UBS ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETNNYSEARCA
Tue, Nov. 29, 2:31 PM
- Though lagging the S&P 500 by about 100 basis points since the election (and the banks by a mile), the mortgage REITs are nevertheless higher since the election despite the sharp rise in interest rates.
- Mortgage REITs are carry players, of course, and can expect to see boosts to income if long rates rise faster than short rates (though book value could take a hit).
- The iShares FTSE Nareit Mortgage REIT ETF (REM +1.2%) today is outperforming the S&P 500's 0.35% advance. The 10-year Treasury yield is down five basis points to 2.30%.
- Annaly (NLY +1%), AGNC Investment (AGNC +1.7%), Two Harbors (TWO +2.9%), Chimera (CIM +2.1%), CYS Investments (CYS +2%), Invesco (IVR +1.5%), Capstead (CMO +1.5%), Western Asset (WMC +1.5%), AG Mortgage (MITT +2.7%)
- ETFs: MORT, MORL
Thu, Nov. 3, 11:38 AM
- With more than half the sector having reported their Q3s, the general themes are rising earnings (covering payouts) and gains in book value leading to sizable returns. Among those who reported last night or this morning - Armour Residential (ARR +1.9%), American Capital Mortgage (MTGE +2.1%), MFA Financial (MFA +1.9%), Western Asset (WMC +1.8%), Anworth (ANH +2%).
- The iShares FTSE Nareit mREIT ETF (REM +1%)
- Other ETFs: MORL, MORT
Thu, Oct. 27, 10:42 AM
- The 10-year Treasury yield is making new bear-cycle highs today, up another seven basis points to 1.86% - its perkiest level since May. The move up in yields is global, with U.K. 10-years up 11 bps and Germany's up 8.5 bps.
- Earlier today, the U.K. reported Q3 GDP growth of 0.5% - far better than what had been predicted post-Brexit.
- Facing at least a little more competition in the yield department, equity REITs have turned sharply lower, with VNQ down 2.1%, and IYR off 1.8%. Mortgage REITs (REM -0.6%) are faring a little better as solid Q3 earnings begin to roll in.
- The major U.S. averages have given up early gains and turned red, led by the S&P 500 and Nasdaq, both off 0.25%.
- Individual equity REITs: Verreit (VER -2.2%), Welltower (HCN -2.4%), Equity Residential (EQR -1.6%), Omega Healthcare (OHI -3.2%), Simon Property (SPG -3.2%), General Growth (GGP -2.6%), Public Storage (PSA -2.9%), Gramercy Property (GPT -1.9%), Washington Real Estate (WRE -1.2%), Hersha (HT -2.9%), Sunstone Hotel (SHO -1.4%), Stag Industrial (STAG -2%)
- Mortgage REITs: AGNC Investment (AGNC -1.5%), Annaly (NLY -0.7%), Two Harbors (TWO -0.4%), Capstead (CMO +0.3%)
- ETFs: VNQ, IYR, MORL, REM, MORT, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, DRA, FRI, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX, RORE
Tue, Oct. 4, 4:29 PM
- Chatter of the ECB's plan to begin tapering monthly bond purchases sent interest rates sharply higher today, and REITs sharply lower.
- The 10-year Treasury yield gained 6.3 basis points to 1.688%.
- The mortgage REITs (REM -2.2%): Annaly (NLY -3.1%), Armour (ARR -1.2%), Two Harbors (TWO -2.9%), Chimera (CIM -3.9%), CYS (CYS -2.4%), Invesco (IVR -3%), Western Asset (WMC -2.8%), MFA Financial (MFA -2.7%), AG Mortgage (MITT -3.1%)
- Equity REITs (VNQ -1.4%): Realty Income (O -2.6%), WellTower (HCN -2.6%), HCP (HCP -2%), Vereit (VER -2.3%), Equity Residential (EQR -0.9%), Simon Property (SPG -1.5%), Public Storage (PSA -1.8%), Government Properties (GOV -2.7%), Gramercy Property (GPT -2.2%), Stag Industrial (STAG -3%)
- ETFs: VNQ, IYR, MORL, REM, MORT, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, DRA, FRI, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
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.
Wed, Jun. 15, 3:20 PM
- Fed Funds futures markets are pricing in just a 50% chance of a rate hike in 2016 after the FOMC stayed on hold in June and cut its expectations for future moves higher in interest rates.
- The mREITs (REM +0.7%) are up just modestly, but all higher now than they were prior to the FOMC news.
- Annaly Capital (NLY +0.6%), American Capital Agency (AGNC +0.9%), Armour (ARR +1.4%), CYS Investments (CYS +1%), New York Mortgage (NYMT +1.4%), Capstead Mortgage (CMO +1.1%).
- ETFs: MORL, REM, MORT
Wed, Jun. 15, 7:03 AM
Thu, Jun. 9, 7:12 AM
Wed, Jun. 8, 7:04 AM
Wed, Jun. 1, 7:01 AM
Wed, May 25, 7:02 AM
Wed, May 18, 2:25 PM
- Having repriced over the past few months for a rates lower-for-longer environment, mREITs (REM -1.6%) may have to reprice again as the FOMC minutes more or less signal the central bank's intention to hike rates in June.
- Yield-starved names like banks, insurers, and online brokers are soaring, but income producers like Annaly Capital (NLY -2.7%), American Capital Mortgage (AGNC -2.5%), Armour (ARR -3.1%), CYS Investments (CYS -3.4%), Capstead (CMO -2%), Western Asset (WMC -2.3%), Anworth (ANH -2.3%), and Ellington Residential (EARN -2.4%) are going the opposite way.
- ETFs: MORL, REM, MORT
Wed, May 18, 7:03 AM
Sat, May 14, 11:33 AM
- The idea of rates lower for longer and a narrowing of credit spreads have helped lift the mortgage REIT sector by 22% since mid-February, but the group remains 17% below year-ago price levels, trades at a near-15% discount to book value, and yields 12%.
- Source: Barron's Amey Stone
- Still a buy? "There are different risks on the asset side, the funding side, and the hedging side,” says Wunderlich's Merrill Ross. She expects the Fed to be on hold until late this year, but notes that doesn't necessarily mean full-speed ahead for sector prices. Years of extremely low rates and expectations of soon-to-come higher rates have made it a "difficult operating environment."
- Lower rates aren't always a boon, and Nomura's Brock Vandervliet says a sharply flatter yield curve could would hit earnings and force dividend cuts. His favorites are sector gorilla Annaly Capital (NYSE:NLY), and Chimera Investment (NYSE:CIM). Chimera, he says, should benefit from regulatory changes allowing it to do more mortgage securitizations. Annaly is trading at just about a 5% discount to book value today vs. close to 20% not long ago. Chimera is actually trading slightly north of March 31 book value of $14.46.
- Ross' favorites are two where the dividends are solid: CYS Investments (NYSE:CYS) - one of the only pure-play agency MBS REITs left - and Invesco Mortgage (NYSE:IVR).
- ETFs: MORL, REM, MORT
Wed, May 11, 7:02 AM
Wed, May 4, 3:29 PM
- Of particular interest given he's on stage at Ira Sohn following hard-money advocate Stan Druckenmiller (hike rates, but gold), Jeff Gundlach thinks the idea of the Fed talking about higher rates while cutting growth forecasts makes no sense.
- He's got a pair trade idea: Buy mortgage REITs (NYSEARCA:REM) and sell utilities (NYSEARCA:XLU). The strategy is based on the idea that the valuations of unloved and "cheap" mREITs, and over-loved and "pricey" utilities will converge.
- Low-volatility stocks (of which utilities fit the bill) are an oxymoron, says Gundlach. Buying at these prices is like the old game "Dynamite Shack."
- Live blog
- Utility ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU, FUGAX
- Mortgage REIT ETFs: MORL, REM, MORT
- Previously: Bill Gross: Go long helicopter makers (May 4)