Annaly: Forget buybacks

• "Share buybacks come directly out of our capital and I equate it to Apple closing down the very factories that produce the cash flow they used to buy back their stock," says Annaly (NLY +0.8%) CEO Wellington Denahan on the earnings call (transcript).
• Denahan notes Annaly since inception has returned 510% vs. the S&P 500's 200% - this while S&P companies bought back $5T in stock and Annaly repurchased zilch (A contrary take: Not every company has the opportunity to buy back stock at a 22.5% discount to book value).
• UBS's Matthew Howlett has Sell recommendations on both Annaly and American Capital Agency (AGNC +0.1%) in part because of their reluctance to repurchase shares (AGNC has been an enthusiastic repurchaser in the past). He notes a possible misalignment of management and shareholder interests as the firms' managers get higher fees from higher assets.
• Previously: Annaly Capital edges higher after earnings miss (May 7)
• Previously: Annaly income stung by slimming margins, higher prepays (May 6)