First let me state emphatically that I have tremendous respect for my fellow authors here on Seeking Alpha. They are among the finest research writers that I have ever read, and I have learned an amazing amount from so many of them. That being said, there are way too many articles written about Annaly (NLY) and their impending failure.
One article on SA points to Mike Farrell's health issue, and as a cancer survivor myself, I was appalled at that statement within an article. Should everyone just stop reading my articles here because I had cancer? Really remarkable and sad.
The article states:
Annaly's competitors have outperformed the mREIT. The reason is due to the Annaly size, Annaly's decision to keep leverage low, and Mr. Ferrill's cancer situation..
Not only would I say that this a completely incorrect statement, just for the fact that size does not mean failure, nor does a more conservative low leverage approach. The reference to cancer left me speechless to say the least.
Some naysayers elsewhere, not necessarily on SA, point to their lack of transparency to which I would say, what the heck have you been reading and listening to? Annaly reports everything in detail and while they are not going to give much about forward guidance or their modus operandi, why the heck should they? They have spawned their own competitors with many folks who actually worked for NLY before going to open their own agencies or leaving to work for others. Would YOU let them know what YOU were up to if you knew they would copy you or try to outrun your flank? Get real folks, it is business.
The real negative articles love to point out that other mREITs are doing better than Annaly and Mike Farrell is overpaid. I refuse to look at any one period of let's say a year or two, and call Annaly a loser, nor will I suggest that a CEO of this stature is overpaid; the issue is about delivering what is promised and Annaly has, time and time again.
This SA article states:
So how does Annaly stack up against some of the other REITs out there? Well, it certainly is not doing as well as American Capital Agency (AGNC), which had an earnings per share of $6.69 and a dividend of $5 on May 9, 2012. Since AGNC is regarded as Annaly's closest competitor, I have to wonder what sort of criteria Mr. Farrell's compensation is based upon. It certainly is not returns to the shareholders.
My initial thought was that this was also a completely inaccurate statement, simply by adding the total amount of returns that Annaly has returned to shareholders over its entire existence vs American Capital Agency's total returns to shareholders. That being said, I always have stated that AGNC has had a better 1-2 years than Annaly because they took more risk. To me that is 13 rounds for Annaly and 2 rounds for AGNC, winner: Annaly by a landslide.
Let's Look At This At The Real Annaly Of Late
This is a 3 month chart and obviously Annaly has been performing from a PPS standpoint. Not only that, they have maintained their dividend with the most modest of reductions ($.55 vs $.57/share) this last time, and with their recent preferred share offerings and more conservative de-leverage approach, it appears that the dividend will be solid for another few years with ZIRP (zero interest rate policy) firmly in place.
The share price has not had its latest run up to ex dividend date yet, and it has already regained all of the last dividend plus some. Does this look like a stock that everyone should just dump now? Get real people. If someone wants or decides to sell, then fine, they are making their own decision. When anyone starts spewing "sell now or else" then that could be hazardous to someone's financial well being.
Personally, I will never tell anyone to do anything. Not to buy or sell. I will give the facts the way I see them in a manner that is duly respectful to other companies as well as other opinions.
Maybe I get testy because of my very long relationship with Annaly from a shareholder's point of view. OK, I admit that. However, I have also lived with the ups and downs and know the power of what they have given me back as a shareholder. Maybe I am entitled a bit. That is not to say that I won't sell my position at some point either. There will come a time that it WILL be time to sell my shares, but not now folks.
Some More Tidbits
They have no equal in size or in experience, through good times and bad, and quite frankly know more about the MBS markets than the little upstarts could hope to learn in another decade.
Annaly has navigated through all interest rate environments, and simply knows how to make money. Do they use more leverage to try to "beat" their competition? No. They tend to be more conservative. They keep plenty of "dry powder" ready to take what the market gives them and at less risk for a risk investment.
Many folks even have gone as far as to demand that everyone just sell Annaly and buy other mREITs. It is absolutely ridiculous, right now especially. Annaly has just begun to deploy more resources, and the insiders have been buying their own shares rather than just cash in options. Name some others who have been or are now doing that.
The inherent risks remain the same for all mREITs as I have noted very often, and everyone can recite them by this time. Annaly is not immune and neither are the others. I will stick with Annaly, trusting that they have been there, done that, and have the t shirt.
The ball is in your court, folks.
Disclosure: I am long NLY.