Chimera Investment (CIM)
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General Discussion on CIM
In response to your question about whether CIM is a buy or a sell, it depends on whether you are a long-term or short-term investor. Even in the most recent quarter, CIM reported an interest rate spread of over 2%. They also have plenty of room to increase their leverage from around 4x to 8x. They are not seeing defaults on their loans and securities. I have been following NLY for many years and have great confidence in FIDAC. This is a very capable team that can evaluate securities to avoid default risk. I think they are also prudent and realistic managers who will take short-term pain for long-term gain. This is what I believe they have recently done, and it will reward CIM shareholders over the next couple of years.On the other hand, CIM can't control the market value of their securities and accounting standards require them to mark-to-market each quarter. Given the volatility and uncertainty that remains in the market, it is quite possible that CIM and NLY will have to writedown securities and loans because accounting standards and the current market value requires it. These writedowns will drive down the dividend and the market value in the short-term. If you are a short-term investor, this should concern you and you should stay away or get out of CIM and NLY.
If you are a long-term investor, you should see this as an opportunity for CIM, NLY and you as an owner. If prices go down, CIM and NLY have the resources and leverage capacity to continue buying high quality securities and loans at more attractive pricing. When the market returns, CIM and NLY get to reprice their portfolio of securities to the higher market values. In the meantime, they will earn a very attractive spread for you that will only get more attractive if security pricing drops further. If the market value of CIM and NLY shares continue to decline, as a long-term shareholder, you should be licking your chops and averaging in. If you believe as I do that FIDAC is an excellent management team, you can have confidence that they are managing what they need to..... default risk, interest rate spread and the price they pay for new securities. None of what they have reports and none of what might drive the price of CIM and NLY stock down in the short-term has to do with default risk or interest rate spreads. It is all purely a mark-to-market issue that in the long-term will work to the owner's advantage.
Short-term investors should get out...... Long-term investors should average in.....
On Apr 06 05:23 AM SeekingAlpha Editors wrote:
> Is this a buy or a sell? Reply
Chimera Investment Struggling to Stay Afloat [view article]
initial dividend of .26 was not for 3 months, was reflective of shorter time period ReplyEditors
General Discussion on CIM
Is this a buy or a sell? ReplyChimera Investment Struggling to Stay Afloat [view article]
I agree with AG. On March 19th, they announced a Q1 2008 dividend of $0.26 per common share, payable April 30, 2008 to common shareholders of record on March 31, 2008. Now, if they had been anticipating liquidity problems since December 2007, why would they markedly increase the dividend amount? It doesn't make much sense. ReplyChimera Investment Struggling to Stay Afloat [view article]
Dividends are a way for management to signal.Paying a dividend 9x higher than the previous quarter does not signal liquidity problems. Reply
Chimera Investment Struggling to Stay Afloat [view article]
Not a good time to be invested in mortgages period. Thornburg (who also held high quality mortgages) reported they suffered a 10% decrease in asset value since Feb 14th. If the same is true for CIM, sizeable write-down would be expected for the quarter. With DB requiring they serve as lead underwriter on future offerings, I would suspect an offering is now being considered. Replyil
Mortgage REITs Rise From Ashes [view article]
The losses for the coming two quarters will be ugly for CHIMERA AND ANNALY. Wachovia analysts estimate that the share price of ANNALY could be down twenty percent when it reports the new quarter result. Citigroup reiterates the 'Sell' ratings for ANNALY AND CHIMERA.Reply
il
Jim Cramer's Mad Money Lightning Round, 2/6/08: Chimera is for Real [view article]
Interesting, tell you a fact - here on wall street most of the MBS.. mortgage pass-through certificates, collateralized mortgage obligations, agency callable debentures, CDOs, Mezz, hybrid adjustable-rate mortgage-backed securities today have impairments ranging from 15% to 60% (Market Value). Structured or packaged MBS have been dumped by the top 8 investment banks as fast as possible to AnnalyNLY, Carlyle and Chimera alike during past 10 weeks. Most senior analysts expect NLY to have new announcement (margin call or write-downs) before Apr 25, 2008. And the worst is the unrealized losses among small REIT players. Personally I shorted several REITs in the water...here hope your investment principles do not have such impairments... , well, when you piss against the wind, you'd better look out for the cleaning bill :) ... - GSer
Reply
il
Mortgage REITs Rise From Ashes [view article]
Interesting, tell you a fact - here on wall street most of the MBS.. mortgage pass-through certificates, collateralized mortgage obligations, agency callable debentures, CDOs, Mezz, hybrid adjustable-rate mortgage-backed securities today have impairments ranging from 15% to 60% (Market Value). Structured or packaged MBS have been dumped by the top 8 investment banks as fast as possible to AnnalyNLY, Carlyle and Chimera alike during past 10 weeks. Most senior analysts expect NLY to have new announcement (margin call or write-downs) before Apr 25, 2008. And the worst is the unrealized losses among small REIT players. Personally I shorted several REITs in the water...here hope your investment principles do not have such impairments... , well, when you piss against the wind, you'd better look out for the cleaning bill :) ... - GSer
Reply
The Wind
Mortgage REITs Rise From Ashes [view article]
ACAS' dividend just got increased - $1.01 this quarter, and total for year is expected to be $4.19. Nice dividend. They've done me just fine. ReplyJim Cramer's Mad Money Lightning Round, 2/6/08: Chimera is for Real [view article]
More Bad News for Financials coming=TSUMAMI JIMRead...
Rescue Plans Won't Prevent Downgrades
By Karen Richardson, Liam Pleven and Carrick Mollenkamp
Word Count: 931 | Companies Featured in This Article: MBIA, Financial Guaranty Insurance, Credit Agricole, UBS, Citigroup, Barclays, Security Capital Assurance
Rescue plans are starting to take shape for struggling bond insurers, but they aren't likely to prevent further ratings downgrades for many of the companies.
At least one such company isn't waiting around. In an effort to raise capital, MBIA Inc. yesterday said it would issue $750 million of common stock, a bigger offering than the $500 million issue it had initially planned.
The company also said it will revise its fourth-quarter loss of $2.3 billion, cutting it by $65 million. MBIA also added $100 million to its loss reserve, bringing the total special addition to $200 million
Reply
Jim Cramer's Mad Money Lightning Round, 2/6/08: Chimera is for Real [view article]
great ,lots of info. Reply