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Todd Johnson

 
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  • 7 Reasons To Buy Altria In Current Turbulent Markets [View article]
    Hi Richjoy403 -

    I am looking at their quick facts, and PM's headquarters is New York. Their operations center, media contact, contact info are all in Lausanne, Switzerland; phone numbers, etc.

    If technically they are headquartered in NY - then I presume it is for the reason you mention and access to Wall Street.

    On a common sense level, I would hope they are based outside the U.S. for legal reasons and because they don't have U.S. operations.

    I believe you are correct though. Thanks for the heads-up.

    Todd

    www.pmi.com/eng/media_...
    Sep 5 11:42 AM | Likes Like |Link to Comment
  • 7 Reasons To Buy Altria In Current Turbulent Markets [View article]
    Hi Archman,

    I hope you are enjoying Labor Day too. Thank you as always.

    I truly believe the smokeless unit will continue to grow at a rapid pace vs. the cigarette unit. They have the core brand names.

    I will be watching STB tomorrow. ;) Thanks for the reminder. Again, thanks for sharing all of your knowledge. It's truly appreciated.

    Best, Todd
    Sep 5 11:36 AM | Likes Like |Link to Comment
  • 7 Reasons To Buy Altria In Current Turbulent Markets [View article]
    Hi Oscar13, yes I do. Their capital group can grow at a rapid pace - plenty of cash flow. I like that business unit too.

    Thanks for the feedback. Todd
    Sep 5 11:33 AM | 1 Like Like |Link to Comment
  • 7 Reasons To Buy Altria In Current Turbulent Markets [View article]
    Michael, I will be watching. Thank you. Todd
    Sep 5 11:32 AM | 1 Like Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Hi Johnny,

    CYS owns only GSE-MBS.

    AGNC, CYS HTS, NLY are all 100%.

    One footnote - just to be very specific: for all intents & purposes NLY is 100%-agency. NLY does, however, own some CIM common stock on their balance sheet. NLY acts as an external adviser for managing CIM's portfolio.

    Here is the CYS link:

    www.cysinv.com
    Corporate Profile

    "CYS is a specialty finance company that was created with the objective of achieving consistent risk-adjusted investment income. We seek to achieve this objective by investing on a leveraged basis in residential mortgage pass-through securities for which the principal and interest payments are guaranteed by the Federal National Mortgage Association, or Fannie Mae, the Federal Home Loan Mortgage Corporation, or Freddie Mac, or the Government National Mortgage Association, or Ginnie Mae, and collateralized by single-family residential mortgage loans. We refer to these securities as Agency RMBS. "
    Sep 4 05:37 PM | 1 Like Like |Link to Comment
  • Chasing High-Yield Dividend Payouts With A Hedge [View article]
    Hi IRA Investor, yes. It's unbalanced by long 2 at the back end and short 1 at the front end.

    The way AGNC's ex-dividend date is only a few days past the September expiration date made this enticing.

    Good to hear from you.
    Sep 4 05:31 PM | Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Good to hear your son is in town. Always my pleasure to hear from you. You are welcome, and I hope your son closes before Tuesday!

    Todd
    Sep 4 01:38 PM | 1 Like Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Hi walkwithalimp,

    A lot of changes are happening, that is for sure. I believe the dividends will be paid on the agency-mREITs.

    The SEC issue (ie derivative use by mreits; and leverage threshold are key issues in SEC-review) is 60-days away. The nationwide refinancing rumor - is more imminent if President discusses it this upcoming week.

    And what are you doing checking out stocks on the weekend? ;)

    Shouldn't you be outside enjoying the sun? Summer is fading away.

    Good to hear from you, Todd
    Sep 4 12:12 PM | 1 Like Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Good morning FreedomAT55,

    My understanding about Operation Twist is the Fed would focus on decreasing the long-term rates & drive up short-term rates. I am assuming this is done for some type of nationwide refinancing plan for GSE-MBS, and provided only to home owners current on their mortgage.

    This is not good for agency mREITs. The prepayment risk rises dramatically. The book value per share (bvps) would rise to the extent prepayment risk does not impair bvps. Agency mREIT's would also benefit to the extent they are hedging potential Fed decisions.

    The net yield curve (agency mREITs borrow at favorable short-term rates thru various sources & buy longer-duration GSE-MBS) would theoretically flatten.

    It is careless to say inflation would rise and commodity prices would rise without giving a time frame. We are in deflationary times thus the low interest rates. Gold, silver are high because of the Euro problems (Greece likely to default per CDS prices); U.S job losses; homeowner's losing value each month (deflationary); workers receiving zero wage hikes (deflationary); health care and other expenses rising creating less disposable money for U.S. workers.

    I believe we are in "current" deflationary times when most asset classes drop in value. Gold/silver are not rising based upon "inflation" - but rather "fear" of what the Fed is doing.

    Long-term, of course, inflation will be the concern. A fiat currency, the Fed printing money on steroids, is often not a good idea. A devaluation of the U.S. currency will have to occur, in the future, to pay our national obligations.

    Best, Todd
    Sep 4 10:47 AM | Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    OceanMan - thank you for writing those thoughts/facts. Concise, direct, and more importantly: investors can confirm everything you just conveyed is true. Caveat emptor.

    I appreciate it. Now where did I put my Advil...... ;)

    Best, Todd
    Sep 3 10:20 PM | 1 Like Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Ocean Man, on a related note - that flash crash of the mreits a few weeks ago - has taught me to use protective puts, and more mental stops; instead of stop limit sell orders - as the markets can just crush a group of stocks and pop back up at the end of the day.

    On the other hand, it is a good idea to have some very low stink bids in on these names.

    I hope you having a good Labor Day weekend.

    Best, Todd
    Sep 3 09:28 PM | Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Hi AnnieA,

    I will send you a pm on a few thoughts that will, including an excellent book. That will help add context to my answers.

    1. The worst case scenario is - hopefully - not going to happen. There are the rumors/speculation, but I can see the government not passing anything & only opening a dialogue - and arguing its merits and not doing anything. When the rumors become real, then we would react differently.

    In the rumored "worst case scenario", nationwide refinancing would cause prepayment risk to agency mREITs (NLY). This could materially, on the negative side of the house, impact their dividends.

    It is impossible to determine the extent of the dividend cut because agency mREITs all have various amounts of leverage; various hedging actions in place.

    2. If agency mREITs are not allowed to exist in current form (for example, the amount of leverage is limited to 3x), then the dividends would be cut drastically.

    3. If agency mREITs are banned, then the residual book value per share would be liquidated. The companies have real assets on their balance sheets - although they leverage the use of borrowing to expand dividends.

    4. In this example, I discuss hedging AGNC via puts. But you can see my strategy:
    seekingalpha.com/artic...

    Basic Protective Put:
    A. Assume I own 100-shares of Annaly Capital Management, Inc. (NLY) with a cost basis of $17-per share or $1700 total investment.

    B.. I would receive quarterly dividends from NLY.

    C. To ensure some downside protection on NLY, I may - if I want to own a longer-term protective put - buy 1 (representing 100-shares)
    NLY Jan 2013 15.000 put (NLY130119P00015000).
    finance.yahoo.com/q?s=.... The cost for this is $280 as of Friday's close.

    In this example, my worst case outcome is:
    $1,700 - [$1500 - $280 = $1,220] = a $480 maximum loss; not counting dividends received between now and January 18th, 2013 (option expiration).

    $1500 = your protective put strike price
    $280 = your cost for the protective put
    01.18.2013 = option expiration

    D. I own only AGNC, NLY, CYS, HTS. They are pure agency-mREITs. TWO is a hybrid: they own non-agency mortgage backed securities. I don't know how hybrids will react in the above rumored worst case scenarios.

    Hopefully that helps and the other info will help too sent pm.

    Todd
    Sep 3 08:14 PM | Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Hi saphira,

    Thank you, sincerely, for the kind words. I am grateful for everyone's help as well as you are. :)

    Regarding the credit swaps - on July 21st - that sounds 100% normal with day-to-day business models. They will adjust swaps, calls/puts, derivatives based upon their GSE-MBS holdings. Here is an example where you can the types of hedges in place:

    ".....As of June 30, 2011, we had total return swaps outstanding linked to the Markit IOS Index, summarized in the table below. Under these swap agreements, we are either entitled to receive (“long position”) or pay (“short position”) a stated coupon linked to the index, net of an implied financing cost equal to one-month LIBOR, plus/(minus) increases/(decreases) in the index market value. Long positions are intended to synthetically replicate the performance of interest-only securities....

    AGNC 10Q, page 24, June 30, 2011, one line of a hedge:
    sec.gov/Archives/edgar...
    A) Position: Long

    B)Markit IOS Sub-Index:
    5.0%, 30-Year, Fixed Rate, Fannie Mae MBS Pools

    C) Notional Amount $74,757 January 2040

    D) Fair Value: $467

    10Q: AGNC Hedging Instruments (pp 8-10):
    sec.gov/Archives/edgar...

    If you go onto other subsequent pages, you will see their constant hedging activities. They are quite sophisticated and that is why trust in the agency mREIT is a must. Without adequate controls in the hedging department, a lot of negative results can occur to our stock holdings.
    ----------------------...

    Hopefully that helps out,

    Thank you very much for your feedback.

    Todd
    Sep 3 07:50 PM | Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Hi Sam - correct. MBB, in my discussion, was intended to show what an agency mREIT is without the use of any leverage.

    I would not use LLI for agency-mREITs. Since agency-mREITs possess an implicit Federal Government guarantee, there are vast differences between non-Federal guarantee loans or non-agency MBS too.

    The MBB holdings simply show that an agency mREIT is a "GSE MBS bond fund". When an agency mREIT completes a secondary, it simply is creating new money for the agency-mREIT (for example, Annaly) to invest in the GSE-MBS bond markets (levered being the big difference, albeit offering potentially even bigger returns in dividends and capital appreciation).

    Hopefully that helps out a bit. Thanks Sam.

    Todd
    Sep 3 07:39 PM | Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    Hi CAJ5150 - thank you. I appreciate it very much. Todd
    Sep 3 07:32 PM | Likes Like |Link to Comment
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