Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
You nailed it, Laterre. Investors also have to learn that what hurts you 1 time may NOT necessarily reverse completely and benefit you and QE3 is a perfect example of that.
That said....if QE3 is going to end (today's BB comments notwithstanding) or taper off, the spreads will widen. They already are wider and are back to pre-QE3 levels as you can see from Chart #2 above.
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
As you can see above, it's my least-favorite Agency MREIT. I like TWO and I think it's time to nibble at AGNC at current levels. So I think you are OK there. CYS is cheap on P/B, CMO/HTS are short-duration.
You have alot more ARR than AGNC -- probably should be reversed. Both long-duration but ARR mgmt. NOTHING compared to AGNC and G. Kain.
I don't trade these, I invest. And I buy a bunch to spread the risks. Again, check out my Top Agency and Top Hybrid choices above.
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
JCM, you raise some interesting points let me take them 1 at a time:
(1) RISING RATES: There's more and more mumbling about ending or tapering off QE3. I know Bullard is out today with a pro-QE3 statement. But that they are even talking about it tells me it will be tapered off no later than next year.
(2) DISCOUNTS: If you mean the MREITs are trading at discounts to NAV, you are right. But discounts can get wider. If you mean the MBS paper was purchased at a discount, virtually all of their Agency MBS paper was bought at a premium.
(3) MBS PRICING: Check out MBB, a dirty proxy for MBS prices. Prices did rally in April, but have since fallen back. The 10-year Treasury has risen again, so most MREITs -- unless they traded in-and-out -- have probably fallen back to 3/31/13 book value.
(4) HOLD TO MATURITY: If they hold to maturity in a rising rate environment then they lose out as they accrete DOWN the premiums they paid, though I agree the prepayments SLOW as rates rise. But the impact to BV is immediate. FBR had a piece on this today which I posted at:
(5) NAV: Not irrelevant (irreverent ? LOL) to value. If NAV/Book Value keeps going down, price will likely follow. If price is down 15% in 6 months and you get 8% in dividends, you are down 7% total. Also, if price falls below BV then no accretive secondaries to take advantage of higher rates. But even if P > BV, if both are falling, then share dilution in the near-term.
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
mREITs During Q1: More Bad News, But A Few Winners Emerge [View article]
mREITs During Q1: More Bad News, But A Few Winners Emerge [View article]
We could easily go to 2.25 - 2.50% on the 10-year....the question is, HOW QUICKLY do we get there ?
MREITs wouldn't mind that rate (slower prepayments) but want to get there in months, not weeks.
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
mREITs During Q1: More Bad News, But A Few Winners Emerge [View article]
http://seekingalpha.co...
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
That said....if QE3 is going to end (today's BB comments notwithstanding) or taper off, the spreads will widen. They already are wider and are back to pre-QE3 levels as you can see from Chart #2 above.
Great post !!!!!!
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
You have alot more ARR than AGNC -- probably should be reversed. Both long-duration but ARR mgmt. NOTHING compared to AGNC and G. Kain.
I don't trade these, I invest. And I buy a bunch to spread the risks. Again, check out my Top Agency and Top Hybrid choices above.
18.4% Dividend Payer Western Asset Mortgage Disappoints - What's The Outlook? [View article]
If rates don't shoot up and keep shooting up on the long-end, at some point the lond-duration AmREITs have value.
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
CYS at 93% P/B and CMO/HTS also attractive.
18.4% Dividend Payer Western Asset Mortgage Disappoints - What's The Outlook? [View article]
http://bit.ly/12Kf9qg:
I like AMTG, too.
18.4% Dividend Payer Western Asset Mortgage Disappoints - What's The Outlook? [View article]
Good Luck !
I like the idea of selling calls -- or puts.
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
Don't Panic: Survival Guide To Prospering With Mortgage REIT 12% Yields [View article]
(1) RISING RATES: There's more and more mumbling about ending or tapering off QE3. I know Bullard is out today with a pro-QE3 statement. But that they are even talking about it tells me it will be tapered off no later than next year.
(2) DISCOUNTS: If you mean the MREITs are trading at discounts to NAV, you are right. But discounts can get wider. If you mean the MBS paper was purchased at a discount, virtually all of their Agency MBS paper was bought at a premium.
(3) MBS PRICING: Check out MBB, a dirty proxy for MBS prices. Prices did rally in April, but have since fallen back. The 10-year Treasury has risen again, so most MREITs -- unless they traded in-and-out -- have probably fallen back to 3/31/13 book value.
(4) HOLD TO MATURITY: If they hold to maturity in a rising rate environment then they lose out as they accrete DOWN the premiums they paid, though I agree the prepayments SLOW as rates rise. But the impact to BV is immediate. FBR had a piece on this today which I posted at:
http://bit.ly/Yqy2Jx
(5) NAV: Not irrelevant (irreverent ? LOL) to value. If NAV/Book Value keeps going down, price will likely follow. If price is down 15% in 6 months and you get 8% in dividends, you are down 7% total. Also, if price falls below BV then no accretive secondaries to take advantage of higher rates. But even if P > BV, if both are falling, then share dilution in the near-term.