Seeking Alpha

Ryan Brennan

 
View as an RSS Feed
View Ryan Brennan's Comments BY TICKER:
Latest  |  Highest rated
  • Despite Earnings Miss, 12.5%-Yielding Apollo Residential Is A Buy [View article]
    juano -
    If you go to Apollo's fourth quarter supplemental information presentation there is a page on financing (though it doesn't give you specifics). In general I would pay attention to 3 month LIBOR and the 10 yr treasury rates

    The presentation is available on their investor relations website
    http://bit.ly/YlJCpl
    Mar 10 02:14 PM | 1 Like Like |Link to Comment
  • Despite Earnings Miss, 12.5%-Yielding Apollo Residential Is A Buy [View article]
    Opening AMTG Price on Jan 1, 2012: $15.43
    Opening AMTG Price on Jan 1, 2013: $20.63
    2012 Stock Price Gain: $5.20

    March 2012 Dividend: $0.75
    June 2012 Dividend: $0.75
    September 2012 Dividend: $0.85
    December 2012 Dividend: $0.70
    December 2012 Special Dividend: $0.35
    2012 Dividend Payments: $3.40

    Total Economic Gain: $5.20 + $3.40 = $8.60
    Opening 2012 Stock Price: $15.43
    $8.60 / $15.43 = 55.7356%
    Mar 10 02:03 PM | 1 Like Like |Link to Comment
  • Despite Earnings Miss, 12.5%-Yielding Apollo Residential Is A Buy [View article]
    Interest rate risk is definitely out there and is a big risk to mortgage REITs. The managers of the mortgage REITs are all well aware of the risks that rising rates pose to their businesses and have been changing their investments to mitigate the risk. This is why it's important that Apollo Residential has started a securitization platform, entered into 5-year interest rate swaps (not mentioned in my article), and that they've entered into a swaption (not mentioned either).

    That being said, mREITs are still risky investments (anything that returns 56% in a year should be, right?).
    Mar 7 12:19 PM | 1 Like Like |Link to Comment
  • Despite Earnings Miss, 12.5%-Yielding Apollo Residential Is A Buy [View article]
    Thanks for the kind words, Darren!
    Mar 7 12:03 PM | Likes Like |Link to Comment
  • Armour's New Preferred At A Discount Is A Deal [View article]
    Thanks Rich. One reason why someone may not want to sell ARR-A's at this point is that if they purchased them around par, the yield on their purchase is better then what they would get by trading into the ARR-B's right now. If someone wants it for the income, trading it in for the capital gains may not be worth it to them. It also depends on what their cost of execution is - paying the commission to both sell the ARR-A's and buy the ARR-B's may wipe out any benefit that they could have received.

    In terms of people buying the ARR-A's, the 10 day average volume is currently 6,835 versus 56k for the ARR-B's.
    Mar 7 10:31 AM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part I: Apollo Residential [View article]
    It was more of a comment on the overall market conditions and it wasn't a comment about EPS.
    In terms of MTGE, they have a phenomenal management team that has continuously put up great numbers. That being said, here are a few examples of the tough environment and their portfolio:
    - Net Interest Rate Spread at 12/31 was 1.88% vs. 1.90% at 9/30
    - Increased leverage to 6.7x at 12/31 from 6.6x at 9/30
    - Prices were down on all 30yr fixed rate mortgages and on most 15yr fixed rate mortgages
    - Weighted average cost of repo for agency portfolio was up 4bps from 9/30

    I think you may also have your EPS numbers wrong. Taxable EPS in 2012Q4 was $1.53 ($1.33 in Q3, $0.89 in Q2, and $1.56 in Q1) and GAAP EPS was $1.40 in Q4 ($4.03 in Q3, $1.15 in Q2, and $1.82 in Q1).

    I'm not saying that it was a bad quarter for MTGE - they grew their book value from $25.21 per share to $25.74 - just that it continues to be a tough environment.
    Mar 5 06:46 PM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part I: Apollo Residential [View article]
    RSO-B is not rated
    Mar 3 10:31 PM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part II: Annaly Capital Management [View article]
    They have issued two new preferreds - the NLY-C and NLY-D. They have coupons of 7.625% and 7.5%.

    It would cost them more to call the NLY-A's at 7.825% and issue additional preferreds at 7.50%. This would happen because of the underwriting fee that they would pay to issue a new preferred. When they issued NLY-D, they paid $0.7875 per share to the underwriters. From 7.825% to 7.50% they're going to save about $0.09 per share per year - definitely not worth it since it will take 8.4 years to break even. Even at 7.00% it might not be worth it - it's only saving them $0.22 per share per year which will take 3.6 years to break even.

    Given the risks and leverage associated with mREITs, you're not going to see rates much lower then where they are now on new issue preferreds. They aren't like banks or something where their balance sheets are going to improve with cash and deposits - these are leveraged mortgage portfolios.
    Mar 1 11:38 AM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part II: Annaly Capital Management [View article]
    The fixed dividend payment is $0.46875
    4 x $0.46875 = $1.875
    The first dividend payment ($0.5625) was for a longer accrual period (early September through end of December) instead of three months that it will be going forward
    Mar 1 09:51 AM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part II: Annaly Capital Management [View article]
    Kenneth - why is it a weak signal? I agree that I don't want to jump into the A's with this premium (given current yield comparison), but I disagree that it's a sign of weakness that they haven't called them.
    Feb 28 10:47 PM | 1 Like Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part II: Annaly Capital Management [View article]
    Thanks kingdad. NRF has been fantastic with both common and preferreds. Given where the C's are trading and that they went ex-div in Feb, I'm not positive that they'll get back to below par. They are trading within one dividend payment right now though.
    Full disclosure: I am long NRF and NRF-C
    Feb 28 10:45 PM | 1 Like Like |Link to Comment
  • Buy Cullen/Frost Preferred Before It Trades On The Exchange [View article]
    gtseeking -
    In the prospectus it states:
    "Dividends will be payable to holders of record at 5:00 p.m., New York City time, on the 15th calendar day before such dividend payment date or such other record date not more than 60 nor less than 10 days preceding such dividend payment date fixed for that purpose by our board of directors or a duly authorized committee of the board in advance of payment of each particular dividend." (Page S-20)

    15 calender days before the June 15 dividend is May 31. Ex-Div date will be 2 or 3 days before that. So purchases made before the last week in May will receive it for sure.
    Feb 28 12:34 PM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part I: Apollo Residential [View article]
    Thanks juano!
    Feb 28 10:46 AM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part I: Apollo Residential [View article]
    While it's trading above par, it's trading within one quarter's dividend payment, meaning you will recover any premium paid in the next dividend payment
    Feb 28 10:45 AM | Likes Like |Link to Comment
  • 5 Mortgage REIT Preferreds To Consider, Part I: Apollo Residential [View article]
    RSO is a commercial REIT, so it is a slightly different trade. It is trading around $24.75, which gives it a current yield 8.33%.
    Feb 28 10:44 AM | Likes Like |Link to Comment
COMMENTS STATS
137 Comments
49 Likes