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Two Harbors Investment Corp. (TWO)

- NYSE
  • Wed, Mar. 18, 2:30 PM
    • Worries about a sharply flatter yield curve abate just a bit as the FOMC drops "patient" from its policy statement - putting rate hikes on the table at subsequent meetings - but Fed economic projections send a dovish signal, with outlooks for economic growth, inflation, and the pace of rate hikes all cut from previous estimates.
    • Outperforming the averages: Annaly Capital (NLY +1.1%), American Capital Agency (AGNC +1.5%), Two Harbors (TWO +1.5%), CYS Investments (CYS +2%), Invesco (IVR +1.7%), Hatteras (HTS +1.7%), Capstead (CMO +2.1%), MFA Financial (MFA +1.7%), Anworth (ANH +2.2%), Dynex (DX +1.5%), Five Oaks (OAKS +3.3%).
    • ETFs: REM, MORT, MORL
    • Previously: FOMC drops "patient," but sends dovish signal (March 18)
    | 9 Comments
  • 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)
    | 44 Comments
  • 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)
    | 12 Comments
  • Dec. 9, 2014, 12:57 PM
    • Unable to catch a bid for a few sessions, mortgage REITs (REM +1%) have turned higher in afternoon action, led by Annaly (NLY +0.7%) and American Capital Agency (AGNC +1.5%).
    • Helping are jitters in the stock market (though U.S. averages are well off the lows), and a 10-year Treasury yield that's retreated all the way to 2.21% after hitting the mid-2.30s on the back of Friday's strong jobs number.
    • Armour (ARR +1.1%), Two Harbors (TWO +0.9%), CYS Investments (CYS +1.4%), Invesco (IVR +1.8%), American Capital Mortgage (MTGE +1%), Hatteras Financial (HTS +2%), Capstead (CMO +2%).
    • Other ETFs: MORT, MORL
    • Also showing some green are the recently beaten-up BDCs, including Prospect Capital (PSEC +0.2%), Fifth Street Finance (FSC +0.2%), Ares Capital (ARCC +0.5%), FS Investment (FSIC), Triangle Capital (TCAP +1.7%).
    • ETFs: BDCL, BDCS, BIZD
    • Previously: Money flows back into fixed income (Dec. 9, 2014)
    | 16 Comments
  • Sep. 2, 2014, 2:26 PM
    • REITs and other so-called "shadow bankers" for the last several years have used captive insurers to join Federal Home Loan Banks, thus getting access to more dependable financing and better terms than they otherwise could.
    • The FHFA for some time has voiced its concern over the practice, and under new rules just proposed, would sunset those existing memberships over a five year period.
    • ETFs: REM, MORT, MORL
    • Two Harbors (TWO -1.8%), Invesco Mortgage (IVR -1.9%), Hatteras Financial (HTS -1.2%), Dynex Capital (DX -1.1%), PennyMac Mortgage (PMT -1.5%), Annaly Capital (NLY -0.8%), American Capital Agency (AGNC -0.3%).
    | 16 Comments
  • Jun. 26, 2014, 3:54 PM
    • Enjoying the decline in interest rates even among some hawkish stomping of feet by St. Louis Fed boss Jim Bullard, the mortgage REIT sector (REM +0.9%) is broadly higher. Sector giants: Annaly Capital (NLY +0.6%) and American Capital Agency (AGNC +1.1%).
    • Others: Two Harbors (TWO +1.9%), Chimera (CIM +1.8%), American Capital Mortgage (MTGE +1%), Cherry Hill Mortgage (CHMI +1.4%), New York Mortgage Trust (NYMT +1.1%).
    • Other ETFs: MORT, MORL
    | 11 Comments
  • May. 15, 2014, 1:13 PM
    • In the red along with the rest of the stock universe all session, a bit of green begins to creep into the mortgage REIT sector (REM -0.4%) as the 10-year Treasury yield tumbles below 2.50%.
    • Annaly Capital's (NLY +0.1%) Q1 results were a notable disappointment as management seemingly found itself overhedged while rates fell sharply. One wonders if the hedges were lifted at all for Q2.
    • The sector's best performer today is CYS Investments (CYS +1.1%). Management indicated on the April 22 earnings call that it thought mortgages were too pricey, so instead had put a slug of money into Treasurys - a move looking pretty good so far.
    • Others: Two Harbors (TWO), Chimera Investment (CIM +0.2%), Armour Residential (ARR -0.1%), AG Mortgage Investment (MITT +0.1%)
    • ETFs: MORT, MORL
    | 2 Comments
  • Apr. 10, 2014, 11:49 AM
    • Lit up bright green as the market's momentum names again break down and lead the averages - and Treasury yields - lower are the mortgage REITs (REM +0.5%).
    • The 10-year yield is off six basis points to 2.63% and Eurodollar futures in the last few sessions have rallied strongly, pricing out at least one rate hike between now and the end of 2016.
    • CYS Investments (CYS +1.7%), Invesco Mortgage (IVR +1.3%), Hatteras Financial (HTS +1.3%), MFA Financial (MFA +1.4%), Two Harbors (TWO +0.8%), American Capital (AGNC +0.6%), (MTGE +0.5%).
    • One day after making a number of additions to its management team - including a couple of hires from the New York Fed - Annaly (NLY +0.5%) is also posting gains.
    • Related ETFs: MORT, MORL
    | 1 Comment
  • Mar. 19, 2014, 3:13 PM
    • A check of sectors following the FOMC statement and updated projections suggesting a quickened pace of rate hikes in the future finds the banks and life insurers notably moving higher. Both groups have struggled earning a spread amid ZIRP and are positively levered to higher rates.
    • Lenders: Bank of America (BAC +1%), Citigroup (C +1%), JPMorgan (JPM), Regions (RF +1.7%), KeyCorp (KEY +0.9%), SunTrust (STI +0.7%).
    • Life insurers: MetLife (MET +1%), Prudential (PRU +0.7%), Lincoln National (LNC +1%).
    • Related ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, KIE, SEF, IYG, IAK, FXO, PFI, KBWB, FNCL, FINU, RWW, RYF, PSCF, KBWP, KBWI, FINZ, KBE, KRE
    • Not necessarily positively levered to higher rates are the mortgage REITs (REM -1.6%): Annaly (NLY -1.8%), American Capital (AGNC -1.7%), (MTGE -1.9%), Armour (ARR -1.3%), Two Harbors (TWO -2%) CYS Investments (CYS -3.3%), Capstead (CMO -1.3%), MFA (MFA -1.8%).
    • Related ETFs: MORT, MORL
    | 14 Comments
  • Mar. 7, 2014, 12:46 PM
    • The mortgage REITs are maybe the poorest performing sector amid a big move higher in interest rates, and formerly bullish Deutsche Bank ringing the register on New York Mortgage Trust, CYS Investments, and American Capital Mortgage after nice runs for all have pulled them close to (or above in NYMT's case) book value.
    • There's also an earnings miss this morning from one of the last of the players to report Q4, Western Asset Mortgage.
    • Annaly (NLY -2.1%), American Capital Agency (AGNC -2.3%), Armour (ARR -1.4%), Two Harbors (TWO -1.8%), Invesco (IVR -2.7%), Capstead (CMO -1.2%), MFA Financial (MFA -2%), Apollo Residential (AMTG -1.7%)
    | 21 Comments
  • Jan. 13, 2014, 3:08 PM
    • What might pull the mREIT sector out of its brutal slump? A slide in the broad equity market for one. An out of nowhere 1%-plus dive in the major averages is being felt in the bond market, where the 10-year yield is off another 3 basis points to 2.83%, and mortgage REITs (REM +0.4%) - whose book values have been savaged by the big jump in interest rates since last spring - are responding.
    • Annaly (NLY +1.2%), American Capital (AGNC +1.4%), (MTGE +1.1%), Two Harbors (TWO +1.4%), CYS (CYS +1.9%), Western Asset (WMC +1.5%), AG Mortgage (MITT +1.1%), and Ellington Residential (EARN +0.8%) are leading. This just in: Sector giants American Capital Agency and Annaly are ahead 6% and 4% YTD, respectively.
    • The iShares 20+ Year Treasury Bond ETF (TLT +0.6%) is up 3.2% for the year.
    | 7 Comments
  • Dec. 19, 2013, 10:30 AM
    • Win-win. Both Flagstar Bancorp (FBC +2.1%) and Two Harbors (TWO +2.5%) fade mostly red action in their sectors following Flagstar's sale of MSRs with $40.7B of UPB to Two Harbors last night.
    • The sale represents 55% of Flagstar's mortgage loans serviced-for-others portfolio. Importantly, Flagstar will continue to receive income and fees as it will act as sub-servicer to the loans underlying the MSRs - in other words, the bank has unloaded the MSRs and the capital requirements they come with, but will still receive some income from the assets.
    • Flagstar's press release
    | Comment!
  • Dec. 18, 2013, 5:31 PM
    • Two Harbors' (TWO) Matrix Financial unit is acquiring a "bulk pool" of mortgage servicing rights (MSRs) from Flagstar Bancorp (FBC) for $500M. The pool consists of Fannie Mae and Ginnie Mae loans largely originated after 2010, and has an aggregate unpaid principal balance of $40.7B. (PR)
    • As part of the deal, Two Harbors and Flagstar have formed a subservicing agreement under which Flagstar "will act as the subservicer of the mortgage loans underlying the MSRs." The agreement will stay in effect as long as the MSRs are outstanding.
    | 4 Comments
  • Nov. 26, 2013, 1:54 PM
    • At what point do you just liquidate the portfolio? Habits die hard and traders used to hitting the sell button on the mREITs (REM -0.5%) are doing so again today even as interest rates slide a bit.
    • Hitting another multi-year low today, Annaly (NLY -1.3%) - with a portfolio of very liquid assets heavily hedged against rising rates - is now selling for 20% less than September 30's reported book value.
    • American Capital Agency (AGNC -0.8%) - with an equally liquid hedged portfolio - is also at about a 20% discount. Previous: CIO Kain promises to continue buybacks at this discounted level.
    • Other agency players: Hatteras (HTS -1%), CYS (CYS -1.4%), Capstead (CMO -1%).
    • Non-agency mREITs are slipping as well - even as Case-Shiller reports continued solid gains in home prices (which should boost portfolio values). Two Harbors (TWO -1.5%), MFA (MFA -1.4%), Western Asset (WMC -1.1%).
    • ETFs: MORT, MORL
    | 44 Comments
  • Nov. 22, 2013, 3:11 PM
    • A nice backup in rates (the 10-year Treasury yield is off 4 bps to 2.75%) is of no help to the mortgage REITs (REM -0.3%), with sector kingpins Annaly (NLY -1.4%) and American Capital Agency (AGNC -1.2%) both hunkered down (NLY earnings call, AGNC earnings call) for the Fed taper, and both hitting 52-week lows today.
    • Earlier this week, AGNC and MTGE CIO Gary Kain took his case all the way to Asia at the Citi financial services conference in Hong Kong (transcript). Yes, book value has been hit by higher rates, but also by how much the market is willing to pay for it. Whereas AGNC traded at an average of 110%-120% of book over the past 4-5 years, it's now at sub-90%.
    • Discounts can last for awhile, he admits, but also reminds this isn't some opaque bank balance sheet, but instead an easily valued, highly liquid portfolio of assets trading at $0.85-$0.90 on the dollar. As long as it persists, American Capital will continue selling MBS for $1 and buying back stock at a discount.
    • Previous: Kain makes a similar case
    • Related ETFs: MORT, MORL
    • Other sector stocks: Armour (ARR), Two Harbors (TWO -0.8%), CYS (CYS +0.1%), AG Mortgage (MITT -0.5%)
    | 12 Comments
  • Sep. 18, 2013, 2:29 PM
    • Most stocks are partying in wake of the Fed not commencing its QE taper today, but one sector of note is the beaten down mortgage REIT (REM +2.8%) group.
    • Annaly (NLY +3.2%), American Capital (AGNC +3.5%), (MTGE +2.4%), Armour (ARR +3.4%), Two Harbors (TWO +3.4%), CYS Investments (CYS +3.7%), Anworth (ANH +2.8%), Western Asset (WMC +2.2%), Javelin (JMI +2%), AG Mortgage (MITT +2.1%), Arlington Asset (AI +1.6%).
    • Yesterday, KBW called out CYS Investments as one of the more aggressive plays for those believing rates might head lower.
    • ETFs of note: MORT, MORL.
    | 24 Comments
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Company Description
Two Harbors Investment Corp is a REIT. It invests in, finances and manages residential mortgage-backed securities, residential mortgage loans, mortgage servicing rights, commercial real estate debt and related assets and other financial assets.
Sector: Financial
Country: United States