Seeking Alpha

Credit Suisse constructive on mREITs

  • Total economic return for mREITs (REM -0.9%) should be positive over the next year, says Credit Suisse, with hybrid/non-agency names faring better than their agency MBS cousins thanks to an expected continued rise in long-term interest rates.
  • The team continues to favor two names with less interest rate risk - Two Harbors (TWO -0.8%) and Ellington Financial (EFC -0.4%), as well as those lumped in with mREITs but not really so - Newcastle Investment (NCT -1%), New Residential (NRZ -0.6%), and PennyMac Mortgage (PMT -1.4%).
  • Management willingness to buy back shares trading below book value coupled with an ability to protect book value will be the "differentiator of valuation within the group," says Credit Suisse, noting the aggressive repurchases of Gary Kain's AGNC and MTGE.
  • Related ETFs: MORT, MORL.
Comments (4)
  • SaltyDog62
    , contributor
    Comments (741) | Send Message
    Cool, since am Long MTGE TWO AGNC among others.
    8 Oct 2013, 12:48 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5619) | Send Message
    Long (NCT).
    8 Oct 2013, 03:18 PM Reply Like
  • joelkatz
    , contributor
    Comments (462) | Send Message
    Long (NRZ).
    8 Oct 2013, 06:46 PM Reply Like
  • Ucatfan54
    , contributor
    Comments (10) | Send Message
    Dropping NCT, but looking to double up on NRZ
    12 Oct 2013, 03:55 AM Reply Like
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