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Mortgage REITs continue to slide - NLY -1%, AGNC -2%, HTS -2.3%, to name 3 - the sector...
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Wednesday, October 10, 2012, 9:46 AM ETMortgage REITs continue to slide - NLY -1%, AGNC -2%, HTS -2.3%, to name 3 - the sector revaluing itself for what must surely be significant dividend cuts. The Fed's MBS purchases - likely to help book values and dividend maintenance in the short run - are vaporizing net interest margins. Absent a big jump in leverage, returns must fall.
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The signs of spread compression were there for a while, but the Fed QE infinity finally woke people up.
Still, dividends could may well stay stable for several quarter as the mREITs increase leverage.
I'm sure that the plethora of other SA articles warning of the dangers - plus some downgrades and divi reductions had nothing to do with the freefall. It was clearly your articles alone that caused it. ....and you certainly haven't missed the opportunity to continue pushing them like a friggin' street vendor.
I read your articles and subsequently sold my AGNC shares at 34.50. (bought at 29) It wasn't that I was able to assess the logic of your arguments so much as it was the respect other commenters had for your judgment. Plus I always suspected that 15 to 20% dividends couldn't last forever.
It appears to be in freefall today (relative to its usual price stability), I think the larger holders were trying to get out gradually but may be accelerating their exit today.
A sincere thank you.
Paul TD.
you're right.
This writers are mostly greedy and bias with their own agenda.
Reits have been here for years & years,
always with Divi that beats other stocks, rain or shine.
Long: ARR, NYMT. DCIX.
I had a substantial investment in NLY, AGNC, CMO, CYS and did well the last few years; but did take your advice and bailed out yesterday based upon your evalutaion of the REIT market and the Fed.
Thanks again.
Now I'm wondering what a good re-entry price might be?
Had I been doing that, I'd have nearly as many comments as you do. I just got tired of throwing at such an easy, dumb target.
Let the weak hands shake out, read the conference call at the end of the month, and go from there.
you have a tough crowd here. in my experience most people have little understanding of mortgages. trying explain the effects of the fed buying agency paper and how that impacts mREITs is a tall order. I give you credit for the effort.
So it comes down to whether your not you trust your management team. When MBS prices are peaking, spreads are near zero and dividends are near zero but BVPS is 50-100% higher than it is today, do you trust your management team to liquidate at the top? That's the key question today.
I have a separate, and significant, allocation to cash which is available for opportunistic purchase of equities. I am willing to "time" equity purchases.
if the price goes below that threshold, then I sell, but in retirement 5 - 10% if great for your savings.
I risk 10% on any investment, and when its gain, or dividends totally fall below 10%, I am out, until then, unless the reasons for getting in are changing, I hold. I go by the idea also, would I buy this stock now?" Sure I hate to give up gains, but it is like mountain climbing, sometimes you have to go back to find a better route to the top.
NOTICE also, that the general market itself is weakening, now isn't a little convenient and coincidental that the REITs AND the market fall together. How much effect are the reasons stated in this article rally hurting the REITs or is it just weak market I spoke of. IF it is the weak market approaching, then I am selling everything!
NOW< you also have to look at the allocation of your total net worth. IN my case, I did not allocate much to REITs yet, so my actual capital loss will be small. AS I just retired, I was going to add more in to REITs until rates began to rise, and now that the REITs are correcting, it is nasty to see the red on the sheets the last few days, but the dividend cuts still keep the pay window above 10%.
I will give you an example: My NLY is down, [since I bought it] 6.25%, I have received over 12% in dividends since my purchase date, so I am still ahead about 5.75%, and with being in a risky deal, up over 5% [as I said] ain't bad brother.
I have checked my other 'deals', [over the years] and REITs are constantly paying me more net than any other investment save for the precious metals. The PM's are the best.
I am sure one can glean one stock or trade out of their history to beat what I am showing you here easily, but I am saying my "NET WORTH has been enhanced with REITs. Had I had all my money in them, I would be worth more today, than I am now. Had I stayed out of REITs, I would be worth much less. especially had I not exited all investments in 2007 as I did. Yes, I missed the big rise in the 'recovery', but I did not need to "break even" like most investors have needed to do, and still have not done.
You can skew the numbers all you like. Lets compare % of net worth gain or loss since the year (_______) and see whose method is working.
If I could choose the date, I would pick the date I quit listening to brokers and gurus and newsletters and began doing my own investing.
I don't have the knowledge nor power to influence people like these big deal newsmen, letter writers and well known gurus.
You listen to Elliot Wave, Weiss, Wealth InNstitute, Vector Vest, Vantage point etc, etc, and so on, soon they will have your money and you won't.....
Monday, NLY was down .8%, (nearly a non event, when looking for dividends) Remember, I said I don't mind riding on a teeter totter, although the ride up is more fun than the ride down, but to enjoy the ups, you need to suffer the downs.
My whole point is, the dratted market is now approaching spooked. So all have to exit. Well, I guess I will decide today or tomorrow, then go to the race at Charlotte for the wxend now that I am retired.
Luck to all
Capt. Brian
The Lost Navigator
Thing of it is, the real net profit to the investor.
Either way, I've been in the name for years, so my cost basis is must lower than this. Even with a reduction in the dividend to $1/quarter, the yield is still 13.3% on the book value. I'll keep reinvesting dividends until management leaves.
This is not a disar b on should buy only on dips.
why ask someone who has so much bias ?
He might tell you to stay away from all these Reits.
Make up your own mind, never ask someone you don't know.
LONG: ARR, NYMT, DCIX.
This is the Sept Correction that didn't happen occurring now.
Late Tues afternoon around 3:45pm there was unleashed an automated program(s) gthat not only drove down the DSow but Reits and other sectors as well as this was the start of the sell-off.
DON'T PANIC! and Be Patient! We will all recover and Make our Dividends as well. Those of you with Cash reserves, ENJOY the buying Opportunities!
The Big Brokerage Houses will be trying to buy up as much of the Reit sector as possible since their YTD returns have been Crapola. With a large forced and Low price purchases of Reits and a couple of other sectors they will pump up their weak returns and appear to be better than they were during the whole year and thus worth their inflated management costs.
Daro I personally am holding onto my mReits and BDCs in the face of what appears to be some market manipulation in those two areas during the overall market downturn. Do what you will with your money.
As far as predictions as to the up or down side of the price you can find as many pros as cons on every stock. This only proves that a stopped clock is right twice a day.
Please dump all your shares because I will continue to buy into this sell off at some point and reap even larger yields.
The intra-day lows were all but abandoned by the close of the market as unknown buyers quickly moved in to snap up those depressed shares. Could it be the same folks that triggered that automated selloff late Tuesday PM? Hmmmmm?
create a little selling pressure by writing doom and gloom articles for a couple weeks before your move, wait until market conditions look bearish, trigger your automated selling program late in the day and continue it through the next day's early session, move in and buy up the panic sellers shares at a much lower cost and then pad your bottom-line by looking like smart investors to your clients with a low buy-in on a high yielding stock which will pump up your previously weak yearly numbers just in time for the Annual EOY reports.