REIT Analyst
REITs, research analyst, bonds, long/short equity

Capstead Mortgage - Nasty Surprise In Store?

I explain in this article what elements and analysis lead me to the conclusion that CMO's book value could be down over 20% in Q2, putting its current stock price at a premium of 12% above BV and making it fairly rich.

Capstead Mortgage Corp. (NYSE:CMO) is an agency mortgage REIT focused on adjustable-rate mortgages (ARMs). As such, it is considered safer than mREITs such as American Capital Agency (NASDAQ:AGNC) that invest purely in fixed-rate mortgages (FRMs). The simple reasoning is that pure fixed-rate MBS players have a lot more duration exposure (these MBS's durations are currently in the 5-7 years range, versus 1-3 years on ARMs). However, mREITs that invest in FRMs tend to carefully...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
  • Access Top Ideas, chosen by Seeking Alpha’s editors
  • Filter long and short ideas by market cap and sector
  • Get Coverage of over 5,000 stocks, many of which have little or no coverage elsewhere
"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
100% Satisfaction Guaranteed
Money back guarantee. Seeking Alpha PRO members receive a no-questions-asked refund for membership on months paid and not used. Details