New York Mortgage Trust Inc. (NYMT) is a real estate investment trust (REIT) engaging in acquiring, investing in, financing, and managing mortgage-related and financial assets in the United States. It primarily invests in agency residential adjustable-rate, hybrid adjustable-rate, fixed-rate, interest only and inverse interest only, and principal only mortgage-backed securities, and multi family commercial mortgage-backed securities.
NYMT has filed for a very large shelf - $500 million - which has just been made effective. In my opinion, NYMT will tap this shelf on Monday, February 4, or shortly thereafter. The management of NYMT has openly stated that they are interested in growing the company and has been issuing capital aggressively to build its investment portfolio. This makes sense as they currently use external asset managers due to their relatively smaller size, and significant growth will allow them to take the investment function in-house. I like this company on the long side for many reasons, which are summarized well here. But I recently liquidated my position, and have shorted some as well, with the idea that I can buy it back at much lower prices when the offering comes out. If you look at the history, after each offering the stock price drops down to roughly the offering price as many offering participants liquidate at the offering price or a couple of cents higher.
I believe that when this quarter is released the book value will be 6.40 to 6.45, based on my assessment of the bonds and mortgages the company owns. With the stock at 7.09 today, an offering could be executed at a large premium to stated book, even with a discount to the current price and a cut to the broker. With the next dividend a number of weeks out, this is the perfect time to raise capital and the perfect price. It's not a question of if but of when NYMT will pull the trigger.
Disclosure: I am short NYMT.