Annaly leads more declines in mREITs


At what point do you just liquidate the portfolio? Habits die hard and traders used to hitting the sell button on the mREITs (REM -0.5%) are doing so again today even as interest rates slide a bit.

Hitting another multi-year low today, Annaly (NLY -1.3%) - with a portfolio of very liquid assets heavily hedged against rising rates - is now selling for 20% less than September 30's reported book value.

American Capital Agency (AGNC -0.8%) - with an equally liquid hedged portfolio - is also at about a 20% discount. Previous: CIO Kain promises to continue buybacks at this discounted level.

Other agency players: Hatteras (HTS -1%), CYS (CYS -1.4%), Capstead (CMO -1%).

Non-agency mREITs are slipping as well - even as Case-Shiller reports continued solid gains in home prices (which should boost portfolio values). Two Harbors (TWO -1.5%), MFA (MFA -1.4%), Western Asset (WMC -1.1%).

ETFs: MORT, MORL

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Comments (44)
  • Javimanic
    , contributor
    Comments (292) | Send Message
     
    hmmm not JMI though.
    26 Nov 2013, 02:12 PM Reply Like
  • WmHilger1
    , contributor
    Comments (1727) | Send Message
     
    I am still buying REITs and BDCs at these reduced levels, the same as I did in 2008 & 2009. I made a bundle then, plus dividends averaging about 11%, and I fully expect to do the same now, only the dividends now average over 13%. The bulls make money and the bears make money, and I collect VERY nice dividends while they do it!
    26 Nov 2013, 02:25 PM Reply Like
  • berloe
    , contributor
    Comments (2200) | Send Message
     
    Are dividends increasing or merely market yield due to lower prices?
    I have not heard lately of any dividend increases in mREITS
    26 Nov 2013, 03:43 PM Reply Like
  • RWMostow
    , contributor
    Comments (1691) | Send Message
     
    Bill-

     

    Good luck to all of us! And Happy Thanksgiving.

     

    -rwm
    26 Nov 2013, 04:42 PM Reply Like
  • abbdiver2
    , contributor
    Comments (92) | Send Message
     
    $NLY JUST the oppisite NLY is expected to cut there div one more time hence the low price With that said I,m looking for a even better entry point to add to my holdings,,good luck
    26 Nov 2013, 04:57 PM Reply Like
  • Dick1366
    , contributor
    Comments (30) | Send Message
     
    I agree with your approach - I have most of the stocks mentioned. Why not buy now. I invested in these quite some time ago and am still positive - so I think I should buy more when the prices have gotten near the bottom! I hope you agree. RPB
    26 Nov 2013, 06:59 PM Reply Like
  • WmHilger1
    , contributor
    Comments (1727) | Send Message
     
    RETs are yielding better percentages because of the lower prices, not dividend increases. Good news and bad news at the same time. New purchases consequently bear higher percentage yields even though they are paying approximately the same dividend amounts. Doubling down a little on these will lower your average price AND raise your average yields.

     

    To RWM - Happy thanksgiving to you also. May our REITS recover soon and the dividends also increase accordingly!
    27 Nov 2013, 12:40 PM Reply Like
  • paul7777777
    , contributor
    Comments (81) | Send Message
     
    @WmHilger1

     

    I agree with you, the dividends are still huge and after a while these stocks are bound to rise again. That is why I don't understand people who are interested in already quite expensive stocks with only 2-3% dividend.
    26 Nov 2013, 02:37 PM Reply Like
  • murray555
    , contributor
    Comments (432) | Send Message
     
    Paul,

     

    It seems everyone knows to buy low and sell high...but very few actually do so. I too continue to add to my positions in mreits, BDC's and trusts.
    26 Nov 2013, 02:53 PM Reply Like
  • darloduck
    , contributor
    Comments (5) | Send Message
     
    I AM HEAVLY INVESTED IN MREITS,NLY HAS A GENIUS AT THE HELM.HER FIRST NAME IS WELLINGTON,A VERY GIFTED WOMAN.
    26 Nov 2013, 02:41 PM Reply Like
  • stevewojo
    , contributor
    Comments (367) | Send Message
     
    The genius at the helm was Mike Farrell, not Wellington. She is the second highest paid woman CEO in the country. And her recent performance was to take NLY from $17in May to under $10 today. Does she deserve $32 million for that? Her genius is getting paid that much for reducing equity by 40%! Just thing what she will be paid when it is down 50%. I guess its not all her fault, blame it on Ben and the Fed.
    26 Nov 2013, 04:33 PM Reply Like
  • RWMostow
    , contributor
    Comments (1691) | Send Message
     
    You can blame some of it on the "buy high / sell low mentality investors."

     

    -rwm
    26 Nov 2013, 04:45 PM Reply Like
  • Moody Smoody
    , contributor
    Comments (56) | Send Message
     
    What are Ms. Wellingtons 'gifts', her qualifications for running a mREIT? NLY seems to have a long track record, however recent
    performance is dismal. mREIT's operate in a kind of carry trade
    concept. If you bet right you make money if you bet wrong you don't.
    Please explain your enthusiasm.
    26 Nov 2013, 02:52 PM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
     
    Really you're going to ask someone who talks in all caps ?
    26 Nov 2013, 04:16 PM Reply Like
  • RWMostow
    , contributor
    Comments (1691) | Send Message
     
    Capt-

     

    Point very well taken.

     

    -rwm
    26 Nov 2013, 04:46 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2863) | Send Message
     
    "At what point do you just liquidate the portfolio?"

     

    After outperforming (including dividends) for 4 years, 2 quarters of under-performance is hardly a reason to shut the company down.
    26 Nov 2013, 03:44 PM Reply Like
  • smurf
    , contributor
    Comments (6284) | Send Message
     
    If one was going to invest in this sector, now would seem to be the time, when everyone is negative. That is, if you have confidence in their business models.

     

    Remember what Buffett said about fearful and greedy.
    26 Nov 2013, 03:53 PM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
     
    Dang they sold the heck out of NLY at the close...
    26 Nov 2013, 04:16 PM Reply Like
  • xxavatarxx
    , contributor
    Comments (4891) | Send Message
     
    Looks like what many thought was your crazy voice was correct after all Capt Jack.
    26 Nov 2013, 04:18 PM Reply Like
  • RWMostow
    , contributor
    Comments (1691) | Send Message
     
    It is up over $10 - AH.

     

    -rwm
    26 Nov 2013, 04:47 PM Reply Like
  • 67g8i32
    , contributor
    Comments (302) | Send Message
     
    It is strange only NLY,AGNC get dumped at the end. ARR,JMI...and others didn't.
    26 Nov 2013, 07:37 PM Reply Like
  • RWMostow
    , contributor
    Comments (1691) | Send Message
     
    67-

     

    What is your take as to why?

     

    -rwm
    26 Nov 2013, 07:44 PM Reply Like
  • 67g8i32
    , contributor
    Comments (302) | Send Message
     
    I wish I know.
    26 Nov 2013, 08:02 PM Reply Like
  • Dasana
    , contributor
    Comments (136) | Send Message
     
    No Sir, "they" sold the heck out of the market; DJ and S&P both sharply down at the end.
    26 Nov 2013, 10:20 PM Reply Like
  • stevewojo
    , contributor
    Comments (367) | Send Message
     
    How a out the "wash sale" rules? Sell for a loss at the end of November and buy right after Xmas to continue your position and also "window dressing" all being done by institutions.

     

    Happy Thanksgiving to all. WSW
    27 Nov 2013, 10:45 AM Reply Like
  • berniespear
    , contributor
    Comments (251) | Send Message
     
    Hmmmm
    26 Nov 2013, 04:27 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11231) | Send Message
     
    Memorial Day 2014:

     

    --Financial media talking about when "tapering" will start.

     

    --mREITs selling for "only" 5% below book because traders are finally starting to get it.

     

    --The 10 Year sits @ ~2.35%

     

    --The yield curve is still steep because the short end is stapled to the basement floor (Thanks, Janet!)

     

    --mREIT dividend yields STILL hundreds and hundreds of basis points higher than the 30 Year.

     

    ...and the beat goes on...
    26 Nov 2013, 04:27 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2863) | Send Message
     
    So you adding down here DVL? I started my AGNC position in 2009, and while ive traded options around it, havnt bought new shares. I have been reinvesting the dividends. Thanks to 3 years of reinvesting, I've got double the shares I paid for. Trying to decide if I want to double down, or just keep letting the DRIP do its thing.
    26 Nov 2013, 04:36 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11231) | Send Message
     
    As long as Janet Yellen (a woman who couldn't make it more clear that she is for hard-core easing) is sailing toward confirmation I am a buyer.

     

    As long as I can buy the assets for ~80% of their par value I am a buyer.

     

    As long as Baby Boomers (who started turning 65 in 2011, and for the next 16 years 10,000 of whom will turn that age every day) transition from salaries to fixed income I am a buyer.

     

    As long the Western world is stuck in this QE trap then I'll be buying...

     

    ...and so on and so forth...
    27 Nov 2013, 11:36 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2863) | Send Message
     
    I think QE is tapered by next summer, so although theres going to be a good deal of volatility, these are still cheap to book, and have a good yield. Might grab some more, still not sure.
    27 Nov 2013, 04:30 PM Reply Like
  • tstreet
    , contributor
    Comments (1035) | Send Message
     
    It is hard not to be a bit cynical at this point about AGNC. Just can't seem to bottom out.
    26 Nov 2013, 04:36 PM Reply Like
  • Phattboy43
    , contributor
    Comments (143) | Send Message
     
    I'm not exceptionally bright and I am usually wrong when I become a "sage" about the stock market. However, I did say this on September 16th.
    "but I see a $17 stock within six months"

     

    I may be right for once. Just sayin'
    26 Nov 2013, 04:41 PM Reply Like
  • Swood@hvc.rr.com
    , contributor
    Comments (19) | Send Message
     
    While I might grab more attention writing all in caps I say I've seen this story of DRASTICALLY (for emphasis, guys!) oversold stocks since I started investing Ben/Warren style back after the Exxon Valdez disaster. I was scared s%#tless when I put in my buy order over the phone (no internet), not helped by the "are you crazy" intonation of the young man taking my order. There is always a reason for panic, it's just hard to see in the moment. I've been scaling into NLY (best of the mortgage REITS, by my reckoning due to its movement towards a beefier commercial portfolio) during the past two weeks as the end of year selling has clearly started early this year. It's rational for those with a large loss in any position to sell out these positions for tax purposes. One need only look at NLY's chart for a couple of seconds to see it has "December sell" written all over it. Another one I'm looking to sink my teeth into is NEM, but the precious metals stocks seem to live in a parallel universe. Hey everybody, have a great Thanksgiving and I have to say this site attracts the most thoughtful, sincere, funny and helpful people of any investment site on the web. Thanks.
    26 Nov 2013, 05:08 PM Reply Like
  • Dividend Living
    , contributor
    Comments (390) | Send Message
     
    So, what was the news that sent these lower?
    26 Nov 2013, 06:33 PM Reply Like
  • Swood@hvc.rr.com
    , contributor
    Comments (19) | Send Message
     
    No news, DL, just some early tree trimming (selling) to offset gains in other ends of the portfolio. Value investors buy on fundamentals of the company. Right now the crazy environment established by the Fed is driving the market for stocks like NLY and AGNC. However, they are pivoting in their strategies and lowering their dividends to compensate.
    Dividends will rise as the new business model. These are not stocks for those with ADHD.
    26 Nov 2013, 06:40 PM Reply Like
  • Dividend Living
    , contributor
    Comments (390) | Send Message
     
    Todays rebound didnt make much sense either as MBS values went down a lot and the ten year went to 2.74. I guess a couple of odd days that dont follow rates are expected once in a while, especially with the year end coming up.
    27 Nov 2013, 04:39 PM Reply Like
  • xxavatarxx
    , contributor
    Comments (4891) | Send Message
     
    Thats what I thought to Dividend Living
    27 Nov 2013, 04:53 PM Reply Like
  • 0123
    , contributor
    Comments (75) | Send Message
     
    Mutual funds dump weakest stocks between now and dec end. Nly may be one of those. When yield curve gets flat, time to liquidate nly. We are heading to higher sloping yield curve - good for nly. Volume of motgages will not grow however due to fed buying from fannie. Yld should be safe at around 9% at current mortgage volume and the interest swaps.
    26 Nov 2013, 07:06 PM Reply Like
  • User 18200722
    , contributor
    Comments (2) | Send Message
     
    Many years ago I bought NLY at $18.80 and have enjoyed many good dividends. But it's embarrassing that it's now about $10. I can't sell it and lock in the losses. The only thing to do is hold it until the situation improves. If it ever does get back to $18.80 I'm going to sell it!
    26 Nov 2013, 10:04 PM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
     
    User 18200722

     

    Embarassment is not a strong enough word.

     

    Imagine buying the harlem globetrotters and having it turn into the Washington Generals.

     

    Meanwhile Management has bumped up their pay while shareholders like 18200722 are stuck with a 50% unrealizable loss.

     

    Those dividends looking back now look more like a return of principal.

     

    Except you paid tax on them.
    27 Nov 2013, 08:59 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2863) | Send Message
     
    Technically the interest payments on MBS are a mix of principal and interest, so you arent wrong.
    27 Nov 2013, 04:28 PM Reply Like
  • 415433
    , contributor
    Comments (4) | Send Message
     
    These mortgage reits are going through serious year end selling due to the dramatic declines in their book values. Mutual funds are dumping them and scared in the headlights individual investors are selling willy nilly to take their tax losses for 2013.. It's going to take a lot of moxie to step in around the middle of December and invest in these mreits as interest rates IMO will retreat back to the 2 1/4%-2 1/2% in 2014 maybe even back to 2% as to re-energize the housing market so the banks can dump all that shadow inventory that they still are holding. I plan on selling out of the money naked puts for March and April expirations on quality mreits at that point in December. Remember the old adage "invest when there is blood in the streets and sell when everyone else is buying. At this point in time the whole street is flooded in blood and the mreits are flowing into the sewer.
    26 Nov 2013, 10:26 PM Reply Like
  • stevewojo
    , contributor
    Comments (367) | Send Message
     
    Don't forget that these same sellers can buy back in after Xmas once the wash sale window closes on December 27 (based on yesterdays massive selling to lock in losses for the year and still retain a position to get dividends). Also, could be some "window dressing" action by mutual funds.
    27 Nov 2013, 05:36 PM Reply Like
  • Dodurgali
    , contributor
    Comments (131) | Send Message
     
    How can management get raises after their company's stock has sunken so low? People lose their jobs or get pay cuts for failing. In the finance world, it looks like you get pay raises for failing while your share holders are losing their pants.
    28 Nov 2013, 11:33 AM Reply Like
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