"Not something we are overly concerned about," says Annaly (NLY) CEO Mike Farrell of an SEC...

"Not something we are overly concerned about," says Annaly (NLY) CEO Mike Farrell of an SEC inquiry into whether mortgage REITs can continue to use leverage and still retain their favorable tax status. MREIT shares have sold off recently - at least in part due to the SEC review - pushing already double-digit yields even higher. A list of the larger ones.
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Comments (5)
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
    Good link. Helps explain what is going on with REIT's at this point in time regarding this SEC inquiry.
    8 Oct 2011, 09:46 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message


    What we were discussing today. Very interesting.


    Operation Twist does not seem to be the issue.
    8 Oct 2011, 10:25 PM Reply Like
  • richjoy403
    , contributor
    Comments (13492) | Send Message
    I am long both NLY and MFA. Anyone who considers him/her self an "investor" has also been burned enough or is or otherwise intelligent enough to realize he/she cannot blindly accept and trust the non-specific statements of any official of any company on anything.


    In this case, Thus he says "we are not overly concerned". But what does overly concerned really mean?...these are weasel-words, they cannot be relied upon to mean anything specific.


    If his company is in fact deeply concerned, what was Farrell supposed to say?...he could hardly say "we are deeply concerned that if the SEC changes the rules so that our shareholders no longer have the advantages of REIT status, or if mREITS can no longer leverage at 5 times, our shareholders will suffer massive losses in share price." Seriously, even the most ardent fan of mREITS knows no company official would say any such thing, even if the company thought that might be true in a year or two.


    The SEC's plate is full, and their staffing thin. Thus they are not likely initiate any inquiries in any industries without a sound reason. For an investor to arbitrarily dismiss the SEC's inquiry is folly akin to the safety garnered by whistling when walking through a graveyard at night.


    However, the SEC also moves glacially slow, especially for 'back-burner' issues...thus IF their inquiry were to result in a decision to formulate new rules that adversely affect mREITS, I would not expect any such signal for a year or longer (they are at the information stage, formulating possible rules takes time, then comes comments).
    FYI for those not familiar--The term weasel word is rarely used in the 21st century, but is appropriate now more than 30 years ago...a weasel word is an informal term for words and phrases aimed at creating an impression that something specific and meaningful has been said, when in fact only a vague or ambiguous claim has been communicated.


    Also, the Barron's linked article uses the term "equanimity" to describe the mREIT industry's view of the SEC inquiry...equanimity has to do with the present moment, and nothing to do with next week, or next year.
    9 Oct 2011, 07:54 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message


    Great comment.


    "Weasel words" one of my favorite terms, I didn't realize it wasn't considered contemporary - you're making me feel old.


    Or should I say like a buttery, nougatey, chocolatey, milky, virtually fat-free, candy bar that is well past its expiration date.


    I am almost 100% sure I feel this way and can say with just about complete certainty everything that I have claimed above could be true.
    9 Oct 2011, 10:43 AM Reply Like
  • richjoy403
    , contributor
    Comments (13492) | Send Message
    CW -- Thanks for the comment...I suspect if weasel words is a favorite term or yours, you are probably as old as I.
    9 Oct 2011, 12:08 PM Reply Like
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