User 151614

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    • ON: Tue Feb 26th 14:44 PM
      Commented on:
      Annaly Capital: Outstanding Performance in a Down Market
      I am long NLY since 2004, and have been adding all the up from the $12 range last year. I rode it down, due to the realization of the risks that jonnycars mentioned. I have to say that this is the ideal operating environment for Annaly, but they took significant steps during the inverted yield curve of two years ago to reposition their assets to perform better (not great, but better) if that trend continued or reemerges. What you buy when you invest in Annaly is a great, not good, management team with experience and very sound judgment.

      One thing you're not doing, as the article's author suggests, is investing in NYC real estate. Annaly makes its money by buying MBS with actual or implied AAA rating -- borrowing short and cheap and then harvesting the yield differential from these high quality assets, mixed with fixed, floating, and ARM terms to spread the risk and provide performance in various environments. As of their last quarter, this spread was up to almost 1%, having tripled over the inverted yield days.
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