Seeking Alpha

Mortgage REITs higher after Annaly results

  • A check of the mREIT sector (REM +0.8%) following better-than-expected Q4 results from Annaly finds about all the individual names in the green.
  • Like many earlier reporters, Annaly experienced a pleasing drop in prepayments during Q4, leading to a widening net interest margin.
  • American Capital Agency (AGNC +0.8%), Armour Residential (ARR +0.9%), CYS Investments (CYS +0.6%), Hatteras Financial (HTS +0.9%), Dynex (DX +1.1%)
  • ETFs: MORT, MORL
  • Annaly's earnings call begins shortly. The stock is up 3.5% in early action.
Comments (3)
  • starcorral
    , contributor
    Comments (326) | Send Message
     
    The REITs are improving after they gave up value in the late summer early fall last year. DX and MFA are recovering what little they lost in my portfolio and paying 12+ and 10+ % dividends. Maybe I'm just naive, but if I was not so intent on my major positions which are significantly undervalued and kicking out good news under a barrage of naysayers, or if I was ten years older and not spending 6 hours a day working portfolios, I might increase my REITs 10 - 15 fold. As I expect most do, I look to the Fed and it's role in throttling the economy in combination with the weather outlook which is pretty much throttling the home building and remodling industries - which [of course] pour over into DIY retail sales and other activities that bloom when consumers step out into warmth and sunlight.
    26 Feb, 10:41 AM Reply Like
  • charliezap
    , contributor
    Comments (1161) | Send Message
     
    You need to distinguish between mortgage REITs and equity REITs. mREITs are highly leveraged and invest in paper (mortgage securities). eREITs in invest in bricks and mortar (offices, apartments, retail stores, hotels, warehouses, etc) and use less leverage. If you're comfortable with interest rate spreads, the derivatives that are used to hedge interest rate risks, and fluctuating dividend rates, then go for mREITs. I'm not, so I do not "invest" in mREITs. I may make an occasional small trade, when I see an mREIT that looks oversold, either on a technical basis or relative to book value.

     

    Re: ""I look to the Fed and it's role in throttling the economy . .""

     

    Since 2009, the Fed has been doing the exact opposite, though its policy of quantitative easing. Currently, we are "tapering", but that actually means we are still easing, only not as much.

     

    Re: "". . the weather outlook . . is pretty much throttling the home building and remodling [sic] industries . .""

     

    Beware of extrapolating from January and February data! January and February have the most exaggerated multipliers for going from the actual monthly data to the SAAR (seasonally adjusted annual rate).

     

    A portion of my portfolio is in eREITs, including CLI, DLR, HPT, SNH, and UMH. These are higher yielding, lower FFO multiple stocks, selling at or below NAV.
    26 Feb, 12:56 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8132) | Send Message
     
    ...and BOOM goes the dynamite!
    26 Feb, 12:11 PM Reply Like
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