Mortgage REIT sector downgraded by Compass Point

It's not just Annaly. Compass Point is ringing the register on a wide swath of the mortgage REIT industry today. American Capital Agency (AGNC -1.6%), Anworth Mortgage (ANH -1.3%), Armour Residential (ARR -1.2%), CYS Investments (CYS -1%), Hatteras (HTS -1.5%), and Western Asset Mortgage (WMC -1.4%) are all cut to Hold from Buy.

All have been big gainers this year, likely narrowing their discounts to book value and - in at least one case - maybe climbing above it.


Comments (13)
  • Orthoeconomics
    , contributor
    Comments (178) | Send Message
    I bet Compass Point sold ahead of this down grade- and will buy back in after their news creates this sell off. I will just relax and enjoy the dividends!
    24 Mar 2014, 09:57 AM Reply Like
  • slebel
    , contributor
    Comments (32) | Send Message
    Agreed. And by crying wolf at this point in the month, I'll receive more shares as dividends to be reinvested. Maybe I should say thank you?
    26 Mar 2014, 08:06 AM Reply Like
  • glenart
    , contributor
    Comments (53) | Send Message
    Who is Compass Point? Is it some sort of small time boutique brokerage or something? Sounds to me that someone got caught short and needs to get bailed out of their positions before they have to make good on the next round of big dividend checks that are due in April........Always remember when you short a stock, you are liable for the dividends that are due to the people you borrowed the stock from. I would not want to be writing out checks at 10-15% interest rates and then watch the stock keep going up......
    24 Mar 2014, 10:01 AM Reply Like
  • sparker561
    , contributor
    Comments (104) | Send Message
    Compass Point, with 2 or 3 offices in OK and 1 in TX is an unusually undistinguished 10 year old securities firm managed by a father, son, and 2 or 3 others, all with very limited experience.


    I've written several longish comments, here, on the dynamics and worth of up and down grades by investment banking firms. If you're wondering about the value of this Compass Point downgrade, you might want to read those comments.
    24 Mar 2014, 01:04 PM Reply Like
  • sparker561
    , contributor
    Comments (104) | Send Message
    p.s. Following the prices of CEF bonds, which, in certain significant ways, are similar to REITS, can be helpful in assessing the mREIT sector.
    24 Mar 2014, 01:22 PM Reply Like
  • macronaut
    , contributor
    Comments (93) | Send Message
    Must be a "discount" securities firm... as in, you can discount much of their publicly available analysis.
    24 Mar 2014, 01:57 PM Reply Like
  • liusing
    , contributor
    Comments (1031) | Send Message
    Looks like it is pretty easy to set up a company, issue a downgrade or upgrade, get it to Reuters, Bloomberg, SA, etc (somehow ?), affect the price a little bit, but able to make some real money.


    And this happens in the biggest market in the world !??
    25 Mar 2014, 02:59 AM Reply Like
  • liusing
    , contributor
    Comments (1031) | Send Message
    No reasons given ? or where to find ?
    24 Mar 2014, 10:05 AM Reply Like
  • murray555
    , contributor
    Comments (432) | Send Message
    More white noise about mreits. I really don't know why I am even commenting on this. Maybe I'm just bored...
    24 Mar 2014, 10:20 AM Reply Like
  • liusing
    , contributor
    Comments (1031) | Send Message
    Lance Brofman just posted MORL see increase in dividends in April, this is a more solid news than whatever what Compass Point is rating about.
    24 Mar 2014, 10:46 AM Reply Like
  • IValueGrowth
    , contributor
    Comments (43) | Send Message
    No such thing as a risk free investment. I have been a big fan of the mREITs since late 2013, but many of these stocks have run up 20%+ since then. Rising short term rates, as Yellen hinted at, will ding the return of mREITs, that is a fact. I have reduced my exposure this morning, swapping it out for NRZ which benefits from rising rates, though I still hold 50% of what I had in MORL.


    Good luck all
    24 Mar 2014, 11:16 AM Reply Like
  • glf4mny
    , contributor
    Comments (464) | Send Message
    glenart, I think you hit the nail on the head. Likely JASON STEWART and WILKES GRAHAM are behind this downgrade and should tell us why?

    24 Mar 2014, 11:41 AM Reply Like
  • Chazuu
    , contributor
    Comments (273) | Send Message
    One month ago the 91 day T bill yielded .095.
    Now it yields about .050.
    The 182 day yielded .110 a month ago.
    Now about .080.
    The trend for short T bills is down--not up.
    Yellen may be wishing for rising short rates, but so far it isn't happening.
    Anyone who thinks they can predict the future of interest rates is delusional.
    24 Mar 2014, 11:48 AM Reply Like
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