Tue, Apr. 21, 5:35 PM| Tue, Apr. 21, 5:35 PM | 6 Comments
Wed, Mar. 18, 2:30 PM
- Worries about a sharply flatter yield curve abate just a bit as the FOMC drops "patient" from its policy statement - putting rate hikes on the table at subsequent meetings - but Fed economic projections send a dovish signal, with outlooks for economic growth, inflation, and the pace of rate hikes all cut from previous estimates.
- Outperforming the averages: Annaly Capital (NLY +1.1%), American Capital Agency (AGNC +1.5%), Two Harbors (TWO +1.5%), CYS Investments (CYS +2%), Invesco (IVR +1.7%), Hatteras (HTS +1.7%), Capstead (CMO +2.1%), MFA Financial (MFA +1.7%), Anworth (ANH +2.2%), Dynex (DX +1.5%), Five Oaks (OAKS +3.3%).
- ETFs: REM, MORT, MORL
- Previously: FOMC drops "patient," but sends dovish signal (March 18)
Mon, Mar. 9, 4:16 PM
Fri, Mar. 6, 10:21 AM
- The 10-year Treasury yield has popped all the way to 2.24% (up 11 bps on the session) following the strong jobs report which saw 295K jobs added in February and the unemployment rate dropping to 5.5%.
- Checking short-term interest rate futures, they're falling (meaning higher rates), but still not pricing in a rate hike until late summer.
- Annaly Capital (NLY -1.3%), American Capital Agency (AGNC -0.6%), Two Harbors (TWO -1%), Armour (ARR -0.9%), Invesco (IVR -0.9%), CYS Investments (CYS -1.4%), Hatteras (HTS -1.1%), MFA Financial (MFA -1.1%), Western Asset (WMC -0.7%), Dynex (DX -1.2%), AG Mortgage (MITT -1.5%), Ellington Residential (EARN -1.1%).
- ETFs: REM, MORT, MORL
- Previously: Dollar and Treasury yields spike after strong jobs print (March 6)
Thu, Feb. 12, 12:03 PM
- CYS Investments (CYS +1.7%) was notable last year for its belief that long-term interest rates weren't heading higher, and its move to take a sizable long position in long-dated Treasury paper. Adding together dividends and the gain in book value in 2014, CYS posted a ROE of 27%, including 6.51% in Q4 (reported last night).
- Speaking on the earnings call (transcript), CEO Kevin Grant notes 10-year U.S. Treasurys continue to look cheap compared to European and Japanese paper.
- Management, however, is working under the assumption that the Fed is "really desperate to get out of ZIRP," and cautions investors to expect thinner spreads and maybe a smaller dividend going forward. On the other hand, Fed tightening could cause bond market disruptions, and CYS has ample dry powder ready to get put to work.
- Previously: CYS Investments income and book value grow in Q4 (Feb. 11)
Wed, Feb. 11, 4:15 PM
Wed, Feb. 11, 4:11 PM
- Q4 core earnings plus drop income of $50.1M or $0.31 per share vs. $49.7M and $0.31 on Q3. Dividend is $0.30.
- Book value per share of $10.50 vs. $10.14 at the end of Q4. Today's close of $8.63 is a 17.8% discount to book.
- Total stockholder return, as defined by the change in book value plus the dividend, of 6.51% for the quarter, 27.06% for the year.
- Net interest rate spread of 1.55% down five basis points from Q3. CPR rate of 8.7% down 60 basis points.
- Leverage of 6.44:1 vs. 6.63:1 in Q3.
- Management says the Fed's pursuit of higher rates is sure to hurt interest margins, but it does have hedges in place to mitigate some of this.
- Conference call tomorrow at 9 ET
- Source: Press Release
- CYS flat after hours
Tue, Feb. 10, 5:35 PM
- ABCO, ACHC, AEM, AMAT, AMBR, AUY, BIDU, CAKE, CJES, CPA, CRAY, CSCO, CSOD, CTL, CVA, CXW, CYS, DDR, DIOD, EFC, EFX, EXL, FET, FEYE, FORR, GAS, HIVE, HNI, HOS, IO, ITRI, LPSN, MET, NSIT, NTAP, NTWK, NU, NVDA, OII, PNRA, PPC, QDEL, REG, SCSS, SKX, SLF, SPRT, STMP, SWM, TAL, TCX, TRIP, TSLA, TSO, TTGT, WFM, ZEN, ZU
Tue, Feb. 3, 3:52 PM
- Unable to put any sort of positive move together even as interest rates tumbled this year, mREITs (REM +0.9%) are uniformly higher this session as the 10-year yield jumps 11 basis points to 1.78%.
- American Capital Agency (AGNC +1.3%) reported better-than-hoped Q4 results last night, but has altered its mix of portfolio holdings and hedges to brace for what it expects will be a wave of prepayments. If rates keep this up, those prepayments may not materialize.
- Annaly (NLY +1.1%), Chimera (CIM +1.5%), CYS Investments (CYS +1.3%), American Capital Mortgage (MTGE +1.8%), Hatteras (HTS +1.1%), MFA Financial (MFA +1.3%), Western Asset (WMC +1.8%), Dynex (DX +1.1%), Ellington Financial (EFC +1.2%).
Mon, Feb. 2, 2:52 PM
- "The combination of a negative duration and relatively long dated hedges lead to book value underperformance in a flat curve environment," merits a downgrade to Underperfrom for Armour Residential (ARR -5.9%), says analyst Doug Harter.
- "With above-average economic return volatility we expect CYS Investments (CYS -2.8%) to continue to have one of the lower price to book multiples among the Agency-only REITs," he says, also cutting to Underperform.
- Tight credit spreads combining with low yields will make it tough for New York Mortgage Trust (NYMT -2.2%) to meaningfully expand core EPS enough to cover the dividend, says Harter, cutting that stock to Underperform. He also notes NYMT has the highest price-to-book ratio in his mREIT coverage universe.
- Harter and team, however, still see some attractive values given the 12.9% discount to book the sector is selling for. PennyMac Mortgage Investment (PMT +0.2%), Two Harbors (TWO -0.7%) and New Residential (NRZ -1.6%) remain among top picks (though PMT and especially NRZ can hardly be considered mREITs).
- Previously: Credit Suisse downgrades three mortgage REITs (Feb. 2)
- Previously: JPMorgan previews Q4 for mREITs (Feb. 2)
Mon, Feb. 2, 7:33 AM
- Armour Residential (ARR -1.5%), CYS Investments (CYS -0.6%), and New York Mortgage Trust (NYMT -1.4%) are all downgraded to Underperform from Neutral at Credit Suisse.
- The details aren't yet available, but the team is no doubt eyeing the sharp flattening in the yield curve of late, and what that might do to earnings power going forward. Also, the sharp drop in bond yields could set the stage for a jump in refinancing, and thus prepayments.
- As for valuation, both Armour and CYS trade at sizable discounts to their last reported (Sept. 30) book value, while NYMT sells for a premium - a rarity in mREIT land these days.
- ARR is the only mover premarket, -2.4%.
Mon, Jan. 12, 10:03 AM
- The mortgage REIT space (REM -0.6%) is cut to Market Weight from Overweight at Wells Fargo, with Annaly Capital (NLY -0.4%), American Capital Agency (AGNC -0.2%), CYS Investments (CYS -0.7%), Capstead Mortgage (CMO -0.8%), American Capital Mortgage (MTGE -0.5%), AG Mortgage (MITT -1.3%), and MFA Financial (MFA -0.3%) - for now - individual names also being cut to Market Weight.
- It's an interesting move, especially in light of the significant discounts to book value nearly every stock in the sector trades at. The mortgage REITs have been especially notable of late for not being able to make any headway alongside the big rally in bond prices. Lower rates might do something for book values, but the sharply flatter yield curve (which could flatten even more once the Fed begins hiking) doesn't bode well for earnings power.
- Other ETFs: MORT, MORL
Tue, Jan. 6, 2:17 PM
- The 10-year yield has plunged all the way down to 1.94% and one would figure on some nice increases in book value for the mortgage REITs (REM -0.1%), but on the flip side are narrowing interest rate spreads (especially as the Fed still seems to be intent on hiking short rates), and what hedging losses the companies are taking.
- Other ETFs: MORT, MORL
- Individual names: Annaly Capital (NLY +0.4%), American Capital Agency (AGNC), Armour Residential (ARR -1%), CYS Investments (CYS -0.2%), Invesco Mortgage (IVZ -2.7%), New York Mortgage Trust (NYMT -0.5%), Hatteras Financial (HTS -0.3%), Western Asset Mortgage (WMC -2.7%), Ellington Residential (EARN -0.4%), Javelin Mortgage (JMI -3%).
Mon, Jan. 5, 4:01 PM
- Equity REITs are green across the board, and mortgage REITs and BDCs are showing some (but not a ton of) gains as the broader markets tumble to start the week.
- A sampling: Realty Income (O +2.1%), Omega Healthcare (OHI +1.6%), Medical Properties Trust (MPW +2.4%), Equity Residential (EQR +0.9%), General Growth Properties (GGP +0.7%), Kimco (KIM +0.9%), Public Storage (PSA +0.5%), CYS Investments (CYS +0.5%), Solar Capital (SLRC +1.1%).
Dec. 30, 2014, 12:37 PM
- Nearly all the mREITs sell at discounts to their most recently disclosed book value, with sector giants Annaly Mortgage (NYSE:NLY) and American Capital Agency (NASDAQ:AGNC) trading at double-digit discounts.
- Often a sizable haircut to book may make sense, as in the case of Armour Residential (NYSE:ARR) and Javelin Mortgage (NYSE:JMI), both of which just cut their dividend (they have the same external manager).
- Of the 24 companies examined, New York Mortgage Trust (NASDAQ:NYMT) and Capstead Mortgage (NYSE:CMO) stand alone in trading at premiums to book value.
- The full list
Dec. 9, 2014, 12:57 PM
- Unable to catch a bid for a few sessions, mortgage REITs (REM +1%) have turned higher in afternoon action, led by Annaly (NLY +0.7%) and American Capital Agency (AGNC +1.5%).
- Helping are jitters in the stock market (though U.S. averages are well off the lows), and a 10-year Treasury yield that's retreated all the way to 2.21% after hitting the mid-2.30s on the back of Friday's strong jobs number.
- Armour (ARR +1.1%), Two Harbors (TWO +0.9%), CYS Investments (CYS +1.4%), Invesco (IVR +1.8%), American Capital Mortgage (MTGE +1%), Hatteras Financial (HTS +2%), Capstead (CMO +2%).
- Other ETFs: MORT, MORL
- Also showing some green are the recently beaten-up BDCs, including Prospect Capital (PSEC +0.2%), Fifth Street Finance (FSC +0.2%), Ares Capital (ARCC +0.5%), FS Investment (FSIC), Triangle Capital (TCAP +1.7%).
- ETFs: BDCL, BDCS, BIZD
- Previously: Money flows back into fixed income (Dec. 9, 2014)
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