May 5, 2014, 8:21 AM
- Core income of $58.3M or $0.15 per share compares to $59.3M and $0.15 in Q4; $0.15 quarterly dividend.
- Book value per share of $4.67 slips from $4.75 after payment of $0.15 in dividends. Friday's closing price of $4.25 is a 9% discount to book.
- Leverage of 8.12x up from 6.92x; average net interest margin of 1.82% up 22 basis points; average CPR of 3.68% slips from 4.8%.
- Repurchased 600K shares at average price of $4.31 each.
- Source: Press Release
- ARR no trades premarket
Apr. 29, 2014, 12:12 PM
- The mortgage REIT (REM -0.9%) sector is lower following American Capital Agency Q1 results from after the bell last night. Earnings beat expectations and comfortably covered the $0.65 dividend, but a 2.3% gain in book value may have been somewhat shy of what was hoped for.
- Opinions make markets, and - unlike CYS Investments' management - American Capital CIO Gary Kain does not view the current mortgage market as too pricey to play in.
- Also for fixed income investors to chew on is Apple's upcoming (bell-ringing?) massive debt offering.
- Related ETFs: MORT, MORL.
- Other agency (or mostly so) MBS names: Annaly (NLY -0.7%), Armour (ARR -0.1%), Hatteras (HTS -0.1%), Capstead (CMO), Anworth (ANH -0.2%), Ellington Residential (EARN -0.6%).
Apr. 25, 2014, 4:43 AM
- The amount that lenders originated in mortgage loans plunged 58% on year Q1 to a 14-year low of $235B, almost entirely due to drop in refinancing. The figures are from industry newsletter Inside Mortgage Finance.
- Loans for acquisitions were flat on year and lower than in Q4.
- The trend is the latest indication that increasing interest rates are hampering the housing recovery. The average 30-year fixed-rate mortgage was 4.5% last week, up from 3.6% in May last year, when rates spiked after the Fed indicated it would scale back its QE program.
- Tickers: DHI, PHM, RYL, MHO, NVR, LEN, SPF, MDC, HOV, TOL ORI, NLY, AGNC, MTGE, ARR, TWO, IVR, CMO, MFA, WMC, FMCC, FNMA, RDN, NMIH, ESNT, GNW
- ETFs/ETNs: ITB, XHB, MORT, MORL, REM, MORT, MORT
Apr. 24, 2014, 10:36 AM
- A check of the mortgage REITs (REM +0.1%) finds not a lot going on stock price-wise following the first Q1 earnings reports from the sector this week (CYS Investments and Hatteras). As expected, book values grew and prepayments remained at a low level.
- Perhaps unexpected was a good deal of caution from CYS management about mortgage prices - right now, it's finding better value in Treasurys, and awaits a pullback in MBS prices before boosting those holdings. "The mortgage market is a little kid playing with matches," said CEO Kevin Grant on the earnings call (transcript). "We just don't know when everybody's fingers are going to get burnt. The traders that play in this market, they know this and they know they are playing with matches."
- Amid the low supply of MBS out there, Hatteras (HTS +0.1%) management on its call (transcript) says it now has 10 originators delivering wholesale product to the company covering more than half of monthly cash flow needs. Up next is expansion into jumbo ARMs.
- Other sector ETFs: MORT, MORL
- Individual names: Annaly (NLY +0.6%), American Capital (AGNC +0.7%), (MTGE +0.2%), Armour (ARR +0.1%), Two Harbors (TWO -0.6%), Invesco (IVR -0.1%), Capstead (CMO +0.3%), MFA Financial (MFA +0.1%), Western Asset (WMC +0.5%).
Apr. 4, 2014, 3:15 PM
- What's working today? With the exception of Western Asset Mortgage which had a massive secondary offering, the mREIT sector is nearly universally higher as money rushes out of the previously perkier areas of the market.
- Not hurting is a seven basis point decline in the 10-year Treasury yield to 2.73%.
- Up the most are the two largest and also investor favorites Annaly (NLY +1.4%) and American Capital Agency (AGNC +1.3%). Others: CYS Investments (CYS +1%), American Capital Mortgage (MTGE +0.5%), MFA Financial (MFA +0.5%), Dynex (DX +0.9%), Armour (ARR +0.5%).
- Related ETFs: REM, MORT, MORL
Mar. 24, 2014, 9:43 AM
- It's not just Annaly. Compass Point is ringing the register on a wide swath of the mortgage REIT industry today. American Capital Agency (AGNC -1.6%), Anworth Mortgage (ANH -1.3%), Armour Residential (ARR -1.2%), CYS Investments (CYS -1%), Hatteras (HTS -1.5%), and Western Asset Mortgage (WMC -1.4%) are all cut to Hold from Buy.
- All have been big gainers this year, likely narrowing their discounts to book value and - in at least one case - maybe climbing above it.
- ETFs: REM, MORT, MORL
Mar. 19, 2014, 3:13 PM
- A check of sectors following the FOMC statement and updated projections suggesting a quickened pace of rate hikes in the future finds the banks and life insurers notably moving higher. Both groups have struggled earning a spread amid ZIRP and are positively levered to higher rates.
- Lenders: Bank of America (BAC +1%), Citigroup (C +1%), JPMorgan (JPM), Regions (RF +1.7%), KeyCorp (KEY +0.9%), SunTrust (STI +0.7%).
- Life insurers: MetLife (MET +1%), Prudential (PRU +0.7%), Lincoln National (LNC +1%).
- Related ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, KIE, SEF, IYG, IAK, FXO, PFI, KBWB, FNCL, FINU, RWW, RYF, PSCF, KBWP, KBWI, FINZ, KBE, KRE
- Not necessarily positively levered to higher rates are the mortgage REITs (REM -1.6%): Annaly (NLY -1.8%), American Capital (AGNC -1.7%), (MTGE -1.9%), Armour (ARR -1.3%), Two Harbors (TWO -2%) CYS Investments (CYS -3.3%), Capstead (CMO -1.3%), MFA (MFA -1.8%).
- Related ETFs: MORT, MORL
Mar. 13, 2014, 3:16 PM
- Ports in a storm on a tough day for the major averages (S&P 500 -1.4%), the mREIT sector is mostly in the green, with sector giants Annaly (NLY +1.1%) and American Capital (AGNC +1.1%) leading the way.
- The 10-year Treasury yield is off eight basis points to 2.65%.
- Earlier: Dividend hikes at mREITs? Capstead (CMO +0.9%) and Ellington Residential (EARN +1.9%) boost payouts by 10%.
- Others: Armour (ARR +0.9), CYS Investments (CYS +0.9%), Dynex (DX +0.8%).
Mar. 7, 2014, 12:46 PM
- The mortgage REITs are maybe the poorest performing sector amid a big move higher in interest rates, and formerly bullish Deutsche Bank ringing the register on New York Mortgage Trust, CYS Investments, and American Capital Mortgage after nice runs for all have pulled them close to (or above in NYMT's case) book value.
- There's also an earnings miss this morning from one of the last of the players to report Q4, Western Asset Mortgage.
- Annaly (NLY -2.1%), American Capital Agency (AGNC -2.3%), Armour (ARR -1.4%), Two Harbors (TWO -1.8%), Invesco (IVR -2.7%), Capstead (CMO -1.2%), MFA Financial (MFA -2%), Apollo Residential (AMTG -1.7%)
Mar. 6, 2014, 7:19 AM
- The stock repurchase authorization is raised to 3M shares from 2M previously. With the boost, the company currently has permission to buy back another 1.49M shares.
- Thomas Guba - on the board since 2012 - is appointed lead independent director.
- Javelin is externally managed by the same team which externally manages Armour Residential (ARR) and Armour made nearly identical moves today, though Javelin's buyback program - under pressure from an activist investor - has previously been more aggressive than Armour's.
- Press release
- JMI no trades premarket
Mar. 6, 2014, 7:12 AM
- Armour Residential (ARR) increases the size of its buyback authorization to up to 50M shares. It was previously $100M, or about 23M shares at the current price.
- Thomas Guba - who has served on the board since 2009 - is appointed lead independent director. Among other responsibilities, Guba will coordinated the activities of the other independent directors, including having the authority to call executive sessions of the independent directors.
- Press release
- Shares +1.4% premarket
- Javelin Mortgage announced nearly identical moves today as well.
Feb. 27, 2014, 5:55 AM
Feb. 26, 2014, 10:36 PM
- Armour Residential (ARR) Q4 core EPS of $0.15 beats by $0.02.
- End of year book value per share of $4.75 falls 9.7% from $5.26 at the end of Q3. Today's closing price of $4.34 is an 8.6% discount to Dec. 31 book.
- Average net interest margin of 1.6% is up 36 basis points from Q3 as CPR falls to 4.8% from 8.8%.
- Leverage of 6.92:1 is about unchanged from Q3. $4B of agency paper sold during Q4 leaving portfolio size of $14.6B vs. $16.7B in Q3. Company continues to shorten duration in 2014, selling $5.5B of 25-year and 30-year fixed rate mortgages thus far this year, leaving $1.3B of 30-years left to be sold. $3.7B of 15-year mortgages have been purchased.
- 13.375M shares repurchased during quarter at an average price of $3.89 each.
- Press release
Feb. 26, 2014, 9:58 AM
- A check of the mREIT sector (REM +0.8%) following better-than-expected Q4 results from Annaly finds about all the individual names in the green.
- Like many earlier reporters, Annaly experienced a pleasing drop in prepayments during Q4, leading to a widening net interest margin.
- American Capital Agency (AGNC +0.8%), Armour Residential (ARR +0.9%), CYS Investments (CYS +0.6%), Hatteras Financial (HTS +0.9%), Dynex (DX +1.1%)
- ETFs: MORT, MORL
- Annaly's earnings call begins shortly. The stock is up 3.5% in early action.
Feb. 4, 2014, 11:51 AM
- Addressing an analyst cadre somewhat uncomfortable with American Capital's (AGNC +1.6%) new policy of purchasing the common stock of its agency mREIT competitors (Wells' Joel Houck: Do you know their hedging strategies? What happens when one blows up?), CIO Gary Kain says the discounts to asset value are so great as to mitigate much of the risk.
- Kain does acknowledge some risks though, and reminds that the purchase program is but a small slice of AGNC's overall portfolio ($400M of others' stock bought so far vs. nearly $600M of AGNC buybacks just in Q4).
- For now, there won't be any disclosure of which names American Capital is buying - a position also not sitting well with those on the call. Should the positions get large enough though, regulatory filings might be required.
- Kain also reminds that AGNC isn't just boosting risk with these purchases - instead it's selling MBS at 100 cents on the dollar to buy them back (via other mREITs) at somewhere in the area of 80 cents on the dollar.
- Most of the mREIT sector (REM +0.7%) is ahead again today - Armour (ARR +0.9%), CYS (CYS +2.8%), Hatteras (HTS +1.6%), American Capital Mortgage (MTGE +0.6%), PennyMac (PMT +1.2%) - but Annaly (NLY -0.6%) lags, perhaps as investors feel it was far more conservatively positioned going into 2014 than AGNC was.
- Earnings call is still ongoing
- Previous coverage
Jan. 30, 2014, 10:20 AM
- You're seeing a lot of demand in the assets we hold, says Capstead Mortgage (CMO +1.5%) management on the conference call after reporting a blowout Q4. In a steepening yield curve environment - the short-end anchored while long rates move higher - Capstead is benefitting from tightening spreads in the 5/1 ARMs it mostly holds.
- Mr. Market seems to have fleshed this out, and Capstead was already trading for right around book value (reported at $12.47 as of Dec. 31) vs. the double-digit discounts for long-end players like Annaly (NLY +0.2%), American Capital (AGNC -0.3%), Armour (ARR), and CYS Investments (CYS -0.5%).
- Another in the adjustable-rate arena is Hatteras Financial (HTS +1.5%).
- Related ETFs: REM, MORT, MORL
ARMOUR Residential REIT Inc invests in and manages a leveraged portfolio of residential mortgage backed securities. It invest in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored entity.
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