Annaly management laments Fed's actions


We get it ... you're not a fan of the Fed. The rambling Annaly (NLY -4%) conference call is an exercise for management (and some of the questioners) to complain about the distortions caused by Fed policy and how mortgage markets may blow up as that policy is reversed.

QE3 is the equivalent of a new $6B mortgage REIT with 6x leverage being formed every month, says CEO Wellington Denehan, who also notes these new mortgage REITs are uneconomic buyers.

Available later on SA, the transcript should be an interesting read as Denehan and her team muse about the process of trying to figure out this market.

In the meantime, Annaly shares reprice themselves for what looks to be another dividend cut (payout was $0.35 per share last quarter). The current price of $11.11 per share is a 12.5% discount to September 30 book value of $12.70 - seems about inline compared to much of the rest of the mREIT (REM -0.8%) sector.

Q3 earnings coverage.

Q3 presentation slides.

Related ETFs: MORT, MORL.

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Comments (5)
  • jbbson
    , contributor
    Comments (839) | Send Message
     
    Neither of my mREIT holdings cut dividends. AMTG holds at .40, reduces leverage to under 3X, boasts a 14% return on assets and the spread in well above 2%. They have also approved a 50 mill share buyback.

     

    WMC holds at .90, leverage stays high, spread increases similar to AMTG and returns are strong.
    7 Nov 2013, 11:24 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13488) | Send Message
     
    The biggest distortion in home prices is Fannie Mae and Freddie Mac. Without the government / taxpayers paying the losses for unnaturally low interest rates and massive over regulation restrictions the housing market would not be churning out new homes and distorting prices higher and higher for flippers and speculators who conservatively account for around 1/2 of the market.
    7 Nov 2013, 12:00 PM Reply Like
  • mbkelly75
    , contributor
    Comments (4545) | Send Message
     
    I look forward to reading the transcript. Reading what was said is easier for me to understand and comprehend what it means for the longer term.
    7 Nov 2013, 12:19 PM Reply Like
  • Patrick Harden
    , contributor
    Comments (463) | Send Message
     
    Every Annaly conference call is rambling. When Mike Farrell was still alive, they barely even touched on the quarterly results. Annaly is so big and bulky that it really can't do much of anything to react to market developments except take leverage up or down.
    7 Nov 2013, 12:59 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11220) | Send Message
     
    Imagine where interest rates would be if China, Japan, the oil states and Europe demanded realistic returns on their money.

     

    Invest accordingly.
    7 Nov 2013, 02:53 PM Reply Like
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