Seeking Alpha

Continued panicky action grips the mortgage REIT sector (REM -3.5%) at the open as the global...

Continued panicky action grips the mortgage REIT sector (REM -3.5%) at the open as the global stock selloff as yet offers no relief on interest rates. Adding to the fear is an opening print of -25% on the Market Vectors Mortgage REIT ETF (MORT -3.7%). American Capital (AGNC -4.5%), (MTGE -2.6%), Annaly (NLY -2.8%), Armour (ARR -4.8%), Invesco (IVR -4.4%), Hatteras (HTS -3.9%), CYS Investments (CYS -3.6%). Set for release from embargo tomorrow is SA Pro's REIT Analyst arguing the selloff in AGNC has left the price about 20% below book value.
Comments (20)
  • Javimanic
    , contributor
    Comments (234) | Send Message
     
    are the mReits powerless or not to adjust the business model for this environment?
    24 Jun 2013, 09:50 AM Reply Like
  • Ron Reed
    , contributor
    Comments (282) | Send Message
     
    No need to change what they are doing now. This is all emotional sell off and presents a great time to buy. Or, a great time to sell puts.
    24 Jun 2013, 09:51 AM Reply Like
  • maxcrc
    , contributor
    Comments (129) | Send Message
     
    I have been hearing the same stuff after AGNC collapsed from $36 to $31 . Now we are 30% down after that "amazing entry point" .
    24 Jun 2013, 10:17 AM Reply Like
  • MobilePreacher
    , contributor
    Comments (425) | Send Message
     
    to panic selling of short duration adjustable rate instruments is silly and stupid. Selling of long term fixed rate instruments like NLY and AGNC is very prudent.
    24 Jun 2013, 10:08 AM Reply Like
  • REIT Analyst
    , contributor
    Comments (477) | Send Message
     
    Have you measured the risks on CMO, for example, versus AGNC? Do you know what kind of duration hybrids trade at? Have you compared CMO's swap hedges with their MBS portfolio rate exposure?
    24 Jun 2013, 10:34 AM Reply Like
  • MobilePreacher
    , contributor
    Comments (425) | Send Message
     
    yes i certainly have... the average duration risk for CMO is about 60 days
    25 Jun 2013, 07:54 AM Reply Like
  • hummerh25
    , contributor
    Comments (98) | Send Message
     
    Dividend payout is more than EPS. Was out at $7.10 just luck.
    $3.75 - $4. Is a buy.
    24 Jun 2013, 10:14 AM Reply Like
  • Javimanic
    , contributor
    Comments (234) | Send Message
     
    this is the big ex-div week as well....how will this play out? wow-alot of buyers on 27th? AGNC,MTGE,AMTG,NYMT,RS... all go ex 26th. NLY, WMC on 27th. who's buying?
    24 Jun 2013, 10:27 AM Reply Like
  • KAWASAKI2010
    , contributor
    Comments (17) | Send Message
     
    Insiders will put lots of cash in their pockets, what a shame.
    24 Jun 2013, 11:03 AM Reply Like
  • jademansion
    , contributor
    Comments (3) | Send Message
     
    oh dear, just bought REM at $12.85 !
    24 Jun 2013, 11:03 AM Reply Like
  • TxGolfer57
    , contributor
    Comments (76) | Send Message
     
    Just bought more NLY at 12.35 and AGNC at 22.41.
    24 Jun 2013, 12:42 PM Reply Like
  • ClintonSPX
    , contributor
    Comments (145) | Send Message
     
    I bought the LINE dip last week made 9 months of divs in 4 days. I bought the ARR dip today
    24 Jun 2013, 01:51 PM Reply Like
  • Cavalaw
    , contributor
    Comments (123) | Send Message
     
    Unless you think ARR is going bankrupt any time soon , it s a great buy right now
    24 Jun 2013, 02:26 PM Reply Like
  • moishep
    , contributor
    Comments (23) | Send Message
     
    A few months ago, when exuberance over AGNC was rampant, I suggested that being 18% above book value was unsustainable. Being 15%+ under book value is also unsustainable.
    24 Jun 2013, 02:34 PM Reply Like
  • murray555
    , contributor
    Comments (224) | Send Message
     
    Added more AGNC at $22.48 and NLY at $12.29 today. If they go down further I will add more.
    24 Jun 2013, 02:42 PM Reply Like
  • Scott Eranger
    , contributor
    Comments (115) | Send Message
     
    I have lost over 60K in a week...mostly paper profit, but in some cases real capital. As far as the MReits...as bad as I want to believe the end is near, I don't. Not sure when this will be over, but it is getting unbearable to look at.

     

    I've taken about $60K in profits this year...I guess I can write off the losses and balance the books.The market is not done going down, and to keep cost averaging on mReits is asinine.
    24 Jun 2013, 04:43 PM Reply Like
  • RWMostow
    , contributor
    Comments (1337) | Send Message
     
    Scott-
    Agree, totally. Good luck.
    -rwm
    24 Jun 2013, 07:31 PM Reply Like
  • drking
    , contributor
    Comments (192) | Send Message
     
    great opp. to add more ARR at $4.29 = 18.45 % yield mopay also
    whats not to like about this added 2000 shares
    24 Jun 2013, 04:44 PM Reply Like
  • Javimanic
    , contributor
    Comments (234) | Send Message
     
    I am tempted to sell some of the lower div % reits I have like NLY,RSO,CYS AND MITT to buy some higher paying such as WMC, AGNC---I am all out of free cash so it is dumb but tempting.
    24 Jun 2013, 04:50 PM Reply Like
  • Scott Eranger
    , contributor
    Comments (115) | Send Message
     
    From an SA article this morning....

     

    Agency mREITs in trouble

     

    With the second quarter's end in sight, I believe significant book value erosions would be the limelight of most of the upcoming earnings disclosures by mortgage REITs. The April rally in the rates, coupled with the material selling off will cause most of the Agency mREITs including American Capital Agency (AGNC) and ARMOUR Residential (ARR) to report book value erosions.

     

    American Capital Agency, in a latest presentation, acknowledged that its book value has seen a decline similar to the one during the first quarter. On further fears of book value declines, Barclays has already downgraded it. Besides, it has also reduced its dividend distribution 16% to $1.05 per share. The company also attempted to rebalance its portfolio. However, the rebalancing efforts are expected to further decline its earnings. As of June 7, 2013, the company's duration gap increased to 0.7 years from -0.2 year. This will further increase book value erosion if the rates continue to increase.

     

    In an upset announcement, ARMOUR Residential declared its third quarter's dividend in line with the second quarter's distributions. However, the fundamentals reveal another story. The company's duration gap increased to 1.47 years from 0.2 years on May 8, 2013. Besides, its new production MBS, which were purchased after the recent equity raise, perform worse during the current environment.

     

    Therefore, the Agency space remains the least favored amid this environment.
    25 Jun 2013, 11:46 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|