Tue, Jul. 12, 11:38 AM
- Plunging interest rates in June led to an 8.5% pickup in 30-year and 15-year fixed agency MBS prepayment speeds, and 14% for ARMs, according to the latest data.
- KBW's Bose George expects prepayments to stay elevated over the next few months, but with mREITs already trading at an average 0.9x book value, the pressure on earnings may already be priced in.
- Picking out a couple of names, Capstead Mortgage (CMO +0.6%) has meaningful prepay risk, says George, while risk is more contained at MFA Financial (MFA -0.1%).
- ETFs: MORL, REM, MORT
- Meanwhile, pain for the mortgage REITs in this case means gain for companies that might benefit from the fast pace of mortgage production. Title insurers like First American Financial (FAF +0.7%) and Fidelity National (FNFV +2.1%) come to mind.
Tue, Jun. 14, 5:41 PM
Mon, May 9, 1:51 PM
- The average yield in the mortgage REIT sector is 14%, says analyst Bose George - probably warranted given falling book values, though things stabilized in Q1 for at least a few. His favorites are Two Harbors (NYSE:TWO) at 78% of book with a 12% dividend yield, and there's also American Capital Agency (NASDAQ:AGNC), Annaly Capital (NYSE:NLY), Chimera Investment (NYSE:CIM), and MFA Financial (NYSE:MFA).
- BDCs, says Ryan Lynch, have been stung by credit fears and trade at an average 87% of book value. His favorites - Ares Capital (NASDAQ:ARCC) and Hercules Capital (NYSE:HTGC) - both yield near 10%.
- Property & casualty insurers have high "cash-on-cash returns" thanks to share buybacks, says Meyer Shields, with Hartford (NYSE:HIG) and AIG standing out on that front. His favorite stocks, however, are lower yielders like Allstate (NYSE:ALL), National General (NASDAQ:NGHC), and XL Group (NYSE:XL).
- KBW also offers a basket of high yielders through the PowerShares KBW High Dividend Yield Financial ETF (NYSEARCA:KBWD). The fund currently yields 9%, and is higher by 20% in the past three months.
- Source: Barron's
Wed, May 4, 9:06 AM
- Q1 net income of $74.3M or $0.20 per share vs. $69.7M and $0.19 in Q4. Dividend is $0.20.
- Book value per share of $7.17 falls from $7.47 three months ago. Last night's close of $6.78 is just a 5.4% discount to book.
- Economic return of negative $0.10 for the quarter, or negative 5.4% annualized.
- Another $161M of credit-sensitive whole loans acquired during quarter, bringing portfolio of these up to $1B.
- Conference call at 10 ET
- Previously: MFA Financial beats by $0.02, misses on net interest income (May 4)
- MFA flat premarket
Wed, May 4, 8:33 AM
Tue, May 3, 5:30 PM
- AFAM, ARCC, ARCO, ARQL, ASC, ATRO, AVA, AYR, BDC, BUD, CDW, CHH, CLH, CPK, CRK, CRL, CRTO, CRZO, CSTE, D, DLPH, DNOW, ECYT, EE, ENR, FUN, GEL, GNRC, GTE, HAIN, HE, HFC, HSC, HSNI, HTWR, HYH, ICE, INXN, IONS, IRT, KATE, KLIC, LGND, MEMP, MFA, MMP, MOS, MPW, MTOR, NBL, NGS, NJR, NRZ, NVMI, NXTM, OMF, ONCE, ORBK, PCG, PCLN, RDC, RDS.A, SBGI, SCMP, SE, SERV, SHOP, SMP, SPAR, SR, SRE, SSTK, STRA, TGH, TGI, TMHC, TREE, TWX, VIRT, VOYA, VSI, WD, WIX, ZTS
Mon, Apr. 11, 9:53 AM
- Continued sector consolidation is on the minds of mREIT investors today, but Wells Fargo - updating its Q1 book value estimates - downgrades Apollo Commercial (ARI +0.6%), Western Asset Mortgage (WMC +0.2%), Capstead Mortgage (CMO), MFA Financial (MFA +0.1%), and Invesco Mortgage (IVR +0.6%) all to Underperform from Market Perform.
- Now read: Mortgage REIT M&A goes big time as Annaly buys Hatteras (April 11)
Tue, Mar. 29, 2:56 PM
- A fast series of rate hikes wouldn't be good news for mortgage REITs, whose carry-trade business model breaks down with a flat or, worse, inverted yield curve.
- Any worries about hawkish Fed action were considerably diminished today after Janet Yellen said caution on rate hikes is "especially warranted," and suggested there's more slack in the labor market than what the trim 4.9% headline UE rate would suggest.
- Mostly lower earlier, the mREIT sector (REM +1.2%) has turned sharply higher.
- Annaly Capital (NLY +0.35), American Capital (AGNC +0.4%), Armour (ARR +1.2%), CYS Investments (CYS +2.3%), New York Mortgage (NYMT +3.2%), MFA Financial (MFA +1.4%), Western Asset (WMC +2.7%), Anworth (ANH +1.5%), Dynex (DX +2.1%), AG Mortgage (MITT +1.9%), Ellington Financial (EFC +1.2%).
Thu, Mar. 17, 1:31 PM
- It's day two of advances for the mortgage REIT sector (REM +1.6%) after the Fed's dovish turn yesterday. The spread between two-year and ten-year U.S. Treasury yields is up to 102 basis points vs. an eight-year low of 95 bps just over a week ago. That spread, of course, is what mortgage REITs profit from, and bigger is better.
- American Capital Agency (AGNC +1.8%), Two Harbors (TWO +2%), CYS Investments (CYS +1.8%), New York Mortgage (NYMT +5.3%), MFA Financial (MFA +1.2%), Dynex (DX +2.4%), Ellington (EARN +1.7%), Five Oaks (OAKS +2.9%)
- ETFs: MORL, REM, MORT, LMBS
- Previously: Mortgage REITs in the green after dovish Fed (March 16)
Fri, Mar. 11, 9:28 AM
Fri, Feb. 26, 10:07 AM
- The mREITs (REM +1.3%) are higher across the board after Apollo Residential Mortgage (AMTG +31.3%) agrees to a sale at a hefty premium to last night's close, but still at a discount to book value.
- The entire sector is trading at sizable discounts to book value, with some names at massive discounts. For its part, Apollo Residential yesterday could be purchased for about 60% of its end-of-year book value. And the assets on the books of these companies tend to be highly liquid and easily valued.
- Running an mREIT may not be a terribly efficient exercise at the small market caps most of the sector sports. The companies depend on being able to issue stock with which to fund growth, but can't do so (without being wildly dilutive) when the shares are trading at such wide discounts.
- Sector giants Annaly Capital (NLY +0.6%) and American Capital Agency (AGNC +1.2%) have market caps above $6B, and Two Harbors (TWO +0.8%), Chimera (CIM +1.1%), CYS Investments (CYS +1%), Invesco (IVR +3.5%), Hatteras (HTS +1.2%), MFA Financial (MFA +1%), and Capstead (CMO +1%) are all near or well over $1B.
- Players in Apollo's league (sub-$500M market cap) include New York Mortgage (NYMT +1%), Western Asset (WMC +0.6%), Anworth (ANH +1.3%), Dynex (DX +1.4%), Arlington Asset (AI +4.6%), AG Mortgage (MITT +8.7%), The Ellingtons (EFC +1.9%), (EARN +1.1%), Javelin (JMI +2.8%), Orchid Island (ORC +1.5%), Five Oaks (OAKS +0.7%), ZAIS Financial (ZFC +1.3%)
Thu, Feb. 18, 3:53 PM
- First off, says CEO William Gorin, MFA (MFA -1.1%) trades at a much narrower discount to book value (about 12% as of last night) than the mREIT peers which are buying back shares (20% and higher discounts).
- Secondly, holding onto capital has allowed and is allowing MFA to take advantage of "very attractive investment opportunities."
- Gorin does note that the company did return $300M to owners in the form of dividends last year and management receives no compensation related to the size of the company's assets. He also reminds that MFA has an existing buyback authorization for up to 6.6M shares (just don't look for management to start using it).
- Conference call transcript
- Previously: More on MFA Financial's Q4 results (Feb. 18)
Thu, Feb. 18, 9:22 AM
- Q4 net income of $69.7M or $0.19 per share vs. $75.8M and $0.20 in Q3. Dividend is $0.20.
- Book value per share of $7.47 slips from $7.70 three months earlier. Last night's close of $6.59 is a relatively modest 12% discount to book.
- The dividend less the fall in book value yields negative economic return of $0.03 for the quarter (1.5% annualized).
- Conference call at 11 ET.
- Previously: MFA Financial EPS in-line, misses on net interest income (Feb. 18)
- MFA flat premarket
Thu, Feb. 18, 8:34 AM
Wed, Feb. 17, 5:30 PM
- AAN, AAWW, AGIO, ALE, BCC, CAB, CBB, CHH, COT, CVI, CVRR, DAN, DISCA, DISH, DNR, DUK, EIGI, ETR, GEL, GOV, H, HCN, HII, HOT, IDA, IDCC, IQNT, IRT, LDOS, LH, MFA, MGM, MNTA, MPEL, MTRN, MZOR, NHI, NI, ONE, PAAS, PCG, POOL, PPP, PRGO, RS, SCG, SIX, SODA, SYNT, TK, TNK, TTC, UAN, UPL, VA, VAL, WAB, WM, WMT, WST
Tue, Jan. 26, 10:58 AM
- Mortgage REIT valuations "appear untethered from traditional metrics," says the JPMorgan team, led by Richard Shane, in its upgrade of MFA Financial (MFA +2.2%). Not upgraded today, but also with Overweight ratings are American Capital Agency (AGNC +1.3%), Apollo Residential Mortgage (AMTG +1%), and Ares Commercial Real Estate (ACRE +1.3%).
- With earnings season for mREITs kicking off next week, Shane and team see book values getting nicked by the Fed rate hike and flattening yield curve.
- As for this year's FHLB rule change which could limit mREIT's access to that source of funding, Shane concludes the names he's following should be fine. He notes ACRE, AMTG, Blackstone Mortgage (BXMT +1.2%), and Western Asset Mortgage (WMC +0.3%) have not utilized FHLB for funding, and while Apollo Commercial Real Estate Finance (ARI -0.4%) is a member, it had no advances as of Sept. 30.
- ETFs: MORL, REM, MORT, LMBS
- Previously: JPMorgan buys the dip in MFA Mortgage (Jan. 26)
MFA Financial, Inc. is a real estate investment trust. It is primarily engaged in the business of investment, on a leveraged basis, in residential mortgage assets, including Agency MBS, Non-Agency MBS and residential whole loans. The company was founded on July 24, 1997 and is headquartered in... More
Industry: REIT - Diversified
Country: United States
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