The mortgage REIT sector ticks down on news the Fed is reloading to flatten the yield curve even...

The mortgage REIT sector ticks down on news the Fed is reloading to flatten the yield curve even more. The mREITs make their living off of a steep curve, levering up to borrow short and lend long. Two popular ones:  AGNC -1.1%, NLY flat (but both lower than before the announcement).
Comments (15)
  • shraga
    , contributor
    Comment (1) | Send Message
    i am a beginner trying to understand the market
    20 Jun 2012, 01:28 PM Reply Like
  • MexCom
    , contributor
    Comments (3056) | Send Message
    I'd recommend reading the Q and annual reports to review the specific strategy of these funds and how they manage their activities from quarter to quarter. They use different amounts of leverage and some concentrate on the shorter end of the yield curve. My favorite tight now is HTS - they say refinancing activity has declined because of the relative stability of rates - especially in the short term mortgage paper. Also default rates are close to zero with Agency holdings.
    My strategy is to diversity with several. I own , HTS, TWO, AGNC and NLY.
    20 Jun 2012, 03:41 PM Reply Like
  • bigalt
    , contributor
    Comments (3) | Send Message
    My suggestion to you is buy some used books at a local unversity book store.
    1.Macro economics
    2.Micro economics
    4.Personal Finance


    You also want to read the financial statements. Also pay attention to MKT drivers.EQ- Europe
    29 Jun 2012, 10:07 AM Reply Like
  • TwistTie
    , contributor
    Comments (2429) | Send Message
    You may observe the market, but it is impossible to understand it.
    20 Jun 2012, 01:45 PM Reply Like
  • chowzer
    , contributor
    Comments (42) | Send Message
    20 Jun 2012, 02:05 PM Reply Like
  • Sacristan
    , contributor
    Comments (57) | Send Message
    We are a long investor with shares in approximately 100 companies world wide in euros, sterling, american and hong kong dollars. If AGNC drops to $29/$30 we will probably add to our holding. Chimera has been knocked for lowering it´s quarterly dividend but AGNC did likewise recently.
    20 Jun 2012, 01:54 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (20278) | Send Message


    as this news pertains to mREITs most notably #NLY
    20 Jun 2012, 02:13 PM Reply Like
  • Patrick Harden
    , contributor
    Comments (450) | Send Message
    A continued decline in long rates will bolster mREIT book values even though it will compress the spread further. A mortgage REIT that was running with reasonably high leverage before and makes selective sales could realize some sizeable gains capable of supporting current dividends.
    20 Jun 2012, 02:32 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (20278) | Send Message
    Hi Patrick, youre probably accurate about the BV but the spread still makes it tougher, and for an mREIT like AGNC which already uses more leverage, they MIGHT be boxed in for a bit.
    20 Jun 2012, 02:40 PM Reply Like
  • ggelina
    , contributor
    Comments (10) | Send Message
    How do you mean, boxed in?
    20 Jun 2012, 04:59 PM Reply Like
  • salpicc
    , contributor
    Comments (2) | Send Message
    Sure you can understand the market. The problem is acting on what's happening at the right time. Sell when others are greedy
    and buy when they are scared.
    20 Jun 2012, 02:59 PM Reply Like
  • gamagin
    , contributor
    Comments (2) | Send Message
    Agree with Sacristan and have added to agnc. these Reits also normally dip after dividend declarations. CIM seems to be a lucrative target for day traders due to its risk profile, which is largely touted on this blog.
    20 Jun 2012, 03:00 PM Reply Like
  • moishep
    , contributor
    Comments (23) | Send Message
    In my view, the MReits are acting very well today (I follow AGNC, MTGE, and HTS).
    1. On ex-div dates, these stocks normally decline by more than the amount of the dividend. Yesterday, AGNC's price decline was less than the amount of the dividend.
    2. The entire market is down, and as we know, correlation is high right now, so it's not surprising at all that the MReits are down, and they're not down that much in relation to the rest of the market.
    3. It looks to me that these stocks are not reacting much at all to the Fed's announcement today, simply that they're declining along with everything else. If they were reacting, one would expect a much greater decline. AGNC, for example, is about where you'd expect it to be, having now declined lower than the amount of the dividend (as expected), and then being lower in concert with the rest of the market.
    20 Jun 2012, 03:21 PM Reply Like
  • Obamitall
    , contributor
    Comments (230) | Send Message
    I find it interesting that the focus is on the fed actions and not on the XD for almost all these mREITs this week. They always drop after XD.
    20 Jun 2012, 03:27 PM Reply Like
  • charles111
    , contributor
    Comments (61) | Send Message
    Long AGNC ! Last bought at 28.50 feels so good !!!
    22 Jun 2012, 03:00 PM Reply Like
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