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  • More from CYS Investments at KBW (previous): The speed (page 9) with which mortgage rates have increased in unlike anything seen even during the financial crisis, says CEO Kevin Grant. He muses over whether Bernanke's May testimony (taper) was confused messaging or an intentional market test. The punishment inflicted on mREITs (MORT) is well-known, but don't forget: Refinance activity will crater - gain on sale windfall to banks may be over, home affordability is now diminished, banks will be pushed to Treasurys over credit risk as the ROE on government paper is now improved. Grant's talk (webcast) is one all mREIT investors will value. [View news story]
    Whether recent events prove positive or not for the mREITs remains to be seen. Grant thinks it's positive (http://seekingalpha.co...), as spreads have blown out and he's a buyer. Prepayment risk has also disappeared.
    Jun 4 09:55 AM | 1 Like Like |Link to Comment
  • A below par reading on personal spending for April was affected by lower gas prices and home heating bills and isn't a biting indictment on retail spending (AEO, ANF, ARO, BBBY, BBY, BJ, CHS, COH, COST, DG, DLTR, GPS, HD, JCP, JWN, KSS, LOW, LTD, M, NDN, NKE, ODP, PIR, PLCE, RSH, SKS, SPLS, TGT, TJX, URBN, WMT, WSM, ZLC), according to economists. Auto sales also cooled off just a bit in April which had an impact. So far, retail trends have been largely favorable in May as the height of the spring selling season shifted a few weeks later. [View news story]
    Report was for April. It's June in less than 24 hours.
    May 31 09:12 AM | Likes Like |Link to Comment
  • Keep an eye on property casualty insurers (TRV, ALL, CB, AIG) after all posted notable declines amid the Oklahoma City tornado disaster yesterday. The dip following Sandy proved a great buying opportunity (though from much lower levels). [View news story]
    "yesterday"
    May 21 09:37 AM | Likes Like |Link to Comment
  • Newly public ING U.S. (VOYA) is up 20% since its IPO 2 weeks ago, but only trades at 60% of book value compared to the average life insurer (MET, HIG, PRU) selling for near book, writes Andrew Bary. Not only that, but the company is misunderstood - it's more retirement-services specialist and asset manager (think PFG) than life insurer, and should command an even higher valuation. What's more the seller (ING) was forced by regulators to do so against its will, the ING CEO calling it a "significant destruction of capital." Spinoff & Reorg Profiles - rarely a fan of promoted IPOs - think's it's worth $31. With an easily digestible $6B market cap, it might be worth even more to an acquirer. [View news story]
    The MC and the Barron's piece both state the average price/book of the life insurers mentioned is about 1 (excluding VOYA). Some (PRU, PFG) are above, some (MET, HIG) are below.

    At $31.17, HIG trades at 80% of its $39.09 stated book as of March 31 (excluding AOCI).
    May 20 03:22 PM | Likes Like |Link to Comment
  • The spinoff of New Residential (NRZ) from Newcastle Investment (NCT) has been completed and NRZ will begin trading on the NYSE today. At the moment, NCT is indicated to open at $5.83, NRZ at $6.70 - a total of $12.53 vs. yesterday's NCT close of $12.33. (PR)  [View news story]
    I'm surprised it wasn't immediate.
    May 16 11:00 AM | Likes Like |Link to Comment
  • Citigroup (C) joins AIG in the hedge fund hotel (Apple was kicked out in late 2012/early 2013), with this week's 13F filings showing a number of well-known funds adding or initiating positions in Q1 (though Tepper's Appaloosa pared his). The stock's up 40% since Michael Corbat took the reins from Vikram Pandit and hit another 52-week high yesterday. [View news story]
    In fairness to Tepper, the data from the 13F is from Q1. We won't know if he was selling (or holding or adding) in Q2 for another 3 months. FWIW, we're about in Q3. These 13F filings are fun, but sadly very old news.
    May 16 07:54 AM | 1 Like Like |Link to Comment
  • GCVRZ: A Potential 16 Bagger Worth The Risk [View article]
    Good one!
    May 15 10:58 AM | Likes Like |Link to Comment
  • My Last Article And My Last Best Idea [View article]
    Definitely will be missed. Best of luck.
    May 14 10:16 AM | 2 Likes Like |Link to Comment
  • InterMedia re-raises, upping its bid for Outdoor Channel Holdings (OUTD +5.9%) to $9.75 in cash to top Kroenke's $9.35 bid from yesterday. The action now moves back to Kroenke. The stock's currently at $10.02, suggesting Kroenke isn't about to fold. [View news story]
    Termination fee upped to $7.5M - does Kroenke no longer want to be topped?
    May 8 09:17 PM | Likes Like |Link to Comment
  • InterMedia re-raises, upping its bid for Outdoor Channel Holdings (OUTD +5.9%) to $9.75 in cash to top Kroenke's $9.35 bid from yesterday. The action now moves back to Kroenke. The stock's currently at $10.02, suggesting Kroenke isn't about to fold. [View news story]
    Stock's at $10.02 right now. Someone's going to make some money if no new bid arrives.
    May 8 11:14 AM | Likes Like |Link to Comment
  • "There are less ways to cheat on a balance sheet than an income statement," says Bruce Berkowitz, explaining why he focuses on the one rather than the other (and why he'll probably never be a buyer of auto stocks). In this great 35-minute chat from late last year, he again makes his case for AIG and BAC - "it's the 90s all over again" - and SHLD - selling for the liquidation value of its merchandise; the brands and the real estate are free. [View news story]
    Nice couple of sessions for Berkowitz - AIG, BAC, MBI all soaring ...
    May 6 12:36 PM | Likes Like |Link to Comment
  • The pot is raised in the play for Outdoor Channel Holdings (OUTD) with Kroenke Sports Entertainment upping its bid to $9.35/share. The action now moves back to InterMedia (whose $9.15 was just topped). Re-raise or fold? Let's ask the two who've been all over this from the start: "I bet InterMedia has a $9.75 bid in by tomorrow afternoon," says Whopper Investments. "Likely a double-digit price soon ... OUTD is worth at least $12 to InterMedia," says Chris DeMuth. [View news story]
    Nice work Chris!
    May 3 10:33 AM | Likes Like |Link to Comment
  • Neutral Tandem's Proxy Fight Could Yield Substantial Value For Shareholders [View article]
    Nice call Thomas ... another in a long line!
    May 1 12:50 PM | 1 Like Like |Link to Comment
  • Mortgage REITs (MORT) catch the eye of D.C., with the Financial Stability Oversight Council reportedly set to cite the industry as a potential source of market vulnerability. The companies have seen assets quadruple to over $400B since 2009, but Annaly (NLY) CEO Wellington Denahan notes their capital bases have risen as well. A Two Harbors (TWO) presentation (page 8) shows mREITs are relatively small players in the MBS market. Maybe the Fed and the GSEs just don't like the competition. Annaly and American Capital (AGNC) are the 2 biggest mREITs, with Two Harbors a distant 3rd. [View news story]
    From the presentation:

    Commercial banks hold about 38% of all mortgage debt outstanding
    GSEs and the Fed 22%
    Other 8%
    Insurance Cos. 8%
    Credit unions 7%
    Non-bank lenders 5%
    mREITs 3%
    Apr 19 09:41 AM | 2 Likes Like |Link to Comment
  • Déjà vu: Royal Bank of Scotland Group (RBS) buys 4,000 "cheap" mortgage loans at auction in March for around half of the value of their unpaid principal. Why so cheap? Because the loans are "to U.S. borrowers who are having trouble paying them back," according to WSJ. To some, this undoubtedly seems like a case of an investment bank's short memory as RBS' ~£1BN in losses on sub-prime assets during the crisis ultimately precipitated its demise. Time will tell. [View news story]
    Don't understand comparison to 2007. Back then, they levered up to own mortgages at 100 cents on the dollar on wildly overvalued and about to plummet property.

    Now they're better-capitalized and buying mortgages at half price on property that's already collapsed in value. They're also buying from a seller who's being forced to sell for non-economic reasons. Seems like RBS has a pretty fair margin of safety on the deal.

    Whether it works or not remains to be seen, but I doubt it will threaten the bank.
    Apr 17 08:02 PM | Likes Like |Link to Comment
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