- Capstead Mortgage (CMO -2.6%) tumbles following last night's Q3 report which showed a big jump in prepayments and a resultant slide in net interest margin.
- On the earnings call, management reiterates what it said on the earnings release - October has seen a big decline in prepayments which should boost interest spread in Q4.
- What happened, asks JMP's Steve Delaney (CC replay), to cause management and the analyst community to not see this prepayment spike? One reason, suggests management, is mortgage originators responded to the jump in 15 and 30-year fixed rates by holding the line on ARM rates. There was a "last gasp" by originators and consumers to get through the refi window.
- The stock has roughly cut its loss in half since the earnings call.
Capstead hit hard by spike in prepayments
Oct 24 2013, 11:20 ET