Mon, Oct. 5, 12:36 PM
- With a wave of Q3 dividend cuts now in the rearview mirror, perhaps investors are looking ahead to what might be stability in payouts. With most of the sector trading at double-digit discounts to book value - and plenty of names selling for more than 20% discounts - even stability should be enough for a reasonable rally into year-end.
- Leading the way higher is Five Oaks Investment (OAKS +6.4%), while mREIT giants Annaly Capital (NLY +1%) and American Capital Mortgage (AGNC +1.2%) are sector laggards today.
- Two Harbors (TWO +1.7%), CYS Investments (CYS +2.3%), New York Mortgage (NYMT +3.5%), Dynex Capital (DX +2.4%), AG Mortgage (MITT +2.6%), Javelin Mortgage (JMI +4%), Armour Residential (ARR +2.9%), Orchid Island (ORC +4.2%)
- ETFs: MORL, REM, MORT, LMBS
Mon, Sep. 28, 12:24 PM
- It's a big ex-dividend day for the mortgage REIT sector, but the stocks of payers like Ellington Residential (EARN -6.2%), Arlington Asset (AI -10.4%), Western Asset (WMC -4.9%), Two Harbors (TWO -5.7%), Chimera Investment (CIM -7.3%), New York Mortgage (NYMT -6.9%), American Capital Agency (AGNC -3.2%), and Annaly Capital (NLY -4.8%), are down far more than their payout amounts.
- The above declines include the dividends being paid, so are higher than actual.
- Others like Armour Residential (ARR -2.9%), Javelin Mortgage (JMI -4.2%), Five Oaks (OAKS -5.9%), AG Mortgage (MITT -3.4%), and Invesco (IVR -4.2%) are just down.
- The decline comes as another Fed head all but promises a rate hike this year, and the 10-year Treasury yield falls back six basis points to 2.10%. Thirty-day Fed Fund futures are pricing in just less than a 50% chance of a 25 basis point rate hike in 2015.
- ETFs: MORL, REM, MORT, LMBS
Thu, Sep. 17, 2:31 PM
- Income favorites like mortgage REITs (REM +1.6%) and equity REITs (IYR +1.4%) are the knee-jerking upward after the FOMC decided to keep ZIRP in place a least a little while longer.
- The "dots" still say a rate hike (and maybe two) is coming before year-end.
- Annaly Capital (NLY +2.1%), American Capital Agency (AGNC +1.6%), Armour Residential (ARR +1.5%), Two Harbors, (TWO +1.3%), Invesco (IVR +1.6%), Dynex Capital (DX +1.5%).
- Spirit Realty (SRC +2.4%), Health Care REIT (HCN +3%), HCP (HCP +2.3%), Gramercy Property (GPT +1.9%), Post Properties (PPS +2.5%), Brixmor (BRX +1.4%), Kimco (KIM +1.6%), Public Storage (PSA +1.1%), Chatham Lodging (CLDT +2.3%), Stag Industrial (STAG +1.8%)
- ETFs: MORL, REM, MORT, LMBS, IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
Fri, Aug. 21, 3:30 PM
- These income favorites often catch a wave of buying when the major averages sell off and yields fall, but the panicky action today is taking down nearly all equities.
- The iShares DJ U.S. Real Estate ETF (IYR -1.7%) and the iShares FTSE NAREIT Mortgage REIT ETF (REM -1.6%), however, are outperforming the S&P 500's 2.7% decline.
- Previously: Just a modest rally for Treasurys as stocks crumble (Aug. 21)
- Leading the mREITs lower is Javelin Mortgage (JMI -5.9%), with SA contributor ColoradoWealthManagementFund noting the company has stopped buying back stock despite its wide discount to book value. The sector as a whole looks like it will continue to have to deal with widening spreads and rising prepayments, and still have a looming rate hike cycle on the horizon.
- Armour Residential (ARR -2%), CYS Investments (CYS -1.8%), Annaly (NLY -1.2%), American Capital Agency (AGNC -1.8%), Arlington Asset (AI -2.4%), Orchid Island (ORC -2.5%), Dynex (DX -2%), Capstead Mortgage (CMO -1.3%).
- Equity REITs: Realty Income (O -0.7%), Vereit (VER -2.3%), Health Care REIT (HCN -1%), HCP (HCP -1.1%), Gramercy Property (GPT -3.1%), Equity Residential (EQY -1.6%), Simon Property (SPG -0.5%), Kimco (KIM -2.1%), Hospitality Properties (HPT -2.8%), Stag Industrial (STAG -1.4%), American Campus (ACC -1.1%), Public Storage (PSA -1%).
Fri, Jul. 24, 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
Thu, Jul. 23, 1:17 PM
- CYS Investments last night reported a big drop in book value as the effect of sharply higher rates more than offset the company's hedges. Core income failed to cover the dividend as prepayments also rose.
- The stock today is down 2.6% and trading at more than a 20% discount to book value.
- Earlier this week, Hatteras also reported a decline in income and fall in book value.
- Sector giants Annaly Capital (NLY -0.5%) and American Capital Agency (AGNC -0.7%) are performing the best today. Armour Residential (ARR -1.8%), Chimera Investment (CIM -0.8%), Invesco Mortgage (IVR -1.1%), New York Mortgage (NYMT -1.2%), Western Asset Mortgage (WMC -1%), Anworth Mortgage (ANH -1.2%), Arlington Asset (AI -2.3%), Ellington Residential (EARN -2.1%), Dynex Capital (DX -0.8%)
- ETFs: MORL, REM, MORT, LMBS
Fri, Jun. 26, 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
Thu, Jun. 25, 4:17 PM
- The XLU underperformed again today, losing 0.7% and bringing its year-to-date decline to more than 12%.
- Looking at equity REITs, the IYR dipped another 0.95% and VNQ fell 1%. Both are down about 6% in 2015, and roughly 15% since late January. Some individual names: Spirit Realty (SRC -2.8%), Senior Housing (SNH -1.2%), HCP (HCP -1.4%), American Realty Capital (ARCP -3%), Gramercy Property (GPT -2.8%), Duke Realty (DRE -2%).
- In mortgage REITs, REM lost 0.9% today and is off 7% YTD. Some individual names: American Capital Agency (AGNC -1.2%), Armour (ARR -1%), CYS Investments (CYS -0.9%), Annaly Capital (NLY -0.8%), Invesco Mortgage (IVR -1.2%), Apollo Residential (AMTG -1.1%), PennyMac Mortgage (PMT -2.3%), Western Asset Mortgage (WMC -2.7%).
- The 10-year Treasury yield gained three basis points to 2.40%.
- Previously: Sell-side abandoning REITs as rates rise (June 25)
- ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
Fri, Jun. 5, 3:57 PM
- The 10-year yield is up nine basis points to 2.40% and a September rate hike looks to be in play after the BLS reported a job gain of 280K in May and Y/Y wage growth of 2.3%.
- Annaly Capital (NLY -1.2%), American Capital Agency (AGNC -2.3%), Armour Residential (ARR -2.7%), Two Harbors (TWO -2.4%), CYS Investments (CYS -1.4%), Hatteras (HTS -1.5%), New York Mortgage (NYMT -1.2%), Capstead Mortgage (CMO -1.4%), MFA Financial (MFA -1.6%), Anworth (ANH -1.8%), Dynex (DX -1.2%).
- ETFs: MORL, REM, MORT, LMBS
- Previously: Financials on the move as rate hike draws nearer (June 5)
- Previously: Jobs up 280K in May; UE rate ticks higher (June 5)
Thu, Apr. 30, 3:15 PM
- A big rise in interest rates early in the session made for a good excuse to sell REITs, but - with the averages sharply lower - rates have reversed course. Still, the sector can't catch a bid, with many of the bigger names down way more than the broader market.
- Equity REITs: Realty Income (O -2.3%), Health Care REIT (HCN -3.2%), Ventas (VTR -3.2%), HCP (HCP -3.1%), Equity Residential (EQR -2.6%), Silver Bay Realty (SBY -2.5%), General Growth Properties (GGP -2.4%), Retail Opportunity (ROIC -3.9%), Boston Properties (BXP -2.4%), Hospitality Properties (HPT -2.9%)
- Mortgage REITs: Armour Residential (ARR -5.6%) - which reported another weak quarter overnight, Two Harbors (TWO -1.1%), Western Asset (WMC -1.3%), Arlington Asset (AI -2.8%), PennyMac (PMT -1.5%). When things get tough, money does have a tendency to flow into the sector giants though: Annaly Capital (NLY -0.4%) and American Capital Agency (AGNC +0.3%) are notable outperformers on the session.
- ETFs: IYR, VNQ, DRN, URE, REZ, SCHH, ICF, SRS, RWR, KBWY, DRV, REK, FRI, FTY, PSR, FREL, WREI
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)
Tue, Feb. 24, 4:48 PM
- Q4 core earnings of $41.1M or $0.10 per share vs. $49M and $0.13 in Q3. Q4 dividends were $0.15 and have since been cut to $0.12.
- Book value per share of $4.39 down from $4.58 at the end of Q3. Today's close of $3.15 is probably a deserved 28% discount to book.
- Net interest margin in Q4 of 1.27% down 16 basis points from Q3. CPR of 6.45% down 101 basis points.
- Leverage ratio of 7.94:1 vs. 8.42:1 in Q3.
- Conference call tomorrow at 8 ET
- Previously: ARMOUR Residential REIT misses by $0.02 (Feb. 24)
- ARR +1.9% after hours
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%.
Wed, Jan. 28, 4:05 PM
- The iShares Barclays MBS Bond Fund (MBB +0.2%) hit a new lifetime high, which should be good for the book values of mortgage REITs (assuming they weren't too hedged), but the yield curve continues to sharply flatten. The 10-year Treasury yield is all the way down to 1.71% and the 30-year at a record-low 2.29% - this as the Fed says it's on track for a mid-year rate hike.
- In addition to shaving margins for leveraged holders of mortgages, the lower rates could result in another refinance wave, and thus a surge in prepayments.
- Annaly Capital (NLY -1%), American Capital Agency (AGNC -1.6%), Armour Residential (ARR -0.7%), Hatteras Financial (HTS -0.7%), Western Asset (WMC -2.2%), Apollo Residential (AMTG -0.7%)
- ETFs: REM, MORT, MORL
- Previously: Bond yields slide after FOMC (Jan. 28)
- Previously: FOMC: Still "patient," but rate hike remains on the way (Jan. 28)
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%).
ARR vs. ETF Alternatives
ARMOUR Residential REIT Inc invests in and manages a leveraged portfolio of residential mortgage backed securities. Itinvest in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored entity.
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