Thursday, May 23, 3:01 PM
Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms.
Wednesday, May 15, 10:05 AM
The mortgage REIT sector (MORT -1%) continues under pressure, today led by Western Asset Mortgage (WMC -7.6%) as its book value blew up in Q1 thanks to portfolio losses. American Capital Agency (AGNC -1.5%) - which started the downturn when it reported losses 2 weeks ago - nears a 52-week low, Armour Residential (ARR -3.1%) hits one. One trader suggests Capstead Mortgage (CMO -1.4%) with a portfolio of mostly reset ARMs the least affected by rising rates. CYS Investments (CYS -0.7%) - trading at a 10% discount to book and also owning ARMs - is attractive as well.
18 Comments[Financials, Quick Ideas]
Monday, May 13, 12:48 PM
Ben Bernanke will likely retire early next year, says CYS Investments (CYS -1.6%), presenting at JMP, with no one emerging to supplant Janet Yellen as next Fed chief. Bernanke is an open book, they say, but while Yellen is thought to be quite dovish, she may prove to be more of a pendulum. Importantly, 2 hawks are rotating onto the FOMC voting role next year - not necessarily changing policy, but certain to create "more noise."
Monday, May 6, 9:50 AM
More sell-side on the mREITS (MORT): Maxim keeps a Buy with $33 PT on AGNC expecting the annual dividend to be maintained at $5/share thanks to $1.08 of undistributed taxable income in the kitty (KBW agrees). Jefferies is cautious, calling AGNC's Q1 tale an example of how even a well-run mREIT can run afoul. "Price and extension risk inherent in agency MBS (NLY, HTS, CYS, CMO, ANH, ARR, WMC) today are risks most investors underestimate."
Monday, May 6, 9:17 AM
American Capital Agency (AGNC) and CYS Investments are downgraded to Hold at Nomura following AGNC's ugly Q1 (CYS also had a substantial decline in BV during Q1). Analyst Bill Carcache notes "mortgage market dynamics are increasingly volatile and unpredictable," with AGNC in double-trouble thanks to complacency about prepayment risk. AGNC +0.9%, CYS -0.7% premarket.
Thursday, April 18, 11:17 PM
Mortgage REITs (MORT) catch the eye of D.C., with the Financial Stability Oversight Council reportedly set to cite the industry as a potential source of market vulnerability. The companies have seen assets quadruple to over $400B since 2009, but Annaly (NLY) CEO Wellington Denahan notes their capital bases have risen as well. A Two Harbors (TWO) presentation (page 8) shows mREITs are relatively small players in the MBS market. Maybe the Fed and the GSEs just don't like the competition. Annaly and American Capital (AGNC) are the 2 biggest mREITs, with Two Harbors a distant 3rd.
Thursday, April 18, 12:19 PM
"We see the investment environment as better than buying our own stock back," says CYS Investments (CYS +1.7%) CEO Kevin Grant on the earnings call (transcript). The company did purchase about $7.6M shares in Q1 as the stock dipped substantially below book value (where it remains, though not as far).
Wednesday, April 17, 4:40 PM
More on CYS Investments (CYS) Q1 earnings: Net interest spread falls to 1.16% from 1.31% in Q4. NAV/share of $12.87 vs. $13.31 on Dec. 31 - company blames lower asset values due to steepening of yield curve following Feb. jobs report; notes curve has subsequently flattened and asset values are recovering. Shares +1% AH to $12, still remain 6.8% below a likely-understated NAV. (PR)
2 Comments[Financials, Earnings]
Tuesday, April 9, 9:24 AM
Mortgage REIT CYSgets an upgrade from Compass Point to Buy from Neutral with a reiterated price target of $13.50. Analyst Jason Stewart cites a favorable interest rate environment, a compelling share valuation, and changing investor expectations, but also notes Fed purchases will keep MBS spreads compressed thus putting a lid on ROE expansion. Shares +.7% premarket.1 Comment[Financials]
Friday, April 5, 10:10 AM
Outperforming today (and one wonders why they aren't green) are the mortgage REITs, as the weak jobs number sends bond yields lower, and - presumably - their book values higher. NLY -0.6%, AGNC -0.8%, ARR -0.5%. CIM, CYS, and JMI just poke into positive territory. MORT -0.9%.
Friday, March 8, 6:33 PM
CYS Investments (CYS) declares a Q1 dividend of $0.32/share, down from $0.40 previously. At the stock's closing price of $12, it's an annualized yield of 10.7%. Shares -2.2% AH to $11.74, an 11.8% discount to the latest stated book value of $13.31 on Dec. 31.(PR)