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Annaly's (NLY) board authorizes the repurchase of up to $1.5B worth of company stock over the...

Annaly's (NLY) board authorizes the repurchase of up to $1.5B worth of company stock over the next 12 months. That's about 10% of the float. Shares +2% AH. (PR)
Comments (13)
  • Regarded Solutions
    , contributor
    Comments (15437) | Send Message
     
    smart move. precludes a stock offerring. I like that.
    16 Oct 2012, 04:31 PM Reply Like
  • batitude
    , contributor
    Comments (118) | Send Message
     
    Someone made a comment that a stock repurchase may be the best investment they can make with the pay-offs they are receiving. Read that this morning. Didn't think it would happen since it shrinks the company, but will help keep the share price higher, and the Dividend % high.

     

    They can always do a stock offering when the spread increases.
    16 Oct 2012, 04:39 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (15437) | Send Message
     
    Thats very true batitude. The problem that I have and why I sold prior to this sell off is the uncertainty surrounding the Feds open ended MBS buying. It might be "only" 40 billion/month, but it could be well over trillions if it goes on for 3-4 years! Then where will the money come from to do another buy back? At my age I have enough grey hair! lol
    16 Oct 2012, 04:49 PM Reply Like
  • batitude
    , contributor
    Comments (118) | Send Message
     
    My hair turned completely gray in my 30's!

     

    I understand the reasons that you sold (I let mine get called out a couple of months ago, and never bought back in yet - almost did yesterday, that whole "hind-sight" investing issue again...).

     

    Probably will not buy back in based on this news, but do believe that this is a very good thing for long-term holders of the stock, and for the company over-all. They are large enough to be able shrink the company and still maintain the lowest borrowing costs, and still be the largest mReit.
    16 Oct 2012, 05:01 PM Reply Like
  • Billionairetobe
    , contributor
    Comments (5) | Send Message
     
    Great opportunity.
    16 Oct 2012, 04:44 PM Reply Like
  • Patrick Harden
    , contributor
    Comments (427) | Send Message
     
    If the stock trades below book, share repurchases are a much better use of cash than reinvesting in 2.5% coupon MBS.
    16 Oct 2012, 04:59 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (15437) | Send Message
     
    diminishing returns on these buy backs.....one is fine, but then what?.....plus it's over 12 months.
    16 Oct 2012, 05:04 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2480) | Send Message
     
    Exactly, they are effectively buying something worth $16.50-ish for about $16. It depends on where book value has moved to this quarter. Smart move, given the environment. Why take a risk buying overpriced mortgages when you can buy your under priced stock instead.
    16 Oct 2012, 05:07 PM Reply Like
  • Jonathan Christopher
    , contributor
    Comments (282) | Send Message
     
    With shares selling at .96 book, and dividends running at about 12%, the effective yearly return to the Annaly balance sheet on a share buyback is 12% plus 4% or 16%for a full year. If you buy back 10% of your stock at the beginning of the year, you increase the return on the remainder of our shares b roughly 16/10 or 1.6%
    IF your margins are dropping due to reduced spreads, this is an excellent way to improve your profitability- or reduce the rate at which you drop your dividends. This excellent strategy is also being followed by companies such as Ashford (AHT) - they buy back shares when significantly below book, and re-issue shares when above book. Similarly, ACAS (The manager for AGNC) is significantly improving earnings by using a similar method. The basic calculation is if you can earn more for your shareholders by buying back shares, rather than investing the money, than that is what you do. -
    that is - if you are REALLY keeping shareholder interest in mind.
    16 Oct 2012, 05:17 PM Reply Like
  • manmur
    , contributor
    Comment (1) | Send Message
     
    Normally,I feel good when a company,or insiders purchase company stock.In this case,I'm not sure....possibly to limit cash dividends paid out,perhaps?
    16 Oct 2012, 06:19 PM Reply Like
  • batitude
    , contributor
    Comments (118) | Send Message
     
    They have to pay out 90% of Taxable income, to the shareholders - cash doesn't generate income, so paying out the cash to buy the shares helps the stock price and the dividend (again 90% of taxable income) will get paid to a fewer number of shareholders. The company gets "smaller" in market cap, but their borrowing costs are so long that it makes much more sense to buy back shares, instead of paying down debt (de-leveraging even more) or buying more MBS (at a all-time low spread). They can always grow like they have in the past when the yield spread is more favorable by doing another stock offering.
    17 Oct 2012, 09:45 AM Reply Like
  • Todd Johnson
    , contributor
    Comments (6952) | Send Message
     
    $NLY, $AGNC, $IVR, $TWO, $MTGE, $CIM To many retail investors own mREITs. They sell what they don't understand. I would too. TJ
    17 Oct 2012, 01:24 AM Reply Like
  • eddylouis
    , contributor
    Comments (10) | Send Message
     
    Good move by forward planning hands on management. Keep up the good work
    17 Oct 2012, 08:26 AM Reply Like
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