Seeking Alpha

Capstead lower after losing Buy rating at KBW

  • KBW cashes in its chips on Capstead Mortgage (CMO), cutting the stock to Market Perform with $12.50 price target.
  • Capstead Wednesday night reported a big quarter, with higher interest margins, lower prepayments, and rising book value.
  • Earnings call transcript
  • Shares -1% premarket
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Comments (1)
  • linkdonald
    , contributor
    Comments (593) | Send Message
    It appears that KBW, like many others, fails to understand the objective in holding CMO. It is to provide interest income that will fluctuate with market rates, albeit with a time delay, and protect principle. Any capital gain, due to temporary market ineffeciencies, is simply a bonus and any temporary loss for the same reason can easily be ridden out. CMO is what it is and nothing more and should not be compared to other holdings not having the same objectives.
    1 Feb, 12:00 AM Reply Like
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