Annaly on sale after big gain in book value

Q2 core earnings of $300.4M or $0.30 per share vs. $239.7M and $0.23 in Q1, and $294.2M and $0.29 a year ago. Dividend is $0.30.

Book value per share of $13.23 up from $12.30 at end of Q1. Today's close of $11.26 puts the stock at a 15.1% discount to book.

Net interest spread of 1.26% gains 36 basis points from Q1.

Agency MBS holdings of $82.4B up from $77.8B in Q1 (95% are fixed rate). CPR of 7% up from 6%.

Commercial real estate paper holdings of $1.6B, flat from Q1. Commercial real estate holdings of $74.4M up from $40.3M.

Leverage of 5.3x vs. 5.2x in Q1 and 6.2x a year ago.

Conference call tomorrow at 10 ET

Previously: Annaly Capital Management beats by $0.03

NLY +1.2% AH

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Comments (6)
  • James Bjorkman
    , contributor
    Comments (2778) | Send Message
    Good earnings, another good sign for the mREIT sector.
    6 Aug 2014, 06:57 PM Reply Like
  • 11802571
    , contributor
    Comments (252) | Send Message
    Yeah, great until people start phreaking again over the imminence of rising interest rates. I may be wrong, but I'm waiting for a lower price before jumping back into NLY or any other mREIT, for that matter. What, did folks just forget about the management exploitation issue that was so big a deal just last week or so?
    Suddenly, NLY is everyone's darling again. I'm staying on the sideline until I see where interest rates are heading, but I think we all know that already. Just how soon and how fast does it happen? There's your risk.
    6 Aug 2014, 07:01 PM Reply Like
  • gene g
    , contributor
    Comments (2) | Send Message
    the trick that will keep NLY stock rising is that they are buying commercial REITs now and that will act not only as a stabilizer but contribute profits-and they are not so dependant on interest rates
    6 Aug 2014, 09:05 PM Reply Like
  • NLTInvestor
    , contributor
    Comments (394) | Send Message
    none of this matters. i want to see what happens when interest rates rise. at best NLY is a trade
    7 Aug 2014, 01:26 AM Reply Like
  • petergrt
    , contributor
    Comments (538) | Send Message
    What sort of a headline is that? Foretelling the future . . . ?


    NLY's problem is illustrated by the foregoing comments: Everybody expected and expects the interest rates to rise, which is why NLY and others have been hedging, at a great expanse and thus limiting the profits.


    The sad fact is that most people forgot that interest rates, particularly those of longer duration are a function of supply and demand and are not directly effected by the Fed, except in the case of QE's, where the Fed was injecting itself on the demand side, and thus manipulated to some extent the market.


    Interestingly though, the rates have actually dropped since the beginning of the reduction of Fed's buying - they ran-up in anticipation of the start of the end, but have retreated over 50 bp's since the actual start of the reduction of purchases.


    Furthermore, when one considers that Italian and Spanish 10-year paper yields only about 2 to 5 bp's over the US Treasuries, that is indicative that there is an enormous amount of cash looking to be invested.


    In other words, I don't believe that long term interest rates are headed much higher anytime soon. In fact, they are decling as I am writing.


    That said, it all depends on the actions of NLY management how will they exploit the interest game. They have shown to be very adept in past, albeit they seem to be way too conservative this time, and I think that they should be able to maintain if not to raise the dividend over the next few quarters.


    The fact that NLY is diversifying its portfolio as well as its business model should provide additional sources of income and stability.


    I am long NLY and have just increased the position by 20%
    7 Aug 2014, 02:24 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
    It looks like the results justify NLY 30 cents a quarter dividend.
    7 Aug 2014, 10:40 AM Reply Like
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