Seeking Alpha

It's a bit apples to oranges, but what a difference there is in management attitudes from a...

It's a bit apples to oranges, but what a difference there is in management attitudes from a couple of mortgage players: Ellington Financial (EFC +2.3%) and Annaly (NLY). While both acknowledge the difficulty of having a non-economic gorilla (the Fed) intruding on the MBS market, Ellington (earnings, earnings call) is highly optimistic about the trading opportunities sure to arise. Annaly: "Balance sheet is not a trading vehicle."
Comments (6)
  • vandob
    , contributor
    Comments (36) | Send Message
     
    NLY is right---thinking of the balance sheet as a trading vehicle is short term in nature---exactly what has got this country in the mess it's dealing with now!
    8 Nov 2012, 11:50 AM Reply Like
  • jerryu44
    , contributor
    Comments (111) | Send Message
     
    theres nothing wrong with trading, if you know how to do it. most however lose money trading.
    8 Nov 2012, 11:54 AM Reply Like
  • REIT Analyst
    , contributor
    Comments (472) | Send Message
     
    Jerry - 100% agreed. The reason why NLY can't really think of its balance sheet in very creative terms is that it is too big, quite simply. If you have 70bb to put to work, the set of opportunities looks a lot smaller in the agencies specified pools market. Oh and they don't do non-agencies either.
    8 Nov 2012, 02:14 PM Reply Like
  • gls3
    , contributor
    Comments (2) | Send Message
     
    agree, very positive on the c/c with solid 12.5% divi described as safe going forward as well as possible special divi in feb. to help holders pay taxes. c/c is worth the time for anyone interested in mortgage buyers / traders.... efc is not a reit
    i exited nly earlier in the year and have been buying efc on dips.
    8 Nov 2012, 02:59 PM Reply Like
  • Micro_Cap_Maven
    , contributor
    Comments (95) | Send Message
     
    Two completely different business models and hedging philosophies. Agency is a small contributor to EFC, which generates the bulk of its earnings in non-Agency.
    8 Nov 2012, 03:03 PM Reply Like
  • Micro_Cap_Maven
    , contributor
    Comments (95) | Send Message
     
    NLY and EFC have two entirely different strategies and philosophies regarding hedging. Why they are even mentioned in the same breathe as NLY makes no sense.
    8 Nov 2012, 05:09 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

Next headline on your portfolio:

|