement selloff highlighted skepticism about the valuation and sector challenges.

Institutional investor activity reflected a divided market sentiment. Recent purchases by firms such as Foundry Partners LLC and Trust Investment Advisors signaled confidence in RITM’s growth strategy, while others, including HRT Financial LP, trimmed their positions. These shifts suggest a cautious approach among investors, balancing optimism over asset diversification with concerns about liquidity pressures and integration costs tied to the Paramount acquisition.

Indirect risks also emerged from ongoing legal disputes involving Sculptor Capital Management, a hedge fund in which Rithm holds a stake. A lawsuit alleging favoritism in Sculptor’s board dynamics and competing buyout bids have raised governance concerns, indirectly affecting RITM’s market perception. Though not directly tied to Rithm’s operations, the controversies underscore broader uncertainties in high-stakes buyout strategies and regulatory scrutiny.

Analyst ratings further highlighted divergent views. A “Moderate Buy” rating on September 22 reflected confidence in Rithm’s dividend yield and strategic acquisitions, while bearish notes cautioned against macroeconomic headwinds, including rising borrowing costs and soft office demand. The mixed outlook underscores the tension between Rithm’s operational strengths and external risks, leaving investors to weigh short-term volatility against long-term potential.