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Mon, Jan. 25, 3:16 PM
- Modest declines in the major averages are masking the continued liquidation in a number of financial sectors.
- Hotel REITs: Pebblebrook Hotel (PEB -2.4%), LaSalle Hotel (LHO -2.2%), FelCor Lodging (FCH -2.9%), DiamondRock Hospitality (DRH -3.3%)
- Nonbank servicing: Ocwen Financial (OCN -6.9%), Walter Investment (WAC -10.5%), Nationstar Mortgage (NSM -6.7%), Altisource Portfolio (ASPS -4.6%), New Residential (NRZ -3.2%)
- Mortgage REITs: Two Harbors (TWO -3.8%), Invesco (IVR -4.3%), American Capital Mortgage (MTGE -3.4%), Western Asset (WMC -3.7%), Apollo Residential (AMTG -3.8%), AG Mortgage (MITT -3.9%)
- BDCs: Prospect Capital (PSEC -4%), Apollo Investment (AINV -2.2%), Medley Capital (MCC -4.1%), Gladstone Capital (GLAD -4.4%). A few in this sector are managing gains though: Main Street (MAIN +1%), TICC Capital (TICC +1.9%), Harris & Harris (TINY +1.8%)
Wed, Jan. 20, 10:44 AM
- The discounts to book values across the sector have grown to such high levels that one wonders whether it just makes more sense for many of these players to liquidate the portfolios and return the money to the shareholders.
- Sector giants Annaly Capital (NLY -4.9%) and American Capital Agency (AGNC -4.6%) are selling at 30% discounts to their most recent book value.
- Armour Residential (ARR -8.3%), Invesco Mortgage (IVR -7%), Hatteras Financial (HTS -5%), New York Mortgage (NYMT -9.5%), Apollo Residential (AMTG -6.4%), AG Mortgage (MITT -7.2%), Anworth (ANH -6.3%), Arlington Asset (AI -8.7%), and Five Oaks (OAKS -8%) are selling at greater than 40% discounts. Two Harbors (TWO -7.5%), CYS Investments (CYS -6.2%), American Capital Mortgage (MTGE -6%), Capstead (CMO -5.9%), Dynex (DX -7.2%), Western Asset (WMC -8%), Ellington Residential (EARN -7.2%), and Orchid Island (ORC -9.6%) are all nearing 40% discounts.
- MFA Financial (MFA -6.4%) and Chimera Investment (CIM -8.1%) are both nearing 30% discounts to book.
- ETFs: MORL, REM, MORT, LMBS
Tue, Jan. 19, 11:43 AM
- The best thing that can be said about the market reaction today, is that New Residential (NRZ -0.6%) isn't down as much as the other mortgage-related names (REM -1.8%) which continue to be mercilessly pounded.
- PennyMac (PMT -4.5%), Ocwen (OCN -3.7%), Walter Investment (WAC -4.8%), Stonegate (SGM -3.4%), Armour (ARR -3.5%), Invesco (IVR -2.4%), New York Mortgage (NYMT -4.1%), Apollo Residential (AMTG -3.1%), AG Mortgage (MITT -3.4%), Five Oaks (OAKS -6.7%), American Capital (MTGE -2%), Two Harbors (TWO -2.2%), Chimera (CIM -3.4%).
- Citi's Michael Kaye - who rates NRZ a Buy - says the repurchase plan makes sense given the stock trades at just 0.84x book and yields 18%. Depending on how the buyback is funded, it could add up to a couple of hundred basis points of accretion. It also sends a signal to the markets about management's belief in the stock's value. Management gave little detail on a timetable.
- Previously: New Residential steps in with $200M repurchase plan (Jan. 19)
Fri, Jan. 15, 10:23 AM
- In the midst of a market panic and with the sector trading at massive discounts to book value, it takes a pair to issue downgrades now, but that's what Wells Fargo has done, cutting Annaly Capital (NLY -2.9%), MFA Financial (MFA -4.1%), Hatteras Financial (HTS -4.5%), American Capital Mortgage (MTGE -5%), AG Mortgage (MITT -5.9%), and Two Harbors (TWO -3.4%) to Market Perform from Outperform.
- At last check one month ago, these names were trading at discounts to NAV ranging from about 10-30%. Presumably those discounts have widened as the stock prices have crumbled further since then, and book values have likely remained stable or even risen.
- For the last year, mREITs have had to contend with the possibility of higher interest rates across the board. Now they have to deal with a sharply flatter yield curve as the 10-year Treasury yield has fallen about 30 basis points since the Fed hiked last month.
- Good news? FRBNY President Bill Dudley is on the tape this morning suggesting negative interest rates as a possibility if the economy sours. That should help mREIT funding costs.
- ETFs: MORL, REM, MORT, LMBS
Dec. 14, 2015, 11:32 AM
- Before it was fears about interest rates - first, with long yields too low and thus slimming margins, and then the Fed's promise to hike short rates (and slimming margins even more). Now we can toss credit worries into the mix, and the action's plenty panicky there - junk bonds are off sharply again today and two more funds have been forced to gate withdrawals and/or liquidate.
- Once pure-play agency REITs like Annaly Capital (NLY -2%) and American Capital Mortgage (AGNC -1.7%) now have some credit exposure.
- Others are more credit-exposed: Chimera Investment (CIM -3.5%), Invesco (IVR -2.7%), American Capital Mortgage (MTGE -2.8%), MFA Financial (MFA -2.8%), New York Mortgage (NYMT -4.7%), Western Asset (WMC -3.6%), Anworth (ANH -2.9%), Arlington Asset (AI -3.6%), Javelin (JMI -4.8%), Orchid Island (ORC -7.4%), Five Oaks (OAKS -12.3%)
- Just to pick a few out, Annaly Capital sells at a 24.4% discount to Sept. 30 book value; American Capital Agency sells at a 26.3% discount; Invesco at a 30% discount; MFA Fnancial at 15.4% discount; New York Mortgage at a 25% discount (this sold at a premium to book as recently as early fall).
- ETFs: MORL, REM, MORT, LMBS
Oct. 27, 2015, 3:34 PM
- The sector's 2nd-largest (by market cap) name, American Capital Agency reported another weak quarter last night and is lower by 5.2%.
- Previously: American Capital takes questions after weak quarter (Oct. 27)
- Previously: Wunderlich throws in the towel on American Capital Agency (Oct. 27)
- Previously: Earnings and book value fall at American Capital Agency (Oct. 26)
- Number one by market cap Annaly Capital (NLY -2%) reports next week.
- Others: Armour Residential (ARR -3.1%), Two Harbors (TWO -2.2%), CYS Investments (CYS -2.6%), Invesco (IVR -2.5%), American Capital Mortgage (MTGE -4%), New York Mortgage (NYMT -3.8%), Hatteras Financial (HTS -3%), Capstead (CMO -2.8%), Western Asset (WMC -3.1%), Apollo Residential (AMTG -3.3%), Dynex Capital (DX -4.2%), AG Mortgage (MITT -3.6%).
- ETFs: MORL, REM, MORT, LMBS
Sep. 18, 2015, 11:19 AM
- Annaly Capital (NLY +0.9%), Anworth Mortgage (ANH +0.6%), Apollo Residential (AMTG +0.1%) and ZAIS Financial (ZFC +0.8%) last night added themselves to the smallish list of mortgage REITs maintaining dividends this quarter.
- Those announcing dividend cuts after the bell were American Capital Mortgage (MTGE -1.2%) and Arlington Asset (AI -0.5%).
- The sector as a whole continues to move higher following the FOMC yesterday afternoon, but hit particularly hard today is CYS Investment (CYS -3.1%). The move is especially notable as CEO Kevin Grant has been consistently skeptical about fears of higher rates.
- ETFs: MORL, REM, MORT, LMBS
Jul. 24, 2015, 3:01 PM
- Just a 1% decline in the major averages (which are being helped by some high-profile earnings moves) is masking far greater carnage in a number of other sectors, notably healthcare (XLV -2.5%) and energy (XLE -2%).
- Business development companies and mortgage REITs are being socked again as well, suggesting the worry may go beyond interest rates and to credit in general, especially as commodity prices continue to tumble - to pick one, crude oil at $48.06 per barrel is at its lowest price in about four months.
- Among BDCs: Hercules Technology Growth (HTGC -4.2%), Triangle Capital (TCAP -3.3%), PennantPark Investment (PNNT -5.4%), Prospect Capital (PSEC -1.4%), Main Street Capital (MAIN -2.8%), TICC Capital (TICC -2.4%), KCAP Financial (KCAP -2.6%), THL Credit (TCRD -2.7%), FS Investment (FSIC -1.8%).
- Among mREITs: Armour Residential (ARR -3.1%), Two Harbors (TWO -0.9%), CYS Investments (CYS -2%), Invesco Mortgage (IVR -1.5%), Capstead Mortgage (CMO -1.2%), Apollo Residential (AMTG -2.6%), Arlington Asset (AI -3.7%), American Capital Mortgage (MTGE -0.9%), Orchid Island (ORC -5.8%).
- MReit ETFs: MORL, REM, MORT, LMBS
- BDC ETFs: BDCL, BDCS, BIZD, FGB
Jun. 26, 2015, 3:31 PM
- Equity REITs are mostly being spared any punishment today, but mortgage REITs are hitting multi-year lows across the board as the 10-year U.S. Treasury yield climbs seven basis points to 2.48%.
- Annaly Capital (NLY -4.7%) hasn't seen a price this low since Alan Greenspan was nearing the end of his rate hike cycle in 2000. American Capital Agency (AGNC -3.7%) is at its lowest price since the bottom of the financial crisis.
- Armour Residential (ARR -2.9%), Two Harbors (TWO -4.5%), Chimera Investment (CIM -4.8%), CYS Investments (CYS -3.7%), American Capital Mortgage (MTGE -5.4%), Capstead Mortgage (CMO -4.5%), Anworth Mortgage (ANH -4.3%), AG Mortgage (MITT -3.3%), Ellington Residential (EARN -5.3%), Orchid Island (ORC -3.9%).
- ETFs: MORL, REM, MORT, LMBS
Apr. 29, 2015, 8:08 AM
- In the wake of lame earnings and a dividend cut at American Capital Agency (NASDAQ:AGNC), not to mention management's cautious stance going forward, UBS downgrades the stock to Sell from Neutral. Gary Kain's other mREIT vehicle, American Capital Mortgage (NASDAQ:MTGE), is cut to Neutral from Buy.
- Also downgraded is AGNC's partner at the top of the mREIT food chain - Annaly Capital (NYSE:NLY) to Sell from Neutral.
- AGNC -1% premarket after yesterday's 2.2% decline. MTGE -1.3%, NLY -0.8%.
- Previously: American Capital earnings call: Hunkering down (April 28)
- Previously: American Capital Agency income and book value slip in Q1 (April 27)
- Previously: American Capital Agency declares $0.20 dividend (April 27)
Mar. 20, 2015, 9:47 AM
- The company last night cut its quarterly dividend to $0.50 per share vs. $0.65 previously. It's enough for Wunderlich to throw in the towel on its Buy call, and the firm downgrades to Hold with price target cut to $18.50 from $21.50.
- The cut isn't a total surprise to Jason Stewart at Compass Point who downgraded the stock six weeks ago on worry that margin pressure had boosted the chances of a reduction in the dividend.
- The current price of $18.12 is a 17.3% discount to Dec. 31 book value.
- MTGE -1.7%
Feb. 9, 2015, 7:36 AM
- "Core EPS beat our expectations, but the longer term outlook for growth in taxable income was muted in the current rate environment," says Compass Point's Jason Stewart, downgrading to Neutral from Buy. "We believe margin pressure and a lower contribution of dollar roll income pose a risk to core earnings power and increase the potential for a dividend cut in 2015."
- Stewart does say that investments in credit risk transfer securities and MSRs should ultimately result in a premium valuation vs. securities-only peers (MTGE currently trades for 85% of book value), but the time-period for these initiatives to scale up has lengthened from earlier expectations.
- MTGE -1.5% premarket
Feb. 3, 2015, 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%).
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)
Oct. 13, 2014, 4:19 PM
- Both equity and mortgage REITs saw plenty of buying as nearly all of the rest of the market was lit up bright red, and Treasury ETFs signaled a sharp drop in yields when government bonds reopen for trade tomorrow (closed this session for Columbus Day).
- A sampling of equity names: Senior Housing Properties (SNH +1.2%), Medical Properties Trust (MPW +1.4%), Gramercy Property Trust (GPT +1.7%), Equity Residential (EQR +0.7%), Inland Real Estate (IRC +0.9%), Sovran Self Storage (SSS +1.1%), Highwoods Properties Trust (HIW +1%).
- One equity REIT sector in the red along with the rest of the market is lodging amid worsening Ebola fears: Ashford Hospitality Trust (AHT -2.9%), Sunshine Hotel Investors (SHO -1.4%), LaSalle Hotel Properties (LHO -1.5%), Summit Hotel Properties (INN -1.5%).
- Mortgage REITs: American Capital Agency (AGNC +1.4%), CYS Investments (CYS +2.2%), Invesco (IVR +1.1%), American Capital Mortgage (MTGE +1.5%), Western Asset (WMC +1.1%).
- ETFs: IYR, VNQ, REM, MORL, MORT, DRN, URE, REZ, SRS, RWR, SCHH, ICF, ROOF, DRV, KBWY, RTL, REK, FRI, FTY, PSR, IFNA, FNIO, WREI
Sep. 19, 2014, 3:32 PM
- Leading the mREIT sector (REM +0.2%) higher this session are American Capital Agency (AGNC +1.9%) and American Capital Mortgage (MTGE +1%) after the two maintained their $0.65 per share quarterly payout last night. Neither move should have been a surprise as both comfortably out-earned their dividend last quarter.
- Also maintaining its payout ($0.30 per shares) after the bell yesterday was Annaly Capital (NLY +0.8%).
- The sector is also getting a break from rising rates with the 10-year Treasury yield lower by four basis points to 2.58%
- ETFs: MORT, MORL
American Capital Mortgage Investment Corp operates as a REIT. It invests in, finance and manage a leveraged portfolio of mortgage-related investment, non-agency mortgage investments and other mortgage-related investments.
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