User 317413

Annaly Capital: Getting Your Slice of the Bail-Out Pie

The Book Value is about $12.70 as of the recent earnings report, (after preferred stock is figured in) it went down a little after agency MBS paper started going down in market value because of the crisis. however it has gone up because of the announcement of direct purchases of that paper even more recently. a wash....

the fed wants to get those rates down to 4.5% that is paid out to owners like NLY of agency paper, which is down almost a point from where NLY usually gets them... however the borrowing costs have also gone down by large amounts... probably a wash there,

there is also prepayment risk, where those AAA paper gets paid off, because it is AAA paper, ( a comment for the lees than smart people who think 92% or more of people don't pay their mortgage) but this means less earnings for NLY... pay off your mortgage, or refinance, no more payments to NLY... however this is off balanced by NLY having an extremely low leverage ratio of something like 7 historically, an absurdly low number compared to more idiots like Bear sterns, merrill, goldman sachs..etc......

NLY can simply and easily raise that to a leverage of 9 to offset that too... since NLY's creditors are even more comfortable with what NLY does.

all in all people who were stupid enough to sell short, or simply sell NLY at or below book value are going to get their head handed to them, which has happened. but any one thinking this is an easy market for NLY is also diluding themselves.

at or near book value may never happen again in this cycle, i think we've run out of stupid people (and stupid hedge funds) who were selling at or below book value.