Douglas E. Johnston
Long/short equity, hedge fund manager

CYS: A Nice Yielding REIT, BUT...

Recently, the residential REIT sector has come under significant pressure as mortgage rates rose to about 4% in the month of May, 50 odd basis points ((bps)) off their lows. (NYSE:CYS) was in that boat losing about 15% in market value which might, at first glance, seem over done presenting a buying opportunity. However, as we will discuss, mortgage REITs like CYS have significant interest rate (and other) risk exposures and with the likelihood of significant capital gains on their investment portfolios diminished, dividends will continue to come under pressure even if rates revert lower. While CYS's dividend for Q2 may be maintained at 32c, based on gains achieved earlier in the year, we estimate a steady state...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details