Seeking Alpha

Buy the (big) dip in the mREITs, say both KBW and RBC Capital. "We think the bond market has...

Buy the (big) dip in the mREITs, say both KBW and RBC Capital. "We think the bond market has over-reacted and mREITs have over-reacted to that over-reaction," says KBW (presumably Bose George). Stocks to buy if the Fed cuts back earlier-than-expected: CMO, HTS, MFA, ANH, DX. Stocks if the Fed continues with the status quo: AGNC, NLY, WMC. RBC favors NLY, MFA, and HTS, but warns AGNC's higher leverage magnifies losses as well as gains. The sector (MORT +1.1%) is continuing with yesterday afternoon's bounce.
Comments (17)
  • $NYMT too. Quite the dip.
    30 May 2013, 10:19 AM Reply Like
  • I don't see how mREITs over reacted.


    MBS down from 106 to 101 in May. Agency REITS levered 8:1 with 50% hedge = 20% loss on book value. Stocks were down about 20% at low. Seems reasonable to me.


    And MBS were going down due to mREITs selling, so it is kind of tail wagging dog here.
    30 May 2013, 10:34 AM Reply Like
  • Many REITs have partly develeraged and also diversified. So your calculation can be correct in the most static REITs like ARR . AGNC shown some weakness in the Q1, but it's working hard in diversification. I trust that managment. Speculators have been playing hard against AGNC, that has triggered a panic selling even in the non agency hybrid REITs which shouldn';t be affected by interest rate increase.
    The Q2 will be very important to see who is who in this sector.
    30 May 2013, 10:49 AM Reply Like
  • Jim Cramer was on CNBC this morning bashing the mReits. This just days after calling NLY a "buy" on his show. That's good enough for me. Cramer says sell... you buy. Works about 80% of the time.
    30 May 2013, 12:04 PM Reply Like
  • Yep. Cramer-contrarian is highly profitable. 10 years now he has been making my skin crawl, yet he rakes it in with his antics. Another example that if you can't make it on one end, make it on another. Dinosaur of the 1990s Bull run, when any monkey could make money.
    30 May 2013, 12:43 PM Reply Like
  • Completely agree. He ripped MA end of the last year and it's done nothing but move northward since.


    He "sold" out of BMY at $40 and missed the subsequent 15-20% pop in the last several weeks.
    30 May 2013, 01:46 PM Reply Like
  • They need an iShares Cramer inverse etf.. I know I would buy it
    30 May 2013, 01:47 PM Reply Like
  • Good one. I would buy it too.
    30 May 2013, 03:30 PM Reply Like
  • Does anybody have a plan whereby you buy these things when they are beaten senseless and yielding whatever, and then buy puts on something to protect the downside of the share price?


    Are we afraid of divi cuts, or are we afraid of book value deterioration?


    Both, I guess.
    30 May 2013, 12:45 PM Reply Like
  • TwistTie,


    "There is nothing to fear but fear itself". Did someone else already say that?


    Have no fear, have no greed.


    Buy Low when the market panics, keep collecting the dividends or reinvest them. I am reinvesting AGNC dividends. I bought AGNC yesterday at $25.88. I think I got a good price.


    I learned from my mistake in the past of averaging up in AGNC, now I will only buy shares for less then my average cost per share, which is 27.43. I am down 2.8% overall, meaningless, because my purpose for buying shares in AGNC is to reinvest the dividend until I retire or semi retire and then I will collect the dividend for my wife and I to live off of.


    Good luck.


    Long: KMR,MO and AGNC!!!
    30 May 2013, 10:29 PM Reply Like
  • Just wrote a piece with the sensitivities - buying any dip should say buy the right company on the dip.
    30 May 2013, 10:53 PM Reply Like
  • agnc moving higher yesterday and today. was 25 the bottom?
    31 May 2013, 09:42 AM Reply Like
  • AGNC should declare their dividend the week of June 3. If they hold it, I expect it to snap back. If not, we haven't seen the low.
    2 Jun 2013, 07:53 PM Reply Like
  • Q2 will be the KEY. We will better understand how the managment is working to survive in a new enviroment of rising rates. I think Q2 will be a major test to see which REITs will be the winners and which ones the losers.
    3 Jun 2013, 09:26 AM Reply Like
  • Does anyone have a take on EFC? selling well less than book,
    Less than 2x levered, 12% yield. Thanks
    3 Jun 2013, 01:39 PM Reply Like
  • I have just doubled my positions in EFC yesterday after the new sell-off. I hope this irrational selling is near over. Agency, no-agency , hybrid REITs have all collapsed, even with contrarian news. I think REITs have falled about the double of what they should have fallen.
    4 Jun 2013, 08:57 AM Reply Like
  • Thanks. Today, EFC is taking another hit. Do you think it is adversely impacted by the slowdown in mortgage apps (released today). Trying to figure out why this is tanking....
    5 Jun 2013, 01:07 PM Reply Like
DJIA (DIA) S&P 500 (SPY)