JPMorgan cuts price targets across the mREIT (REM +1.2%) sector, but the move is one of catching...

JPMorgan cuts price targets across the mREIT (REM +1.2%) sector, but the move is one of catching up to the action rather than a call on prospects going forward. "We believe consensus forecasts for higher rates are already priced into current valuations." Those cut: NLY, WMC, AMTG, MFA. Apollo retains its Overweight rating (the others are Neutral) as it and Western Asset have additional hedges in place to mitigate losses on MBS.

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Comments (9)
  • ChuckJ
    , contributor
    Comments (80) | Send Message
    What else is new
    17 Jul 2013, 10:46 AM Reply Like
  • Joe Eifrid
    , contributor
    Comments (358) | Send Message
    Weird! The mREITs have sold off on fears of higher mortgages rates taking a hit on book values.


    "Our 2014 price targets for residential MREITs reflect a slight discount to NAV (0.95x) to account for heightened volatility and risk bias towards higher rates."


    NLY at $10.50? Last reported book is 15.19 as I recall. If the $10.50 represents 95% of NAV, they sure are looking for a huge hit to book. AMTG at $16? Last reported book is $21.72.
    Then JPM says this?


    "AMTG’s MBS portfolios did not decline as much as those of pure-play agency MREITs. Additionally, both WMC and AMTG have payer swaptions in addition to pay-fixed swaps, which we would expect mitigated some of the losses on Agency MBS."


    17 Jul 2013, 10:50 AM Reply Like
  • rdealmeida
    , contributor
    Comments (3) | Send Message
    What do you think of PSEC? Thanks for your thoughts.
    17 Jul 2013, 12:48 PM Reply Like
  • Joe Eifrid
    , contributor
    Comments (358) | Send Message
    I own some PSEC, and have owned for a couple of years. I haven't really looked at it closely recently. I would probably wait for a pullback to buy more. Right now I am waiting for the next earnings reports to add anything that is interest rate sensitive and see the affects to NAV. Too much of my port wrapped up in them as it is. I have concentrated my mREIT holdings around more diverse non-agency issues like IVR, MITT and PMT.
    17 Jul 2013, 02:56 PM Reply Like
  • words
    , contributor
    Comments (75) | Send Message
    Big bank analysis and announced ratings seem generally tardy and at best fodder for contemplating contrarian positions.
    17 Jul 2013, 11:13 AM Reply Like
  • CNC72
    , contributor
    Comments (54) | Send Message
    Oh gee, thanks? The sky is either blue, or overcast sometimes. Sometimes the seas are calm, at other times not???? --- "While explaining metaphysics to the nation I wish he would explain his explanation." - Huh?


    Nice of J.P. Morgan Chase to share this information with us.
    17 Jul 2013, 12:19 PM Reply Like
  • vixstox
    , contributor
    Comments (4) | Send Message
    a little late to the party.
    17 Jul 2013, 12:49 PM Reply Like
  • gdlaughs
    , contributor
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    With NLY's recent purchase ( presumably mostly reset mortgages in the portfolio) aren't higher rates going to benefit the company? Seems that mgmt mentioned positioning the original portfolios for higher rates a couple or so quarters ago too? Calculations based on worst case scenarios? Perhaps 'words' has a good point? Perhaps a case of baby going with the bathwater? Classic shoot first,ask questions later?
    17 Jul 2013, 01:22 PM Reply Like
    , contributor
    Comments (137) | Send Message
    what about psec ??
    17 Jul 2013, 02:26 PM Reply Like
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