PennyMac Financial Services (PFSI +8%) flies after Lee Cooperman's Omega Advisors discloses a 21.6% stake in the just-IPOed mortgager company founded by former Countrywide exec (and PMT CEO) Stan Kurland. [View news story]
What does this do to PMT? I worry it now becomes a mere milk cow for PFSI. Will Mr. Kurland leave enough income for PMT to continue its 9+% dividend? I also wonder if we are seeing a rotation out of PMT into PFSI. From recent SEC filings it appears virtually all PMT executives are buying into its management shares since that seems to be where the PMT revenues will flow.
I've always found it curious that folks who preach the four-percent "rule" exclusively never quite account for a stock's dividend income in addition to any possible capital gain. Just the same, I've always found it curious that those who preach dividend income exclusively fail to point out the technical truth that a company that pays you your dividend does so with your own money...namely that the funds to cover dividend checks come straight from retained earnings, or such. And, that the stock price drops exactly by the amount of the dividend. The trick to a good dividend stock is getting the company whose stock more than recovers from its "ex-dividend" price so you really do get "free money." Also, pleae point out that the goal of dollar cost averaging is to achieve average..if 'average' is your thing. I prefer to consider starting a new position in a new stock as an alternate..aiming for better-than-average.' Further, I've never been a fan of diversification. Again, it aims to ensure mediocre performance....in other words, you sell what's working and load up on laggards? That's safe, I guess. As a general philosophy, I agree it's good not to trust your own judgement, or believe your own bull. Speaking for myself. Remember, there are tw other "tricks" to a well appreciated dividend portolio: writing calls against highly-appreciated stock for the little extra income selling contracts can bring in, and possibly borrowing on margin to get some speculative money flowing in an otherwise staid old cash machine. That could be paying seven-percent mney for a 10-percent yield, or buy this year's hot stock (aapl for instance) on margin. That's gambling. A final thought in proper budgeting would be to spend this year what you earned last year. In other words, have a sweep account for all dividends and capital gains from last year's adventures so you know what you can spend this year. Stash away this year's winnings in the same sweep account fr next year. Just noodling...
Fed Forecast Puts Annaly And mREITs In A Sweet Spot [View article]
Thank you for your take on things. It seems, indeed, the prevailing view. Now, calling all observers who can seeing over the horizon. What happens when the Fed nudges interest rates higher? mREITS cratered when spreads tightened. My question is will the reverse eventually happen. The change will mean scramble as rMBS values drop. Interest rates rise. A re-balancing occurs. A new normal carries us forward. Personally, I am buy and hold for income. Ups and downs are the nature of things here. That's fine with me as long as it's not out.
Thanks, Mr. Bar. You are always a 'must click' when I read up on this space.
I am intereted in peoples' views about the 'inevitable' period when the Fed eases, or reverses, it's support of mortgage interest rates. When the Fed reverses engines, book value presumably drops as the Fed unwinds its positions..trickle or flood. Long yield presumably rises,short rates may stay the same. The long/short spread increases. Hence, bigger dividend pay-outs. I get paid on the spread, not BV...much as I like bigger numbers and total return. Besides, if there is the dreaded panic sell-off there will be a gradual adjustment upward in payouts and a return to buying....a new normal. I recall the recent sell-off and dividend cuts are because the spread shrank. In short, reverse the causes and reverse the effect. I invite someone smarter than me to disagree. Again, Mr. Bar, thanks for the great read. You've earned your penny!
A "strategic shift" is afoot at the mortgage REITs, says Wunderlich's Merrill Ross, as the gorilla in agency MBS (the Fed) has some looking at assets like commercial mortgages and private label securitizations. Exhibit A is Annaly's (NLY) purchase of CreXus (CXS). "It's like the Yankees saying they are going to diversity out of baseball," says Jefferies' wary Daniel Furtado. [View news story]
Hardly. If you're implying it is leaping industries. Annaly's wholly-owned subsidiary, FIDAC, already manages Crexus, in addition to NLY's 12-percent equity position in the firm. No stranger to these parts. Check out NLY's website (annaly.com) to see the other firms in the Annaly "family" of mortgage-related, interest rate-sensitive activities.
Annaly Positioned Well In The Face Of Strong Headwinds [View article]
'Buy on bad news, sell on good.' 'With dividends, the investor gets paid to wait.'
The above investor cliches apply to the cycle of mREITs. Buy on dips, take the dividends. Decide in the next up-cycle whether to sell. NLY, AGNC are clearly in what one might call their own double-dip crisis. Interest rates will rise, mortgage value will increase, pre-pays and defaults will subside..for these and other reasons mREITs business tactics will be less a scramble to survive and be more of a climb. I held thru the rise, hold thru this drop and am paid quite well to be patient about the next up-tick. Also, I have added PMT and RWT to my mortgage mREITS to broaden my exposure to a real estate re-bound. Other than these points, 'who knows'...another market maxim.
Mortgage REITs continue to get repriced for lower yields going forward with earnings reports from JPMorgan and Wells Fargo not bringing good news. Both banks reported sliding net interest margins and booming mortgage business (some, if not most of which is refinancing) - an ugly combination for leveraged owners of MBS. [View news story]
Buy low, sell high, get paid to wait. It's time to wade back in. Wake me when it's 2014.
Miss Countrywide? It's back, writes Steve Gandel, in the form of PennyMac (PMT), formed 3 years ago by Countrywide alums. Last month, PennyMac opened its first retail branch. Heading the office is Stephen Brandt, who reportedly ran Countrywide's "Friends of Angelo" program. "There's free money on the table and you don't have to work that hard to get it," says a Stifel analyst covering PMT. [View news story]
Over the past few months I've been reducing my mREIT holdings and rotating into PMT and RWT. I like the dividend streams and opportunistic positioning for "recovery, or new normal, however you see things. I have also been watching OZM and FIG. I believe all of these companies are opportunistic in an area of real estate "recovery" (the new reality). IN more mainstream recovery, WFC and USB would round out my finance arm of real estate. I believe all of these areas have yet to be fully overvalued by retail investors. I am intrigued by PMT, but wary. The management knows where the bodies are buried. I have no trouble with PMT doing re-finances, re-packaging and SRO servicing. They're nimble and aggressive where traditional banks are slow and lumbering. No surprise there. I have no trouble with them even doing some sub-prime lending. I believe I believe the pendulum has swung too far in the spectrum of risk and safety. Though, PNMAC may be where too much money is going from a public investor perspective. These guys (PMT management, Blackrock and Highfields) are well capable of sleight of hand in pocketing fees. probably all legal, though maybe not entirely above-board. I wish I had more visibility on this. These guys may be among those who need careful watching. RWT, by contrast, seems straight on delving into loans, servicing and RMBS activity The big boys have pulled back and out...as a percent of market share...leaving a field for the taking I find the stock a bit over-priced for a bargain, though. In my world, a six-percent dividend is bottom-rung.
QE3 Is Music To Mortgage REIT Investors' Ears [View article]
Infomercial? Seems more appropriate for Parsimony Research to buy advertising space on SA than promote its productsand services in comments. Don't know if the glowing testimonials in comments are 'plants' or sincere product endorsements. I would hope this space is for journalism and commentary.
NYSE Gives Chimera Investments Extra Time To Avoid Delisting [View article]
I've been a "loyal" holder of both NLY and CIM since 2010. Have loved the dividends when the field for capital gains has been rather sparse. And, I thought CIM's business model to focus on private jumbo mortgages, and rates, would give it a better recovery trajectory than GSE-backed paper. But, that hasn't happened. And, with all of this uncertainty around CIM I now operate on the old adage of not getting married to a stock and trying to figure it all out. I don't know enough to stay this course. I'm not a sophisticated investor. So, I finally dumped my CIM Friday (at cost, fortunately), and rotated into AGNC. Now, I'm AGNC and NLY. No more drama....beyond the usual mREIT story.
PennyMac (PMT +1.3%) continues to tack on gains after securing a $100M repo line from Barclays. Founded in 2008 by ex-Countrywide officers, the company is an aggressive buyer of mortgages, including jumbo loans - though it has not yet securitized and sold any of these. [View news story]
PS My apologies for my typo-riddled entry of earlier today. My cleaned up version was too late to replace it. Suffice it to say, I believe both PMT and RWT are waves forming to a crest, that the standard mREITS such as NLY are waves receding.
5 Catalysts To Own PennyMac Mortgage [View article]
Thanks, again, for another thoughtful article. Though, I wonder why you put PMT in the standrad mREIT category. To me, it is more, and different. Far from pure play mREIT securities, PMT has fingers in many more aspects of the business. While others run from the fire, PMT trots right in. Among its initiastives, PMT buys and re-structures troubled residential mortgages, including HAMP. It earns money from mortgage serving, holds and can originate plain-vanilla mortgages, and has a plan for securitizing mortgage packages. Remember them? I have been gradually rotating out of the one-trick mREITS into firms such as PMT for the wider, multi-pronged play on a recovering real estate market. Another firm I am easing into is Redwood Trust (RWT). It also has a re-structure branch, plus an active MBS securitizartion program. Both firms, incidentally, believe there is a longer term play in the mortgage originating business since it is believed many existing big firms will move away from mortgage markets as Fannie and Freddie are phased out. While this is my new growth area for my real estate exposure I still hold some NLY and CIM (gulp) for the dividends through these thin, rather treacherous, times.
Chimera Investments (CIM -2.9%) is downgraded to Underperform at BAML and to Neutral at Credit Suisse in the wake of its dividend cut earlier this week. Chimera is more exposed to credit risk than some of its mREIT brethren as its portfolio has a higher proportion of non-agency-backed MBS. [View news story]
Not adding yet. I need to see the re-statements, read the documents and hear management discussion. I always laugh at folks who sleep better knowing somehow a government guarantee of Fannie or Freddie means anything...like, choosing a sailing ship because of its lifeboats. Have you checked out those lifeboats recently? CIM has a good niche..selective jumbo mortgage in select regions.The broad picture of American real estate is dozens of little pictures, so don't look at the big picture! CIM isn't. But, all this is just sass until we see the 2011 re-statements. Actually, I am taking a look at Pennymac (PMT) now that I am risked out on mREITS. PMT is some former Countrywide guys who make money the old fashioned way..originating loans, servicing loans, doing loan modifications a la HARP and their own methods, then buying lots of discount toxic stuff from the likes of Citi and...drum roll, please..re-packaging into mortgage -backed securities for sale to those who still dare. That is, if they cannot save the mortgages themselves. SO, even with CIM's cuts and troubles things are actually looking up at real estqte ground level..albeit only to a new plateau of historical underperformance and mediocrity, not yet the roaring 00's.
Why Austerity Isn't Working For Greece [View article]
No one is saying austerity is the final strategy to recovery. Quite obviously, as pointed out here, 'austerity' alone far from it. It is only the first step. But, Greece needs to starve the beast that consumes way more than a Greek it produces. 1. Bust public employee unions, or sharply and substantively dimniish their power. Lay off thousands more. Slash outlandish wages and retirement benefits. 2. perform real tax collections, corporate and individual. Seize and sell properties in lieu of taxes collected. Use the military, if necessary. 3. privatize moribund state industries once a legal foundation for safe private enterprise has been created. 4. Sell off state lands for cash. Liquidation sale.
Austerity is the hard part of 'creative destruction.' But really, Greece needs toactually do what is says...walk the talk. Otherwise it's just more talk. Otherwise, by true capitalist assessment, it is a lousy investment. We've had enough of that.
PennyMac Financial Services (PFSI +8%) flies after Lee Cooperman's Omega Advisors discloses a 21.6% stake in the just-IPOed mortgager company founded by former Countrywide exec (and PMT CEO) Stan Kurland. [View news story]
I also wonder if we are seeing a rotation out of PMT into PFSI. From recent SEC filings it appears virtually all PMT executives are buying into its management shares since that seems to be where the PMT revenues will flow.
Living Off Dividends in Retirement [View article]
Just the same, I've always found it curious that those who preach dividend income exclusively fail to point out the technical truth that a company that pays you your dividend does so with your own money...namely that the funds to cover dividend checks come straight from retained earnings, or such. And, that the stock price drops exactly by the amount of the dividend.
The trick to a good dividend stock is getting the company whose stock more than recovers from its "ex-dividend" price so you really do get "free money."
Also, pleae point out that the goal of dollar cost averaging is to achieve average..if 'average' is your thing. I prefer to consider starting a new position in a new stock as an alternate..aiming for better-than-average.'
Further, I've never been a fan of diversification. Again, it aims to ensure mediocre performance....in other words, you sell what's working and load up on laggards? That's safe, I guess.
As a general philosophy, I agree it's good not to trust your own judgement, or believe your own bull. Speaking for myself.
Remember, there are tw other "tricks" to a well appreciated dividend portolio: writing calls against highly-appreciated stock for the little extra income selling contracts can bring in, and possibly borrowing on margin to get some speculative money flowing in an otherwise staid old cash machine. That could be paying seven-percent mney for a 10-percent yield, or buy this year's hot stock (aapl for instance) on margin. That's gambling.
A final thought in proper budgeting would be to spend this year what you earned last year. In other words, have a sweep account for all dividends and capital gains from last year's adventures so you know what you can spend this year. Stash away this year's winnings in the same sweep account fr next year.
Just noodling...
Fed Forecast Puts Annaly And mREITs In A Sweet Spot [View article]
Now, calling all observers who can seeing over the horizon. What happens when the Fed nudges interest rates higher?
mREITS cratered when spreads tightened. My question is will the reverse eventually happen.
The change will mean scramble as rMBS values drop. Interest rates rise. A re-balancing occurs. A new normal carries us forward. Personally, I am buy and hold for income. Ups and downs are the nature of things here. That's fine with me as long as it's not out.
Annaly's Continuing Metamorphosis [View article]
I am intereted in peoples' views about the 'inevitable' period when the Fed eases, or reverses, it's support of mortgage interest rates.
When the Fed reverses engines, book value presumably drops as the Fed unwinds its positions..trickle or flood.
Long yield presumably rises,short rates may stay the same. The long/short spread increases. Hence, bigger dividend pay-outs. I get paid on the spread, not BV...much as I like bigger numbers and total return.
Besides, if there is the dreaded panic sell-off there will be a gradual adjustment upward in payouts and a return to buying....a new normal.
I recall the recent sell-off and dividend cuts are because the spread shrank. In short, reverse the causes and reverse the effect.
I invite someone smarter than me to disagree.
Again, Mr. Bar, thanks for the great read. You've earned your penny!
A "strategic shift" is afoot at the mortgage REITs, says Wunderlich's Merrill Ross, as the gorilla in agency MBS (the Fed) has some looking at assets like commercial mortgages and private label securitizations. Exhibit A is Annaly's (NLY) purchase of CreXus (CXS). "It's like the Yankees saying they are going to diversity out of baseball," says Jefferies' wary Daniel Furtado. [View news story]
Annaly's wholly-owned subsidiary, FIDAC, already manages Crexus, in addition to NLY's 12-percent equity position in the firm. No stranger to these parts.
Check out NLY's website (annaly.com) to see the other firms in the Annaly "family" of mortgage-related, interest rate-sensitive activities.
Annaly Positioned Well In The Face Of Strong Headwinds [View article]
'With dividends, the investor gets paid to wait.'
The above investor cliches apply to the cycle of mREITs. Buy on dips, take the dividends. Decide in the next up-cycle whether to sell.
NLY, AGNC are clearly in what one might call their own double-dip crisis.
Interest rates will rise, mortgage value will increase, pre-pays and defaults will subside..for these and other reasons mREITs business tactics will be less a scramble to survive and be more of a climb.
I held thru the rise, hold thru this drop and am paid quite well to be patient about the next up-tick.
Also, I have added PMT and RWT to my mortgage mREITS to broaden my exposure to a real estate re-bound.
Other than these points, 'who knows'...another market maxim.
Mortgage REITs continue to get repriced for lower yields going forward with earnings reports from JPMorgan and Wells Fargo not bringing good news. Both banks reported sliding net interest margins and booming mortgage business (some, if not most of which is refinancing) - an ugly combination for leveraged owners of MBS. [View news story]
Miss Countrywide? It's back, writes Steve Gandel, in the form of PennyMac (PMT), formed 3 years ago by Countrywide alums. Last month, PennyMac opened its first retail branch. Heading the office is Stephen Brandt, who reportedly ran Countrywide's "Friends of Angelo" program. "There's free money on the table and you don't have to work that hard to get it," says a Stifel analyst covering PMT. [View news story]
I have also been watching OZM and FIG. I believe all of these companies are opportunistic in an area of real estate "recovery" (the new reality).
IN more mainstream recovery, WFC and USB would round out my finance arm of real estate.
I believe all of these areas have yet to be fully overvalued by retail investors.
I am intrigued by PMT, but wary. The management knows where the bodies are buried. I have no trouble with PMT doing re-finances, re-packaging and SRO servicing. They're nimble and aggressive where traditional banks are slow and lumbering. No surprise there.
I have no trouble with them even doing some sub-prime lending. I believe I believe the pendulum has swung too far in the spectrum of risk and safety.
Though, PNMAC may be where too much money is going from a public investor perspective. These guys (PMT management, Blackrock and Highfields) are well capable of sleight of hand in pocketing fees. probably all legal, though maybe not entirely above-board.
I wish I had more visibility on this. These guys may be among those who need careful watching.
RWT, by contrast, seems straight on delving into loans, servicing and RMBS activity The big boys have pulled back and out...as a percent of market share...leaving a field for the taking
I find the stock a bit over-priced for a bargain, though. In my world, a six-percent dividend is bottom-rung.
QE3 Is Music To Mortgage REIT Investors' Ears [View article]
I would hope this space is for journalism and commentary.
NYSE Gives Chimera Investments Extra Time To Avoid Delisting [View article]
And, I thought CIM's business model to focus on private jumbo mortgages, and rates, would give it a better recovery trajectory than GSE-backed paper. But, that hasn't happened. And, with all of this uncertainty around CIM I now operate on the old adage of not getting married to a stock and trying to figure it all out.
I don't know enough to stay this course. I'm not a sophisticated investor. So, I finally dumped my CIM Friday (at cost, fortunately), and rotated into AGNC. Now, I'm AGNC and NLY. No more drama....beyond the usual mREIT story.
PennyMac (PMT +1.3%) continues to tack on gains after securing a $100M repo line from Barclays. Founded in 2008 by ex-Countrywide officers, the company is an aggressive buyer of mortgages, including jumbo loans - though it has not yet securitized and sold any of these. [View news story]
Suffice it to say, I believe both PMT and RWT are waves forming to a crest, that the standard mREITS such as NLY are waves receding.
5 Catalysts To Own PennyMac Mortgage [View article]
Far from pure play mREIT securities, PMT has fingers in many more aspects of the business. While others run from the fire, PMT trots right in.
Among its initiastives, PMT buys and re-structures troubled residential mortgages, including HAMP. It earns money from mortgage serving, holds and can originate plain-vanilla mortgages, and has a plan for securitizing mortgage packages. Remember them?
I have been gradually rotating out of the one-trick mREITS into firms such as PMT for the wider, multi-pronged play on a recovering real estate market.
Another firm I am easing into is Redwood Trust (RWT). It also has a re-structure branch, plus an active MBS securitizartion program.
Both firms, incidentally, believe there is a longer term play in the mortgage originating business since it is believed many existing big firms will move away from mortgage markets as Fannie and Freddie are phased out.
While this is my new growth area for my real estate exposure I still hold some NLY and CIM (gulp) for the dividends through these thin, rather treacherous, times.
Chimera Investments (CIM -2.9%) is downgraded to Underperform at BAML and to Neutral at Credit Suisse in the wake of its dividend cut earlier this week. Chimera is more exposed to credit risk than some of its mREIT brethren as its portfolio has a higher proportion of non-agency-backed MBS. [View news story]
I always laugh at folks who sleep better knowing somehow a government guarantee of Fannie or Freddie means anything...like, choosing a sailing ship because of its lifeboats. Have you checked out those lifeboats recently?
CIM has a good niche..selective jumbo mortgage in select regions.The broad picture of American real estate is dozens of little pictures, so don't look at the big picture! CIM isn't.
But, all this is just sass until we see the 2011 re-statements.
Actually, I am taking a look at Pennymac (PMT) now that I am risked out on mREITS.
PMT is some former Countrywide guys who make money the old fashioned way..originating loans, servicing loans, doing loan modifications a la HARP and their own methods, then buying lots of discount toxic stuff from the likes of Citi and...drum roll, please..re-packaging into mortgage -backed securities for sale to those who still dare. That is, if they cannot save the mortgages themselves.
SO, even with CIM's cuts and troubles things are actually looking up at real estqte ground level..albeit only to a new plateau of historical underperformance and mediocrity, not yet the roaring 00's.
Why Austerity Isn't Working For Greece [View article]
Why Austerity Isn't Working For Greece [View article]
It is only the first step. But, Greece needs to starve the beast that consumes way more than a Greek it produces.
1. Bust public employee unions, or sharply and substantively dimniish their power. Lay off thousands more. Slash outlandish wages and retirement benefits.
2. perform real tax collections, corporate and individual. Seize and sell properties in lieu of taxes collected. Use the military, if necessary.
3. privatize moribund state industries once a legal foundation for safe private enterprise has been created.
4. Sell off state lands for cash. Liquidation sale.
Austerity is the hard part of 'creative destruction.' But really, Greece needs toactually do what is says...walk the talk. Otherwise it's just more talk.
Otherwise, by true capitalist assessment, it is a lousy investment. We've had enough of that.