Cypress Sharpridge: Safety in Home Mortgages?

Jun. 8.10 | About: CYS Investments, (CYS)
Not much positive news from the equities market these days, but income investors can find some, since all equities prices are depressed yields on the rise. Income on the following play is guaranteed by Fannie and Freddie.

Cypress Sharpridge Investments, Inc. (NYSE:CYS) is a specialty finance company that was created with the objective of achieving consistent risk-adjusted investment income. The company seeks to achieve this objective by investing on a leveraged basis exclusively in whole-pool residential mortgage pass-through securities for which the principal and interest payments are guaranteed by the Federal National Mortgage Association (or Fannie Mae), the Federal Home Loan Mortgage Corporation (or Freddie Mac), or the Government National Mortgage Association (or Ginnie Mae), and collateralized by single-family residential mortgage loans. It refers to these securities as Agency RMBS. The company is managed by Cypress Sharpridge Advisors LLC, a joint venture between Cypress CSI Advisors LLC, a sponsor of private equity funds and leveraged buyouts of U.S. companies, and Sharpridge Capital Management, L.P., a specialist fixed income asset management company.

In my book, the stock is both an income and a price appreciation play:


  • Right now the yield is over 16% -- guaranteed by Fannie and Freddie!
  • $2.20 dividend on a 13.34 price

Price Appreciation

  • 6.84% price appreciation in the last month
  • 56% Barchart technical buy signal
  • 13 new highs in the last 20 trading sessions
  • 30.24 price with a 50 day moving average of 29.66

Investor Sentiment

  • Motley Fool CAPS members think the stock will beat the market by a vote of 23 to 1
  • The Experienced All Stars agree 10 to 0
  • Wall Street columnists have written positive articles 5 to 0

Wall Street Recommendations

  • 2 buy
  • 1 out perform
  • 1 over weight

If you're looking for a bright stop on a cloudy day, think about this:

  • Guaranteed Income - back by Fannie & Freddie
  • 16% + yield
  • Recent price appreciation
  • Positive investor sentiment
  • Wall Street recommendations
  • Positive press articles

Disclosure: No position in CYS at the time of publication