Seeking Alpha
  • Today - Tuesday, September 30, 2014

  • 4:37 PM
    • Additional commitments from one new and one existing lender brings the size of Fifth Street Finance's (NASDAQ:FSC) syndicated credit facility to $705M from $680M. The facility now includes 17 lenders with an accordion feature allowing future expansion up to $800M.
    • The boosted firepower helps as the Fifth Street eyes going after larger deals (up to $250M).
    • Source: Press Release
    | Comment!
  • 4:25 PM
    • Principal Financial Group's (NYSE:PFG) Principal Global Investors agrees to lift its stake in Stamford-basd equity management firm Columbus Circle Investors to 95% from 70%.
    • Principal Global first acquired its stake in 2005, and AUM have since more than quadrupled to $17.5B as of June 30.
    • The investment has "greatly exceeded" expectations for returns in the mid-teens, says Jim McCaughan, CEO of Principal Global.
    • Source: Press Release
    | Comment!
  • 4:12 PM
    • Calling the move a significant milestone for Sliver Bay (NYSE:SBY), CEO David Miller says, "The transaction will benefit our stockholders by enhancing the company's cash flow profile beginning in the Q4."
    • Previously: Silver Bay moves forward internalizing management
    | Comment!
  • 4:09 PM
    • The first monthly dividend is scheduled to be declared in October and paid in November. Concurrent with monthly dividend announcements, American Capital Agency (NASDAQ:AGNC) will also disclose (in intra-quarter months) its estimate of month-end net asset value.
    • Source: Press Release
    • Shares are trading, but currently unchanged in after-hours action.
  • 3:51 PM
    • The Courtyard Anaheim at Disneyland Resort sold for $32.5M, or $212K per key. It's one of Chesapeake's (CHSP -0.8%) earliest investments, purchased in 2010 for $25M. The sale price represents a 7.1% trailing cap rate and produced an unlevered 13.3% annual IRR during the ownership period.
    • Alas, the property (purchased in 2010 alongside a downtown L.A. hotel) is considered a non-strategic asset by Chesapeake thanks to its non-core CBD location.
    • Source: Press Release
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  • 3:45 PM
    • Nearing the end of the day at the JMP Financial Services and Real Estate Conference, attendees get a two-fer, with Michael Vranos and Lawrence Penn presenting for both Ellington Financial (EFC -0.1%) and Ellington Residential (EARN -1.8%).
    • Webcast and presentation slides
    • "We are religious interest rate hedgers," says Penn (the CEO of both). Our edge, he says, is not in predicting the direction of interest rates. He notes EFC lost just 1% of book value in its agency portfolio and EARN (which is strictly agency MBS) lost only 3% ... "orders of magnitude" less than the company's industry peers.
    • EFC hedges credit as well, says Penn, and he notes the company made money during brutally tough years - 2008/09 and 2011 - for credit.
    • Previously: Mortgage REITs slip amid investor presentations
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  • 3:29 PM
    • Cement company Summit Materials was co-founded amid the depths of the financial crisis by Blackstone (NYSE:BX) and others, and has been a busy buyer ever since, making more than 30 acquisitions.
    • The owners, reports Bloomberg, have hired Goldman and Citi to manage the offering, and the company could have a valuation of around $2.5B.
    • The move comes amid a fast pace of deals in the cement industry, led by the $40B merger between Lafarge SA and Holcim Ltd., and Martin Marietta Materials purchase of Texas Industries Inc.
    | Comment!
  • 3:14 PM
    • Insurers (mostly MetLife MET, the others are at least publicly keeping their lips zipped) are not pleased about being subject to capital rules designed for banks.
    • The so-called quantitative impact study (QIS) will take input from the insurers as its attempts to figure out the impact on them of the new banking regulations.
    • Others of interest include AIG and Prudential (NYSE:PRU).
    | Comment!
  • 3:05 PM
  • 1:44 PM
    • Previously trying to stay out of the ETF price wars, State Street Global Advisors (STT -0.1%) sets price cuts averaging 20% across 15 of its core equity and fixed income ETFs. The new fees on the 15 SSgA ETFs now range between 9-55 basis points from 15-65 previously.
    • Among those with lower fees is the industry goliath, the SPDR S&P 500 ETF (NYSEARCA:SPY), with a cost of 9 basis points down from 15.
    • Globally, SSgA is the 2nd largest ETF provider, but is in danger of losing that spot to fast-growing Vanguard (its competing S&P 500 tracker is VOO; iShares' is IVV). In Europe, SSgA is the eight-largest provider with assets of $10.5B, but is also under threat there from Vanguard which has built up AUM of $10.3B. Vanguard's European ETFs have seen $5.6B of net inflows this year vs. SSgA's $1.8B.
    | Comment!
  • 1:29 PM
    • The bottom has fallen out of Walter Investment (WAC -5.9%) over the past few minutes. There's no notable news to report as yet, but perhaps it's been hit with a regulatory investigation similar to those faced by Ocwen Financial (OCN -1%) and Nationstar Mortgage (NSM -1.1%).
  • 1:03 PM
    • Estimated new insurance written of $950M in Q3 compares to $429.9M the previous quarter, and $354.3M the quarter before that.
    • Source: Press Release
    • NMIH +3.6%
    | Comment!
  • 12:56 PM
    • The number of U.S. bank branches fell 1.7% Y/Y as of June 30 to 94.725 and is now 4.9% lower than the 2009 peak, according to the FDIC. Not only that, but layouts are changing - typically branches set aside 60% of their space for teller services and 40% for advice, and now that ratio has flipped, according to JPMorgan (NYSE:JPM) consumer bank chief Barry Sommers.
    • Staffing is following, with JPMorgan expecting total branch staff to fall 20% by 2015 compared with 2011 levels.
    • Wells Fargo's updated technology allowing ATMs to do much of the work of the teller has been rolled out to half of the bank's branches and is expected to be in all of them by early next year. The new systems also greatly reduce paper work flow, with the result being just 10% of floor space now accounting for back-office operations vs. 40% a few years back.
  • 12:29 PM
    • The auction for the bankrupt Atlantic City hotel/casino began last week and resumed this morning, with an affiliate of Brookfield Asset Management (BAM -0.7%) topping a $90M all-cash offer from Florida-based real estate developer Glenn Straub, reports the WSJ.
    • Should Straub not win the auction, he would collect a $3M breakup fee for serving as the lead bidder. In any case, the fate of the property could end up in court thanks to a budding legal dispute between Straub and Revel.
    | Comment!
  • 11:40 AM
    • While the portfolio of non-agency MBS issued prior to 2008 has declined somewhat to $4.9B as of August 31 due to runoff and sales, MFA Financial (MFA -0.6%) has substantially boosted its holdings of MBS backed by re-performing/non-performing loans (RPL/NPL MBS) to $782M, says CEO Bill Gorin, presenting at the JPM Financial Securities Conference.
    • The company is also now the owner of about $83M of re-performing residential whole loans (the actual loans, not the MBS).
    • As for agency MBS, MFA hasn't purchased any since Q1 of this year.
    • Presentation slides
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  • 11:18 AM
    • Not a lot has changed from an interest rate risk profile, says Hatteras Financial (HTS -0.4%), presenting at the JMP Financial Services Conference, and updating on Q3. As rates are lower though, the company has boosted its hedging and lowered leverage a bit.
    • Presentation slides
    • CPRs have ticked up this quarter as interest rates have come down, but not out of line with what might be expected.
    • Progress continues on building jumbo ARM capability and the company expects to have more to say on this at the time of its Q3 earnings report.
    | Comment!
  • 10:35 AM
    • The Total Return ETF (NYSEARCA:BOND) - far smaller, but following a similar strategy to the Total Return Fund - saw $446.5M pulled on Friday following the announcement of Bill Gross' departure from Pimco. The redemption accounted for 12.5% of the fund's shares. Withdrawals slowed to $98M yesterday.
    • It seems a good portion of those funds were placed for at least safekeeping BlackRock's (NYSE:BLK) iShares Core U.S. Aggregate Bond ETF (NYSEARCA:AGG), which saw more than $400M of inflows.
    • What's Pimco selling? Traders say Pimco was seeking bids on more than $170M of agency-backed CMBS.
    | 1 Comment
  • 9:44 AM
    • Noting the stock is off about 14% since being initiated with a Market Perform on July 17, analyst Nikhil Bhalla, sees a better H2 shaping up for the company and upgrades Ashford Hospitality Price (AHP +1.4%) to Outperform with $20 price target.
    • "Investors getting into the stock at this level are buying into a portfolio that is trading materially below what it is worth in the private market," he says, estimating that discount to be 28-33%.
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  • 9:37 AM
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  • 9:23 AM
    • Maybe the 2.5% 10-year Treasury is cheap, says CYS Investments (NYSE:CYS) CEO Kevin Grant, presenting at the JMP Financial Services and Real Estate Conference. The Fed is finally starting to get it, he says, noting it's cut its GDP growth estimates in coming years to just 1.8-2.6%.
    • Presentation slides
    • Doing some back-of-the-envelope work, Grant says the fracking revolution - by reducing U.S. imports - is adding about 0.6% to GDP growth, so the underlying numbers are somewhat worse than the weak projections.
    • This could be one of the shortest rate hike cycles ever, says Grant, suggesting Jon Hilsenrath's idea of one hike and then a very long pause makes more than a little bit of sense.
    • As for the "dots" which show a series of rate hikes beginning in the middle next year, Grant says they make no sense given the Fed projections of weak GDP growth and low inflation.
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