With a return of 43.9% over the past year, Fortress Investment Group (NYSE: FIG) is currently the top-performing mutual fund on the market.

The company began operations as a private equity firm in 1998 with $400 million under management. Between 1999 and 2006, the firm averaged a return of 39%. And today, operating as a mutual fund, the group manages more than $54 billion.

The fund‘s success merits a closer look, and while reviewing the company’s portfolio, I made a surprising discovery.

Most mutual funds tend to maintain a more conservative portfolio of holdings that encompass a wide variety of market sectors. And most fund’s largest holding rarely makes up more than 25% of the portfolio.

But Fortress is different.

In fact, in the company’s current holdings, just one stock makes up 43% of the overall portfolio. Fortress owns more than 67 million shares of this company — a total investment of over $3.1 billion at today’s prices. 

And so far, Fortress’ decision to put over $3 billion worth of eggs in one basket has been right on the money. The stock has been on a tear: up 49% since January, 110% during the past 12 months, and 225% over the past three years.

The name of the company? Nationstar Mortgage Holdings (NYSE: NSM).

Regular StreetAuthority readers know that our analysts have been bullish on housing for years. And our newsletter subscribers have made a lot of money following our writer’s recommendations. StreetAuthority expert Amy Calistri recommended shares of Nuveen Real Estate CEF (NYSE: JRS) to subscribers of her Daily Paycheck newsletter back in September 2010. So far, her readers are up 54% on the recommendation.

But as with any stock that has shown spectacular results in the past, how are we to know that this explosive growth will continue?#-ad_banner-#

Let’s start with revenue. Similar to a bank, Nationstar makes money by issuing home mortgages and collecting interest on the loans. Although the company doesn’t get a lot of press, Nationstar is actually one of the largest mortgage servicers in the U.S. The company’s portfolio includes more than 1.9 million residential mortgages with $312 billion in unpaid principal. When you consider that Nationstar’s market cap is “only” $4.4 billion, you begin to realize the potential for future profits.

Some analysts are concerned that rising interest rates could stunt the current housing rebound. But due to recent acquisitions and an increase in service fee income, NSM’s total revenue in 2013 is projected to double the revenue earned in 2012 ($859 million).

NSM recently purchased a mortgage portfolio from Bank of America (NYSE: BAC) worth $215 billion. On top of that, it acquired two other mortgage brokers: Greenlight and Equifax. Although these purchases have left Nationstar cash-flow negative in the near term, the company made these purchases without going into debt or diluting shares with new issuances. 

Earnings per share were $2.40 last year. But the company expects to triple EPS by next year, with projections ranging between $6.45 and $7.50.

The price-to-book ratio is high at 5, which makes NSM a slightly riskier investment at today’s (near record-high) prices. But earnings have been so strong that even with the run-up in stock price, shares are trading at a forward price-to-earnings ratio of 8. 

Risks to Consider: Rising interest rates and a downturn in the housing market could have a negative impact on earnings. Like any loan, the mortgages Nationstar holds are at risk of default. The company does not currently pay a dividend, so any investment is a bet on continued growth to generate returns.

Action to Take –> For speculative investors who believe the housing market will continue to thrive, Nationstar should be an excellent investment over the next two years.

P.S. — Gains of more than 127%… and 43% safer returns than traditional investing. Amy Calistri’s Daily Paycheck advisory is delivering these and more, and right now, 91% of her picks are winners. To see how she’s doing it, click here.