While screening on Barchart for the stocks that have hit the most recent new highs, up popped Cypress Sharpridge (CYS) with 17 new highs and up 5.58% in the last month. CYS is a leveraged investor in mortgages guaranteed by Fannie and Freddie. The stock had great upward momentum even through the recent market weakness.
If their projections are correct, investors in the issue could see an annual return in the neighborhood of 35% - 40% over the next 5 years.
Cypress Sharpridge Investments, Inc. 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.
Points to consider:
- 100% Barchart technical buy signal
- Trend Spotter buy signal
- Above its 20, 50 and 100 day moving average
- 17 new highs and up 5.58% in the last month
- Relative Strength Index of 75.28% and still rising
- Trades around 13.07 with a 50 day moving average of 12.40
Fundamental factors to consider:
- Wall Street brokerage analysts do not like to recommend investment pools run by outside firms
- An independent analyst, Wayne Rogers made this a buy recommendation on 5/13
General Investor Sentiment:
- Although not a widely followed stock on Motley Fool the 181 readers that do follow the stock ate 97% positive on the issue
- CAPS members vote 129 to 6 that the stock will beat the market
- The More experienced All Stars a very positive with a 46 to 0 vote
Summary: This is a speculative issue. The question is does Cypress Sharpridge have the expertise to select the right block of mortgages that will allow the spread on their leveraged investment to become profitable?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.