Seeking Alpha

Wow, it's getting frothy in mortgages. Cerebus and Goldman are among a rush of firms raising...

Wow, it's getting frothy in mortgages. Cerebus and Goldman are among a rush of firms raising funds to chase returns in non-agency MBS. Improving housing is one part of the story, but a sharply shrinking supply of paper is another. Subprime mortgages have returned 30% YTD.
From other sites
Comments (14)
  • Tony Petroski
    , contributor
    Comments (6373) | Send Message
     
    Does that mean the toxic is no longer toxic?

     

    How long before we have TARP II?
    4 Oct 2012, 12:31 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    And when those MBS become overbought, those same firms will sell them short. Some of this run may also be motivated by front-running the Fed, which could indeed buy non-agency MBS at some point.
    4 Oct 2012, 12:39 PM Reply Like
  • Russ Winter
    , contributor
    Comments (661) | Send Message
     
    Central bank moral hazard run amok.
    4 Oct 2012, 12:43 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (20394) | Send Message
     
    As the Fed buys up agency MBS, whoever sells them has to replace the assets, buying direct substitutes such as non-agency MBS. That's how the Fed manipulates every market out there.
    4 Oct 2012, 12:46 PM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (1905) | Send Message
     
    NLY downgraded, by more experts:
    Money and mouth in same place. Just bot more NLY...Down .31, good company, gurus driving price down, grab grab...
    Like takin' candy from a baby.
    Capt. Brian
    The Lost Navigator

     

    Watch tomorrow, and I betcha price goes bak up..
    4 Oct 2012, 12:56 PM Reply Like
  • Pinkrabbit
    , contributor
    Comments (190) | Send Message
     
    I don't know about grabbing NLY just yet. The chart on NLY has been stinko since August. I would not consider until the price crosses above the 8 day SMA which is still going down like a submarine Capt unless you feel duty bound to go down with the ship.
    4 Oct 2012, 01:28 PM Reply Like
  • Boog
    , contributor
    Comments (103) | Send Message
     
    ...and then back down....as traders smell blood....
    4 Oct 2012, 02:56 PM Reply Like
  • U Mass baseball
    , contributor
    Comments (26) | Send Message
     
    This is just another temporary setback for NLY. They have weathered many storms, & will come out of this just fine. Their top executives are among the very best in the REIT field. Good time to buy more. A strong rebound is in store. I've just added 2000 shares. BTY, their dividend, even with the most recent 9% drop, is 12%.
    4 Oct 2012, 01:56 PM Reply Like
  • Niklashausen
    , contributor
    Comments (225) | Send Message
     
    In a recent SA article I encountered the old Wall Street saw, "The bull climbs up the stairs, but the bear jumps out the window." Things could get exciting when the window-jumping begins. Long NLY for now, but it may be time to set some stops.
    4 Oct 2012, 02:04 PM Reply Like
  • jrbuettner
    , contributor
    Comments (76) | Send Message
     
    Glad I sold NLY a while ago, and got into IVR and ARR, monthly dividends are lovely
    4 Oct 2012, 02:10 PM Reply Like
  • DingoDog
    , contributor
    Comments (5) | Send Message
     
    MFA has been trending up all year but this activity is prob. due to div. comeing out,,ex date 10/10 I belive
    4 Oct 2012, 02:36 PM Reply Like
  • jameso99
    , contributor
    Comments (58) | Send Message
     
    390% payout ratio???
    4 Oct 2012, 03:02 PM Reply Like
  • FrankEllis
    , contributor
    Comments (238) | Send Message
     
    390% payout ratio???
    What do you know about tax law?
    REIT's, in order to not pay tax, are required to pay out at least 90% of their taxable income each tax year, so the pass through income is taxed at holder level, but only taxed once, not twice.
    If one understands the tax requirements that allow the high yields, that actually cause and require the pay out of 90% of income taxable income, the ratio you ask about is not relevant to trusts.
    The tax law requirements for pass through income is the different between 3-4% dividends by businesses electing to be taxed as corporations, versus 15% distributions of taxable income by businesses electing to be taxed as trusts.

     

    Looking at Corporation tax rates of 30+% and your personal tax rate of 15% (assuming dividends are qualified), versus paying out 90% of taxable income so that you pay whatever you normal marginal rate of unqualified income, makes for the high yield rates on REIT's, trusts, BDC's, MLP's, and royalty trusts.

     

    As an investor, as well as a tax payer, one should be aware of these facts and requirements.
    4 Oct 2012, 04:01 PM Reply Like
  • mostserene1
    , contributor
    Comments (3344) | Send Message
     
    Buy REITs Now!
    4 Oct 2012, 05:12 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector