"I would not overestimate retail investors' knowledge of how this business works," says Scott Ulm, co-CEO of Armour Residential (ARR -1.3%). Income fans love mREITs (MORT -1.3%) but can suffer quick losses as rates rise. "We believe mREITs are not appropriate for most individual investors," says Edward Jones' Kate Warne, warning brokers to steer clients away from the sector. Ulm remains hopeful: "As bonds become cheaper, reinvestment becomes more profitable." Beneath a big rally for the averages, the sector is hit again today: American Capital (AGNC -2.6%), (MTGE -1.2%), Annaly (NLY -1.9%), Two Harbors (TWO -0.9%), Hatteras (HTS -1.9%), CYS (CYS -2.8%), Anworth (ANH -0.9%). [View news story]
Anything coming from ARR is not good for anyone. Maybe some Mreits are worthwhile but definitely not ARR.
The White House officially unveils 5 executive actions and 7 legislative proposals aimed at patent trolls. In addition to previously-reported items (I, II), the White House plans to review ITC procedures for setting import bans, and recommends giving businesses "better legal protection" for using products targeted by suits. Though many tech companies applaud the move, Microsoft (MSFT) is worried it "targets software innovations more broadly." Quartz isn't impressed, arguing (among other things) the action doesn't touch existing patents, and that the USPTO remains understaffed. Potentially affected companies: ACTG, WILN, VRNG, VHC, RPXC. [View news story]
Who cares about the squabble between the two. AAPL is creating jobs in a key market. Samsung now you have some market share now where are the jobs. Oh I forgot your still a protectionist.
Armour Residential Slumps After Earnings Release [View article]
Aka I agree with you the trend is down down down. I wouldn't put anything in this company. A few years back an author came out with why no one should own ARR. TJ was right. If there is a turn around it will be after ARR is delisted. At this pace it appears to be in 2016.
Doug Kass/ Berkshire Hathaway (BRK.B) afternoon Q&A roundup: Kass wonders if the contrast between Buffett's bathtub BofA investment and the weeks of due diligence that went into BRK's move into American Express shows The Oracle is now more interested in the game than the score. "I have every bit of the intensity, though it's not manifested in the same way," Buffett responds. Kass asks if, contrary to Buffett's aversion to short-selling, BRK would consider a $100M investment in a managed investment account at Seabreeze if the profits went to charity. Munger: "We don't like trading agony for money." Kass asks what qualifies Buffett's son to be Berkshire's next non executive chairman. "[My son] won't be running Berkshire, [just] safeguarding its culture," Buffett politely says. (WSJ,NY Times) [View news story]
I think Buffet adding his own to the board as a safeguard as in the best interest of shareholders. With the amounts of capital in the business many vultures are bred in the hills waiting for prey to feed on. When Warren and Charlie leave the legacy will remain in his child. Even though this sounds great though he could have brought in a poor inner city kid that managed to get a degree from a local college and instruct him what to do. I know this person wouldn't mind because he would be making more than his whole neighborhood would make combined. And that would be just one year of pay. It's all charity.
Do You Believe In The 12 Rules Of Goldbuggery? [View article]
Gold you little precious. Good comments by all. I'm not a bug though. I believe the sell off had more to do with market internals than anything else. How else do you raise cash to lever down at a key level in the market. Start selling physical and then hide in utilities or income producing stocks. As to explain the steep premium to buy gold is a dealer pricing in risk. If turn over seems to the downside and they are holding inventories higher than normal than true price in higher risk. They have to make a living too. Also if inventories get to low and velocity is slow then raising the premium keeps the bills paid. The physical market is fragmented like this.
The early adopter hoarders will be come the central bank. Time will change but its not different this time. What happens when some one has 1 million coins and decides to make their wallet into holding and then write a program to create a derivative of there holdings and backed by the value of there holding. Then starts to issue the derivative virtual currency to the masses. Oops another central bank.
What prevents someone or corporation from obtaining a substantial if not significant supply of bitcoins. Out of the 21 million coins that will be available, what happens when someone holds half. That means they will be able to control the price (value). Hence a central bank. True they may not be able to create bitcoins out of thin air but they will be able to control its value by selling blocks into the market to drive down the price, or buying blocks to raise the price. As the ramp up happens you'll see collections of hoarders. Time will eventually appreciate the value based on the demand or non trust for fiats. But I hate to say it its not different this time. In the future the coins may appreciate in value so much they they will only be able to be traded as fractions of one bitcoin. Hence carried out to six points beyond the decimal. Do you really understand what the means. I don't think anybody has. That would mean .000001 coin could equal one dollar or one bitcoins equals one trillion dollars. So back to the hoarders who will own millions of them and have trillions of value. Yeah it's different this time. NOT
A bipartisan Senate bill would force all banks to hold capital of 10% and those with over $400B in assets an extra 5%. The strictest provisions would hit six banks: JPMorgan (JPM), BofA (BAC), Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS) and Morgan Stanley (MS). Analysts reckon the bill has little chance of becoming law, although its authors reckon support for the measures are growing. [View news story]
Too much of their money sitting with the fed and not working is what is happening now. Every time the fed prints the banks get bigger. The fed buys the mbs and the banks park the money back into the fed. For once congress should break them up or do as much as possible to limit the growth of these banks. Get the fed out of this and make capital competitive again.
Millennials: The Next Push For A Long-Lasting Bull Market? [View article]
Yes let the milennals buy from the boomers. The real story will be those gen x and y types caught in the middle. If the market moves up for the milennals then x and y will see the best part.
'Are Mom And Pop Investors Late To The Party Again?' [View article]
Mom and Pop! Huh, I'm proud to be Pop. I'm proud to be an investor. What the institutional players don't really see is that the Internet changed everything. Mom and Pop the access and now don't have to be at the whim of CNBC. Now the kiss of death is the 2/20. Through diversification they steal from the masses. Take a 100 k investment. All the money is divided evenly through 5 funds. Two of the funds earn 7% for a total gain of $2800 and the hedge takes 440. But three of the funds lose 5%. For a total loss of $3000. So overal total return of all funs was negative. But they take $2000 plus $440. So in real terms you lose $2640. Or 2.64% and not the .2% they send in your statement. Then pride themselves for preserving your capital. If anything they should have to put back 20% for every loss too. If they can take a gain from you they should be able to put back too when there is a loss.
Fraud Is Unlikely At New Oriental Education [View article]
You said it your self from student to teacher from one semester of study. Really a con. Oh by the way I watched a great basketball game last night and now I'm head coach.
H-P (HPQ -1%), rather than Apple (AAPL -1.9%), might be to blame for Foxconn's hiring freeze, thinks UBS' Steve Milunovich. Milunovich, among the first to report of a major drop in iPhone build rates for the March quarter (a report vindicated by Apple's FQ2 guidance) says his sources indicate nothing has changed. Meanwhile, Jefferies' Peter Misek (previous) claims FQ2 iPhone build orders have fallen to just 20M-25M, but believes 5S builds will start in March. CRUS -5.1%. SWKS -2.3%. TQNT -2.6%. BRCM -1.6%. OVTI -3.1%. Update: H-P states its PC ops don't rely on the Shenzhen, China facility that has seen a hiring freeze. [View news story]
Most of these guys say a lot about nothing and are fishing for a story. Wow Foxconn not hiring or laying off. Things are getting bad in China. I guess the Foxconn bubble is about to burst.
Newcastle Investment (NCT) prices its 20M share secondary, with gross proceeds of about $209.6M ($10.48/share?). The underwriters retain a 30-day option to buy up to 3M additional shares. Well-received? Newcastle is off just 0.3% to $10.72 in premarket trade. (PR) [View news story]
I was just looking at the trends inside the industry and revealed several areas of focus. All data can be verified by going to mortgagestats.com. 1. The banks have enjoyed the perfect storm when it comes to MSR market share. The top three have grown out of the misfortunes of others and supported by the govt. Wells has not had as much growth as BAC or JPM. But between the three they have 4.5T out of 7.9T of the market. During 2007 the three had 2.7T. Then country wide failed and in 2008 BAC took over and all three held 5.2T. And for the years after the numbers have been the same. 2. Now BAC is shedding MSR in a timely manner. If they were to divest all countrywide MSR that would leave 1.2T left to wind down. This would put them back at there 2007 level. 3. JPM had 800B in 2007 and peaked at 1.5T in 2008. since then this number has come down to 1.1T. So YOY change is about 100B 4. Now WFC had 1.4T in 2007 and now has 1.8T. 5. Now for as applies to us. As Basel goes we could see another 600 to 800B coming from super banks. WFC uses this as a core but in order to comply they will have to wind down eventually. Same applies to JPM and Citi. 6. Basel itself will not apply the needed urgency to divest. Next as the proposal goes Congress is finding ways to make these super banks smaller. I don't think something like Glass-Steagal but it will definitely impact them. As a fact Dodd-Frank didn't solve this and the banks just got bigger. So as the banks get smaller in order to comply they'll have to divest more. So Basel and Congress will help in spreading the wealth. 7. So if NSM,FIG,NCT/NRZ can reach a point where they hold 1T in MSR a lot of money can be made. 8. IMO this will take years up to 2019 for the bulk of divestures to happen. 9. SPP is currently standing at 2X. As years go out SPP has room for growth to 3.5 to 4X. This affects our pps. As the value of each MSR multiple increases the economic worth will increase pertaining to pps. As Credit Suisse pointed out currently MSR on the books will be worth 6.15 per share or a 2X multiple. So grow the MSR on the books and as the multiple increases so will pps. 10. It's going to be a long road and I applaud mgmt for going this direction. I also applaud all of you who have sat through this. I still sweat a lot even though I filled the truck at 0.47 per share a few years ago. Just trying to average down. But the investment is still strong.
"I would not overestimate retail investors' knowledge of how this business works," says Scott Ulm, co-CEO of Armour Residential (ARR -1.3%). Income fans love mREITs (MORT -1.3%) but can suffer quick losses as rates rise. "We believe mREITs are not appropriate for most individual investors," says Edward Jones' Kate Warne, warning brokers to steer clients away from the sector. Ulm remains hopeful: "As bonds become cheaper, reinvestment becomes more profitable." Beneath a big rally for the averages, the sector is hit again today: American Capital (AGNC -2.6%), (MTGE -1.2%), Annaly (NLY -1.9%), Two Harbors (TWO -0.9%), Hatteras (HTS -1.9%), CYS (CYS -2.8%), Anworth (ANH -0.9%). [View news story]
The White House officially unveils 5 executive actions and 7 legislative proposals aimed at patent trolls. In addition to previously-reported items (I, II), the White House plans to review ITC procedures for setting import bans, and recommends giving businesses "better legal protection" for using products targeted by suits. Though many tech companies applaud the move, Microsoft (MSFT) is worried it "targets software innovations more broadly." Quartz isn't impressed, arguing (among other things) the action doesn't touch existing patents, and that the USPTO remains understaffed. Potentially affected companies: ACTG, WILN, VRNG, VHC, RPXC. [View news story]
Armour Residential Slumps After Earnings Release [View article]
Doug Kass/ Berkshire Hathaway (BRK.B) afternoon Q&A roundup: Kass wonders if the contrast between Buffett's bathtub BofA investment and the weeks of due diligence that went into BRK's move into American Express shows The Oracle is now more interested in the game than the score. "I have every bit of the intensity, though it's not manifested in the same way," Buffett responds. Kass asks if, contrary to Buffett's aversion to short-selling, BRK would consider a $100M investment in a managed investment account at Seabreeze if the profits went to charity. Munger: "We don't like trading agony for money." Kass asks what qualifies Buffett's son to be Berkshire's next non executive chairman. "[My son] won't be running Berkshire, [just] safeguarding its culture," Buffett politely says. (WSJ, NY Times) [View news story]
Capital Trust: What Does A Reverse Split Of Shares Mean For REIT Investors? [View article]
Do You Believe In The 12 Rules Of Goldbuggery? [View article]
As to explain the steep premium to buy gold is a dealer pricing in risk. If turn over seems to the downside and they are holding inventories higher than normal than true price in higher risk. They have to make a living too. Also if inventories get to low and velocity is slow then raising the premium keeps the bills paid. The physical market is fragmented like this.
The End Of Money [View instapost]
Bitcoin Crashed. Again [View article]
A bipartisan Senate bill would force all banks to hold capital of 10% and those with over $400B in assets an extra 5%. The strictest provisions would hit six banks: JPMorgan (JPM), BofA (BAC), Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS) and Morgan Stanley (MS). Analysts reckon the bill has little chance of becoming law, although its authors reckon support for the measures are growing. [View news story]
Millennials: The Next Push For A Long-Lasting Bull Market? [View article]
'Are Mom And Pop Investors Late To The Party Again?' [View article]
Now the kiss of death is the 2/20. Through diversification they steal from the masses. Take a 100 k investment. All the money is divided evenly through 5 funds. Two of the funds earn 7% for a total gain of $2800 and the hedge takes 440. But three of the funds lose 5%. For a total loss of $3000. So overal total return of all funs was negative. But they take $2000 plus $440. So in real terms you lose $2640. Or 2.64% and not the .2% they send in your statement. Then pride themselves for preserving your capital. If anything they should have to put back 20% for every loss too. If they can take a gain from you they should be able to put back too when there is a loss.
Many Mortgage REITs Have Been Decreasing Dividends, PennyMac Just Raised Its To 9% [View article]
Fraud Is Unlikely At New Oriental Education [View article]
H-P (HPQ -1%), rather than Apple (AAPL -1.9%), might be to blame for Foxconn's hiring freeze, thinks UBS' Steve Milunovich. Milunovich, among the first to report of a major drop in iPhone build rates for the March quarter (a report vindicated by Apple's FQ2 guidance) says his sources indicate nothing has changed. Meanwhile, Jefferies' Peter Misek (previous) claims FQ2 iPhone build orders have fallen to just 20M-25M, but believes 5S builds will start in March. CRUS -5.1%. SWKS -2.3%. TQNT -2.6%. BRCM -1.6%. OVTI -3.1%. Update: H-P states its PC ops don't rely on the Shenzhen, China facility that has seen a hiring freeze. [View news story]
Newcastle Investment (NCT) prices its 20M share secondary, with gross proceeds of about $209.6M ($10.48/share?). The underwriters retain a 30-day option to buy up to 3M additional shares. Well-received? Newcastle is off just 0.3% to $10.72 in premarket trade. (PR) [View news story]
1. The banks have enjoyed the perfect storm when it comes to MSR market share. The top three have grown out of the misfortunes of others and supported by the govt. Wells has not had as much growth as BAC or JPM. But between the three they have 4.5T out of 7.9T of the market. During 2007 the three had 2.7T. Then country wide failed and in 2008 BAC took over and all three held 5.2T. And for the years after the numbers have been the same.
2. Now BAC is shedding MSR in a timely manner. If they were to divest all countrywide MSR that would leave 1.2T left to wind down. This would put them back at there 2007 level.
3. JPM had 800B in 2007 and peaked at 1.5T in 2008. since then this number has come down to 1.1T. So YOY change is about 100B
4. Now WFC had 1.4T in 2007 and now has 1.8T.
5. Now for as applies to us. As Basel goes we could see another 600 to 800B coming from super banks. WFC uses this as a core but in order to comply they will have to wind down eventually. Same applies to JPM and Citi.
6. Basel itself will not apply the needed urgency to divest. Next as the proposal goes Congress is finding ways to make these super banks smaller. I don't think something like Glass-Steagal but it will definitely impact them. As a fact Dodd-Frank didn't solve this and the banks just got bigger. So as the banks get smaller in order to comply they'll have to divest more. So Basel and Congress will help in spreading the wealth.
7. So if NSM,FIG,NCT/NRZ can reach a point where they hold 1T in MSR a lot of money can be made.
8. IMO this will take years up to 2019 for the bulk of divestures to happen.
9. SPP is currently standing at 2X. As years go out SPP has room for growth to 3.5 to 4X. This affects our pps. As the value of each MSR multiple increases the economic worth will increase pertaining to pps. As Credit Suisse pointed out currently MSR on the books will be worth 6.15 per share or a 2X multiple. So grow the MSR on the books and as the multiple increases so will pps.
10. It's going to be a long road and I applaud mgmt for going this direction. I also applaud all of you who have sat through this. I still sweat a lot even though I filled the truck at 0.47 per share a few years ago. Just trying to average down. But the investment is still strong.