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Business Wire (May 7, 2013)
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MORL vs. ETF Alternatives
The ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (NYSE: MORL) ("MORL" or the "ETN") is an exchange-traded note linked to the monthly compounded 2x leveraged performance of the Market Vectors® Global Mortgage REITs Index (the "Index"), reduced by the Accrued Fees. MORL is listed on the NYSE Arca exchange, is denominated in USD, and pays a USD-denominated variable monthly coupon linked to 2 times the cash distributions, if any, on the Index constituents, less any withholding taxes.
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Country: United States
Wednesday, Sep 113:50 PM
Wednesday, Sep 113:50 PM| 3 Comments
- U.S. REITs had a tough August, falling 6.23% on a total return basis, according to NAREIT. The YTD return has now gone slightly negative. This compares to the S&P 500 off 2.9% in August and up 16.15% YTD.
- Not all sectors are down though. Lodging/Resorts leads, gaining 10.85% YTD. Self-Storage, Manufactured Homes, and Timber (CUT, WOOD) have also gained.
- Leading on the downside are mortgage REITs (MORT), off 5.59% YTD. Apartments and Retail are also posting losses YTD.
- REIT ETFs: FRI, WREI, FTY, ICF, IYR, REM, REZ, RTL, PSR, KBWY, SCHH, RWR, VNQ, DRN, URE, DRV, SRS, REK, ROOF, REZ, MORL.
Wednesday, Sep 1110:30 AM
Wednesday, Sep 1110:30 AM| 2 Comments
- Trading at about 10% discounts to book, Gundlach thinks the mREITs (REM +0.2%) offer value, but he doesn't expect much price appreciation in the near-term. His favorites are the agency players as he believes they'll outperform over an entire cycle.
- He mentions Annaly (NLY +0.9%) specifically as a both a well-run mREIT and a good proxy for the entire sector. Even should the annual dividend drop to $1 (vs. $1.60 now), it's still near a 9% yield, he says.
- Last night's webcast.
- Late August: Gundlach turns bullish on mREITs
- Other ETFs: MORT, MORL.
- Other agency players: AGNC, ARR, HTS, CYS, CMO.
Tuesday, Sep 109:41 AM
Tuesday, Sep 109:41 AM| Comment!
- It's not so much rising rates that is making things tough in mortgage REIT land (REM -0.9%), says CYS Investments (CYS +1.9%) CEO Kevin Grant, presenting at Barlcays. It's that the cost of hedging has gotten so high (presentation slides).
- Forward rates imply 4% on the 10-year Treasury yield in 2014, and he questions how the economy might fare in such an environment. Don't underestimate the negative impact to the economy from the end of the refinancing boom, says Grant. He's been through a few of these cycles, and like night follows day, within weeks after somebody refinances, they go out and buy a car. It's therefore no surprise auto sales have been strong this year, but that could be about to end.
- CYS has given up some of its big opening pop following the maintenance of its $0.34 per share dividend. Higher rates are again taking a toll, the 10-year Treasury yield up to 2.96%.
- Other ETFs: MORT, MORL.
Tuesday, Sep 312:17 PM
Tuesday, Sep 312:17 PM| 4 Comments
- Armour Residential (ARR -2.9%), CYS Investments (CYS -2.3%), and Hatteras Financial (HTS -2.5%) are leading the mREIT sector (REM -1.3%) lower as interest rates again move sharply higher.
- Other movers include Annaly (NLY -1.6%), Western Asset (WMC -1.5%), and Ellington (EARN -2.2%), (EFC -2.1%).
- Other ETFs: MORT, MORL.
- Still occasionally lumped in with mREITs, specialty mortgage servicers gain as the market now realizes the value of MSRs increases as rates move higher (fewer prepayments). Ocwen (OCN +4.1%), Nationstar (NSM +2.4%), Walter Investment (WAC +1.8%).
Thursday, Aug 291:02 PM
Thursday, Aug 291:02 PM| 35 Comments
- In a major about-face, Jeff Gundlach turns bullish on the mortgage REIT sector (REM +0.7%), telling CNBC he spots value as many are trading at 10% or more discounts to net asset value. He specifically mentions Annaly (NLY +1.3%) as being a buy. Reported book value as of June 30 is $13.03 vs. the current price of $11.50.
- Other popular names trading at big discounts (though not mentioned by Gundlach): AGNC, ARR, IVR, HTS, CYS, CMO, MTGE, DX, WMC, JMI, EARN, to name a few.
- Other mREIT ETFs: MORT, MORL.
- He's also a fan of closed-end income funds trading at wide discounts to NAV. None are mentioned, but PDI, PFN, and PFL come to mind. DoubleLine's own DBL is trading right about at NAV.
- Of Apple's (AAPL +0.6%) big run to $500? "All the easy money has been made ... It's kind of dead money."
Friday, Aug 2311:43 AM
Friday, Aug 2311:43 AM| 3 Comments
- CYS Investments (CYS +7.1%) leads the mortgage REITs (REM +2.5%) higher a day after its CEO Kevin Grant purchased 34K+ shares of company stock. Grant last purchased shares during the month of May (at far higher prices).
- It's been a busy season of insider buys at the beaten-down mREITs. Of note are a number of purchases at Annaly (NLY +3.2%).
- Among other movers today: American Capital (AGNC +4.1%), (MTGE +2.7%), Invesco (IVR +3.6%), New York Mortgage (NYMT +2.5%), Anworth (ANH +1.8%), Capstead (CMO +2.4%) (see new SA contributor MobilePreacher's take: Capstead, The 'Perfect' Security).
- Related ETFs: (MORT +0.2%), (MORL +5%).
Wednesday, Aug 2112:05 PM
Wednesday, Aug 2112:05 PM| 8 Comments
- The big picture view says better entry points are coming soon - perhaps after the taper actually begins (September?) and a new Fed chief is announced (October?).
- The team's favorite names are those associated with the sector that really aren't mREITs, but instead have more-specialized business models: Newcastle Investment (NCT +0.5%), its spinoff New Residential (NRZ +1.8%), and PennyMac Mortgage Investment Trust (PMT -0.1%).
- In the security-focused names, top picks are Two Harbors (TWO -0.8%) and Ellington Financial (EFC +0.1%), and American Capital Mortgage (MTGE).
- Thus far in Q3, CS sees sector book values off 4% amid a 40 bp increase in rates. The good news is credit spreads haven't continued to widen, but a coming taper announcement could blow them out again.
- Sector ETFs: REM, MORT, MORL.
- Earlier: Two Harbors gets an upgrade.
Wednesday, Aug 2111:47 AM|Wednesday, Aug 2111:47 AM| 1 Comment
Tuesday, Aug 201:26 PM
Tuesday, Aug 201:26 PM| Comment!
- New York Mortgage Trust (NYMT +4.1%) CEO Steven Mumma adds to his stake in the company, purchasing 25K shares today at $5.65 each. The purchase increases by nearly 15% his company holdings which now total more than 195K shares.
- After today's big gain, the stock's off about 19% over the last 90 days.
- Earlier: Another mREIT insider buy as the AG Mortgage Investment CEO steps in.
- Mortgage REIT ETFs: REM, MORT, MORL.
Tuesday, Aug 2010:50 AM
Tuesday, Aug 2010:50 AM| 25 Comments
- Sector giants Annaly (NLY +3.3%) and American Capital Agency (AGNC +4.3%) are the leading gainers, followed but Armour (ARR +2.6%), MFA (MFA +2.7%), Dynex (DX +2.8%), New York Mortgage (NYMT +3.3%), and Western Asset (WMC +2.8%) as interest rates take a breather from going up.
- Earlier: This year's Treasury bear market may be the worst one yet.
- Especially ugly trade in the preferreds of many of the agency mortgage REITs have some traders wondering if retail panic isn't ringing a bell for a bottom in the sector. Today, the action isn't necessarily ugly, but it is sloppy - with different preferreds of the same issuer (Armour, for example I, II) trading in different directions even as both represent the same credit risk.
- ETFs: (REM +2.4%), (MORT +2.7%), (MORL +5.8%).
Monday, Aug 1910:04 AM
Monday, Aug 1910:04 AM| 35 Comments
- One trader takes note of Annaly Capital (NLY -2.1%) - it's fallen through the 2008 panic low all the back to 2005 levels hit amid a prolonged rate hike cycle and when the dividend had to be cut to $0.10 (it was $0.40 last quarter).
- Others of note: Armour (ARR -1.9%), CYS Investments (CYS -2.4%), AG Mortgage (MITT -2%), Capstead (CMO -1.3%), Javelin (JMI -2.3%), American Capital (MTGE -0.9%).
- Related ETFs: REM, MORT, MORL.
Friday, Aug 161:24 PM
Friday, Aug 161:24 PM| 42 Comments
- It's thin trading conditions, but the 10-year Treasury yield jumps 9 bps all of a sudden to 2.86%, touching a new 2-plus-year high. This despite weaker-than-expected consumer and housing data this morning.
- TLT -0.8%, TBT +1.7%.
- The move is taking a toll on stocks, where the S&P (SPY -0.4%) has slipped more than half a percent off the session high.
- The mortgage REITs (REM -1.7%), (MORT -1.5%), (MORL -3.5%) quickly react to the downside. Leading are: Armour (ARR -2.9%), CYS (CYS -4.2%), Javelin (JMI -3.5%), Hatteras (HTS -2.3%), (MFA -2.6%), Annaly (NLY -1.9%), American Capital (AGNC -1.8%), Dynex (DX -1.4%).
Thursday, Aug 1511:12 AM
Thursday, Aug 1511:12 AM| 13 Comments
- Anything paying income is again being particularly hard hit by the rise in Treasury yields (the 10-year now at a 2-year high of 2.8%).
- Selections in mREITs (REM -2.1%), (MORT -1.9%) include RAIT Financial Trust (RAS -4.1%) - whose IRT had an ill-timed IPO yesterday and Ellington Residential (EARN -4.8%) - the market not caring about reasonable Q2 performance, a hefty discount to book, and the launch of a repurchase program. Other mREITs: CYS Investments (CYS -3.6%), Apollo (AMTG -3%), Newcastle (NCT -5%), Invesco (IVR -2.7%), Arlington Asset (AI -1.2%). A leveraged ETF play: MORL.
- Hanging in there relatively well are the BDCs: Fifth Street (FSC -1.3%), Triangle (TCAP -1%), MCG (MCGC -1.2%), Hercules (HTGC -1.2%), Ares (ARCC -0.3%).
- BDC ETFs: BDCS, BDCL, BIZD.
- In emerging markets fixed income, a trader takes note of EDD, a closed-end fund now trading at more than a 15% discount to NAV.
- Emerging market bond ETFs: EMB, LEMB, PCY, EMLC, ELD, PFEM, EBND, VWOB.
Tuesday, Aug 1312:44 PM
Tuesday, Aug 1312:44 PM| Comment!
- Tumbling Treasury prices - with TLT carving out a new 52-week low today - are again hitting income favorites.
- Leading mREITs (REM -1.4%) lower are Invesco (IVR -3.3%), Annaly (NLY -2.3%), American Capital (AGNC -2%), and Western Asset (WMC -1.6%).
- A number of income CEFs not long ago were so much in favor they commanded large premiums to NAV. They're now at seemingly growing-by-the-day discounts. Among the movers today is the Pimco Dynamic Income Fund (PDI -1.4%) selling for $27.45 against yesterday's closing NAV of $30.23. Others include: PCI, PFN, and PFL.
- Still trading at premiums to NAV are the Pimco High Income Fund (PHK -0.9%) and the Pimco Corporate & Income Fund (PTY -1.1%).
- Municipals (MUB -0.6%) slip as well, hitting Muni CEFs: NXZ -0.9%, IIM -1.2%, VKQ -0.7%.
- Related ETFs: MORT, MORL, SUB, MUNI, PVI, PZA, SHM, TFI, VRD, HYD, ITM, MLN, PRB, SMB, GMMB, SMMU, RVNU, NY .
Thursday, Aug 88:42 AM
Thursday, Aug 88:42 AM| Comment!
- Net income per share of $0.71 does not reflect $0.22 per share of negative valuation adjustments that should be realized in Q3. Book value per share of $14.69 up 1% from Q1, up 22.4% from a year ago.
- Earnings call at 5 ET. Q2 results. (PR)
- RWT's quarterly Redwood Review is a must-read for any mortgage investor (REM, MORT, MORL). From the opening letter: "It's too early to say the worst of the recent market disruptions are behind us, but it does appear that the agency and non-agency RMBS markets are firming somewhat. We are beginning to see spread premiums on AAA RMBS stabilize."
Tuesday, Jul 309:09 AM
Tuesday, Jul 309:09 AM| 13 Comments
- The pummeling in the mortgage REIT (REM) sector is an overreaction to the move in interest rates, says American Capital Agency (AGNC) CIO Gary Kain on the earnings call (presentation slides)
- If investors just looked at historically low valuations (as compared to book value) without knowing the events of the past quarter, they would probably be eager buyers; especially with the wider spreads of today
- Kain is nevertheless respectful of today's higher volatility, taking the book to over 40% of 15-year mortgages with pay-up risk no longer material; the duration gap remains under one year even with a 200 bp increase in interest rates
- Shares +5.5% premarket
- Previous on AGNC earnings
- Kain-led MTGE +4.2%
- Other mREITs premarket: NLY +1.3%, ARR +1.6%, WMC +2.4%, IVR +1.8%
- View all 3 replies
Dividend Living:: AH the mREITs are still rising a bit. Even at this pace It still will take a while to get back to where we were before taper talk started.
- View all 5 replies
det9:: Took a 5 yr chart. Every time above 102-105 came down very sharp.
- View all 2 replies
Ocean Man:: The funny thing is, I would have sold half if there was a dividend run-up today LOL. Could pop 4-8% tomorrow.
Dividend Living:: I figure Bernanke owed me a free dividend.
- View all 1 replies
Ocean Man:: It looks like you'll be happy tomorrow.
- View all 4 replies
gharris:: Are you buying MORL today, with the drop in advance of x-date tomorrow? GH.
Ocean Man:: No, just riding what I have left.
- View all 2 replies
Ocean Man:: Correction: ex-div Thursday.
- View all 6 replies
losbronces:: I only bought 300 shares in a nontaxable account, so no problem.