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  • Will Mortgage REIT Investors Be Left Holding The Bag? [View article]
    Hi Bill - It's the opposite of a "rising tide lifts all boats". While CIM may not be forced to delever per se, forced sellers in the agency market will likely put pressure on the non-agency market too. So CIM's book value could take a hit. Also, the headline risk from an SEC ruling could cause a mass exodus from all mREITs...
    Sep 16 04:02 PM | Likes Like |Link to Comment
  • Will Mortgage REIT Investors Be Left Holding The Bag? [View article]
    Hi skyraider - see comment above to hermit99 above. If you want to post a specific question, we would be happy to address it for you.
    Sep 16 03:05 PM | Likes Like |Link to Comment
  • Will Mortgage REIT Investors Be Left Holding The Bag? [View article]
    Hi hermit99 - Parsimony (as a firm) is in the process of becoming a Registered Investment Advisor. The description in our profile is the one that best fits our current status based on the choices on SA's list.

    Most of our research/commentary is typically a collective effort among the research team...which is why we often use the term "we" in our articles. There is no "I" in "team"...

    As far as responding to comments, we could certainly do a better job of that. One of the great things about SA is that often times other readers will answer questions that are posted in the comments. It's a true open forum...
    Sep 16 03:04 PM | 2 Likes Like |Link to Comment
  • Will Mortgage REIT Investors Be Left Holding The Bag? [View article]
    gbsjamin - thanks for posting this info. You are correct, this may turn out to be a "smoke" but no fire event...but the headline risk will certainly add to the volatility of the stock over the short term.

    That said, any event that could potentially have a significant adverse impact on your investment is worth following very closely (regardless of the probability of the event).
    Sep 16 02:51 PM | 1 Like Like |Link to Comment
  • Will Mortgage REIT Investors Be Left Holding The Bag? [View article]
    On Margin is right about the timing of the SEC ruling.

    Eve - I believe On Margin means to sell the rallies in the stock to reduce your position. If you are concerned about the SEC ruling, it is not a bad idea. We are holding for now though...
    Sep 16 02:42 PM | 1 Like Like |Link to Comment
  • Avoid Chimera, Try 3 Mortgage REIT Investments With Stronger Risk/Reward Profiles [View article]
    liber8, thanks for your comment an thanks for reading our articles.

    You bring up a good point about the weighted avergae cost data above. We certainly should have been more clear on the data we included in the table. The point was not to cherry pick, it was to highlight the fact that the "safest" part of CIM's non-agency portfolio (senior agency paper) is currently valued below the weighted average amortized cost basis. You are correct, the picture looks even worse when analyzing the bulk of their portfolio (senior IOs and subs). It's also important to point out that 84.3% of CIM's non-agency portfolio is rated below B or not rated (up from 78.5% in December).

    Regarding the senior (non-retained) securities that you mentioned above: These securities have been re-securitized and sold to third parties. As such, CIM receives no future economic benefit from these securities and there is no future recourse to CIM.

    In full disclosure, we never stated that CIM investors would lose money on their investment per se, but it is our opinion that there are better relative investment opportunties in the space with better risk/reward profiles...
    Aug 21 06:26 PM | 1 Like Like |Link to Comment
  • Avoid Chimera, Try 3 Mortgage REIT Investments With Stronger Risk/Reward Profiles [View article]
    First of all, any reader who has been following us knows that we have probably been the most bullish SA contributor on mREITs. We think mREITs offer a phenomenal risk/reward opportunity for investors (as long as interest rates remain as low). That said, all mREITs are not the same and we think that there are better relative investment opportunities in the space than CIM. We are not short CIM and we never have been. As a rule, we don't short stocks in industries we like.

    Short selling is a very difficult endeavor, especially individual stocks. Regarding CIM specifically, no one in their right mind would short a $3 stock that pays a 17% dividend...there is absolutely no edge in that trade because a short seller is on the hook for the dividend payment.

    In general, short selling is not evil. It's a strategy that every investor should be familiar with. If you hope to do well in the market (and protect your assets) over the long-run, you need to understand how, when and why stocks should be sold. We wrote a Primer on short selling a few months ago (see link below) if anyone is interested in learning some techniques.

    seekingalpha.com/artic...

    Disclosure: Parsimony rarely shorts individual stocks. However, we sometimes take short positions through various option strategies or inverse ETFs. We have a position disclosure at the end of all of our articles and we take that very seriously.
    Aug 21 05:37 PM | Likes Like |Link to Comment
  • Avoid Chimera, Try 3 Mortgage REIT Investments With Stronger Risk/Reward Profiles [View article]
    The tone of your comment suggests that you are long CIM?

    You are making the assumption that the non-agency bonds will eventually be worth par (100%) and that CIM will get out whole. We don't agree with that assumption and we feel that CIM will eventually have to take a loss on these positions.

    There is a reason why CIM trades below book value (0.91x)...
    Aug 19 12:44 PM | Likes Like |Link to Comment
  • The Best REIT Now: Annaly Capital [View article]
    jpmist - agreed, NLY's total return is very compelling.

    The dividend adjusted share price chart is the same as total return...if you look closely the charts are the same...
    Aug 12 12:13 PM | Likes Like |Link to Comment
  • 9 Low Beta Utility Stocks Yielding Over 4% [View article]
    arlebur - Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock has a beta of 0.5, it is theoretically half as volatile as the general market...
    Jul 28 09:22 PM | Likes Like |Link to Comment
  • Who Owns Annaly Capital? [View article]
    Derek - Thanks for the reply and good catch. The institutional table above should not have $ values...the values are actually the number of shares held by those institutions. The largest institutional investor (Blackrock) actually owns over $700 million worth of stock...
    Jul 23 04:28 PM | 1 Like Like |Link to Comment
  • Who Owns Annaly Capital? [View article]
    walleke - that was a typo. No one at Parsimony works for Annaly. That sentence had several typos. It should read "Annaly employs leverage to enhance shareholder returns". We have been a shareholder so long that I guess we feel entitled to the returns..Freudian slip...
    Jul 22 10:35 AM | Likes Like |Link to Comment
  • Beware of Prepayment Activity When Investing in Mortgage REITs [View article]
    Doyle3000 - See article below for our view on CIM...

    seekingalpha.com/artic...
    Jul 17 11:33 AM | Likes Like |Link to Comment
  • Is Annaly Capital Currently Overvalued? [View article]
    Thanks for your comment, Mark. We agree with you...we just posted an article recommending that investors take advantage of this dip...

    seekingalpha.com/artic...
    Jul 12 11:10 AM | 1 Like Like |Link to Comment
  • 10 High Dividend Yield, Low Beta Stocks to Consider for a Market Pullback [View article]
    Hi berloe - technically NLY meets all of the parameters above as well, but we only included 10 stocks on this list and we tried to include companies in a variety of sectors...

    We figure that most loyal readers such as yourself know how we feel about NLY... :)
    Jul 8 01:57 PM | 1 Like Like |Link to Comment
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