Sep. 18, 2014, 1:10 PM
- The entire sector is in the red, but the biggest declines are being seen in the industry giants, about the only spots large investors can move a lot of shares quickly: Annaly Capital (NLY -1.6%), American Capital Agency (AGNC -1.6%).
- Yesterday's FOMC statement may have left in the "considerable period" language, but the committee remains on course to begin a rate hike cycle in less than a year.
- Further, the selloff on the long end of the curve can has reached the sizable stage - the 10-year yield is up 32 basis points in a month, and has now erased about all of the summer's decline. Book values could take a hit (though hedging is likely to ease the pain).
- REM -0.7%
- Other ETFs: MORT, MORL.
- Other names: Armour (ARR -1.3%), Invesco (IVR -0.7%), Hatteras (HTS -3%), Capstead (CMO -0.3%), Western Asset (WMC -0.4%)
Sep. 11, 2014, 7:35 AM
Sep. 3, 2014, 8:04 AM
- CYS Investments (NYSE:CYS) - led by Kevin Grant - has been the mREIT poster-child for riding the trend of falling interest rates in 2014. The stock is ahead 27% YTD while continuing to pay a fat dividend. A bull on the stock for some time, Maxim - worried about CYS's exposure what's looking like higher interest rates on the way - rings the register, downgrading to Hold from Buy.
- Capstead Mortgage (NYSE:CMO) - up 9% YTD - holds a portfolio of short-duration ARMs, meaning less exposure to rising rates and less money needed to buy hedges to protect against rising rates, Maxim upgrades to Buy from Hold.
- CYS is lower by 0.4% in premarket action.
Jul. 30, 2014, 4:31 PM
- Net income of $36.6M or $0.35 per share vs. $38.4M and $0.37 in Q1. Dividend is $0.34.
- Book value per share up $0.10 to $12.69. Today's close of $12.96 is a 2% premium to book.
- Financing spreads slipped eight basis points to 1.22%. CPR of 17.22% is up 206 basis points.
- CEO Andrew Jacobs: Increase in prepayments knocked $0.02 per share off of earnings.
- Conference call tomorrow at 9 ET
- Previously: Capstead Mortgage misses by $0.01, misses on revenue
- CMO flat AH
Jul. 30, 2014, 4:21 PM| 2 Comments
Jul. 29, 2014, 5:35 PM
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Jun. 12, 2014, 8:11 AM| Comment!
May. 28, 2014, 2:43 PM
- The swoosh down in interest rates - the 10-year Treasury yield is now off 8 bps on the session to just 2.44% - isn't really boosting the mREIT sector (REM -0.1%), and one wonders which managements hunkered down for higher rates and now find themselves overhedged. There's also a flattening yield curve and it wasn't too long ago when the bear case on mortgage REITs was slimming net interest margin, not higher rates.
- Kudos to CYS Investment (CYS +0.5%) management, which - not finding a ton of value in mortgages - loaded up on Treasurys in Q1. The stock is one of the sector's stronger performers YTD, up 24.5%.
- Others today: Annaly (NLY +0.1%), American Capital (AGNC -0.7%), Armour Residential (ARR +0.7%), Hatteras Financial (HTS -0.3%), Capstead Mortgage (CMO -0.2%), Western Asset Mortgage (WMC -0.6%)
- ETFs: MORT, MORL
May. 20, 2014, 9:52 AM
- Dodd-Frank and the qualified mortgage rules associated with it aren't going away any time soon, says CYS Investments (CYS -0.2%) CEO Kevin Grant, presenting at a Wells Fargo conference. The upshot: It's going to remain tough to get a mortgage, housing will be sluggish, and a there will be a shortage of mortgages for companies like CYS to buy. "We're becoming a nation of renters."
- For adjustable mortgages, it's even more extreme. They're disappearing as new mortgage rules make it necessary to qualify borrowers on a fully indexed rate. Hatteras Financial (HTS) and Capstead Mortgage (CMO) - players in the ARMs arena - present later today.
- Reiterating what he said on the last earnings call, Grant says CYS - while it waits for mortgage spreads to widen - is buying Treasurys. The cost to finance a portfolio is next to nothing and Grant's able to get a spread often better than he can get buying mortgages.
- Presentation slides
May. 1, 2014, 3:54 PM
- "It's kind of in a situation, near-term, where it doesn't look like it can get much better, which I'm sure is a great position for you guys," says JMP's Steve Delaney, speaking to management on the Capstead Mortgage (CMO +0.9%) earnings call (transcript). With the Fed on hold, interest rate risk (Capstead plays at the short end of the curve) is minimized, prepays are slowing, and repo is getting cheaper.
- Getting to a question, Delaney asks what there is to do at the office each day to boost returns and improve the portfolio. "We like where we are," responds CEO Andrew Jacobs. The biggest challenge notes Delaney (and management doesn't totally refute), may be finding $600M-$700M of bonds it really wants to own. Fortunately, notes management, runoff is light at the moment. "I wouldn't want to be looking to add serious size in the ARM space right now," says EVP Robert Spears.
- Previously: Capstead Mortgage Corporation beats by $0.02, beats on revenue
Apr. 30, 2014, 5:24 PM| Comment!
Apr. 30, 2014, 4:59 PM
- Net income of $0.37 per share compares to the same amount in Q4 and a $0.34 dividend. Book value of $12.59 per share is up from $12.47 at 2013's end. Net interest spread of 1.30% is up five basis points. CPR falls to 15.16%.
- Portfolio size about unchanged at $13.5B. Leverage about unchanged at 8.52:1.
- "We are continuing to see lower repo borrowing rates in April, which could, if this trend continues, offset modest upward pressure on borrowing costs from additional forward-starting swaps moving into current-pay status in the second quarter ... More importantly, a healthy repo market allows us to continue executing our strategy of managing a conservatively leveraged portfolio of agency-guaranteed residential ARM securities."
- Today's close of $12.78 puts the stock at 2.5% above book value - fairly rich for the mREIT sector these days.
- CC tomorrow at 9 ET
- Source: Press Release
- CMO no trades AH
Apr. 29, 2014, 5:35 PM
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Apr. 29, 2014, 12:12 PM
- The mortgage REIT (REM -0.9%) sector is lower following American Capital Agency Q1 results from after the bell last night. Earnings beat expectations and comfortably covered the $0.65 dividend, but a 2.3% gain in book value may have been somewhat shy of what was hoped for.
- Opinions make markets, and - unlike CYS Investments' management - American Capital CIO Gary Kain does not view the current mortgage market as too pricey to play in.
- Also for fixed income investors to chew on is Apple's upcoming (bell-ringing?) massive debt offering.
- Related ETFs: MORT, MORL.
- Other agency (or mostly so) MBS names: Annaly (NLY -0.7%), Armour (ARR -0.1%), Hatteras (HTS -0.1%), Capstead (CMO), Anworth (ANH -0.2%), Ellington Residential (EARN -0.6%).
Apr. 25, 2014, 4:43 AM
- The amount that lenders originated in mortgage loans plunged 58% on year Q1 to a 14-year low of $235B, almost entirely due to drop in refinancing. The figures are from industry newsletter Inside Mortgage Finance.
- Loans for acquisitions were flat on year and lower than in Q4.
- The trend is the latest indication that increasing interest rates are hampering the housing recovery. The average 30-year fixed-rate mortgage was 4.5% last week, up from 3.6% in May last year, when rates spiked after the Fed indicated it would scale back its QE program.
- Tickers: DHI, PHM, RYL, MHO, NVR, LEN, SPF, MDC, HOV, TOL ORI, NLY, AGNC, MTGE, ARR, TWO, IVR, CMO, MFA, WMC, FMCC, FNMA, RDN, NMIH, ESNT, GNW
- ETFs/ETNs: ITB, XHB, MORT, MORL, REM, MORT, MORT
Apr. 24, 2014, 10:36 AM
- A check of the mortgage REITs (REM +0.1%) finds not a lot going on stock price-wise following the first Q1 earnings reports from the sector this week (CYS Investments and Hatteras). As expected, book values grew and prepayments remained at a low level.
- Perhaps unexpected was a good deal of caution from CYS management about mortgage prices - right now, it's finding better value in Treasurys, and awaits a pullback in MBS prices before boosting those holdings. "The mortgage market is a little kid playing with matches," said CEO Kevin Grant on the earnings call (transcript). "We just don't know when everybody's fingers are going to get burnt. The traders that play in this market, they know this and they know they are playing with matches."
- Amid the low supply of MBS out there, Hatteras (HTS +0.1%) management on its call (transcript) says it now has 10 originators delivering wholesale product to the company covering more than half of monthly cash flow needs. Up next is expansion into jumbo ARMs.
- Other sector ETFs: MORT, MORL
- Individual names: Annaly (NLY +0.6%), American Capital (AGNC +0.7%), (MTGE +0.2%), Armour (ARR +0.1%), Two Harbors (TWO -0.6%), Invesco (IVR -0.1%), Capstead (CMO +0.3%), MFA Financial (MFA +0.1%), Western Asset (WMC +0.5%).
CMO vs. ETF Alternatives
Capstead Mortgage Corp operates as a self-managed real estate investment trust. The Company together with its subsidiaries invests in leveraged portfolio of residential mortgage pass-through securities consisting of adjustable-rate mortgage securities.
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