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  • Orchid Island Capital And The Misunderstood Hedges [View article]
    Orchid, Armour, and Bimini are plain and simple straight up Ponzi schemes, even more than Amway or that vitamin supplement company. Caveat emptor. Colorado you know this better than I do. I can only surmise that you have some kind of position on this. The only thing misunderstood about Orchid why you disregarded the fleas on this DOG.
    Jul 2, 2015. 10:24 PM | 2 Likes Like |Link to Comment
  • Western Asset Mortgage Capital Corporation And My Bearish Interest Rate Assessment [View article]
    1st let me say I am all in on WMC, even to the point of fully margined. I have said all along that these mREITs are impossible to read day to day. Even though I try and have gotten whipsawed in the process. WMC sells at a small premium to book value at a time when all of the other mREITs sell at a large discount to book value. Their assets to liabilities have increased parabolicly, while others have decreased of late. I know it is the popular thing to do, having all of these derivitives. I would prefer they concentrate on better assets. I suspect their balance sheet will bite them in the ass sooner or later. Right now WMC is about the only one with EPS greater than the dividend. Let's talk interest rates, the whole world is lowering their rates how can we possibly raise rates and be competitive? We seem to be in a controlled state of deflation recently. No one knows what the big picture or the end result of this will be.
    Jul 2, 2015. 10:07 PM | 5 Likes Like |Link to Comment
  • How Is ARMOUR Residential's Turnaround Going? [View article]
    I buy your books, I pay for your schooling, and all you think about is screwing the teacher. Trading at a discount to book value sounds like the best of all worlds. I can't remember the last time the dividend was less than EPS. That difference has to come from somewhere. They are giving you a return of capital and calling it a dividend, this is why BV has continued to fall so precipitously. You can continue to put your head in the sand and ignore the figures, it is your money to do with as you please, but track record is a good indicator of future performance. If you get into bed with a dog you will get fleas AKA the Bimini fiasco to those who thought like you. Nothing personal, I hope you get bailed out by QE or some other such scheme, but I don't see it. Good luck and do your Due Diligence.
    Jun 28, 2015. 08:19 AM | 5 Likes Like |Link to Comment
  • Grexit! [View article]
    Here is my understanding of the Grexit. Germany and Merkel have been at the forefront of these negotiations because the Duestche Bank is holding so much of Greece's debt. D Bank is hanging on by a thread and default by Greece would put them in Bankruptcy. No one knows where the dominoes would stop falling. It will be quick and very ugly. Greece and D Bank are already having huge runs on their liquidity. The best scenario would be both sides admit mistakes and take a haircut. To be worked out by middle management. Lots of pain for everyone. DBank would still need a bailout as would Greece. As I see it Greece has an unemployment problem instead of an austerity problem. Germany and America have relatively low unemployment and have been exporting their unemployment problems to the 3rd world causing regional wars. Twenty somethings with no job or prospects are very receptive to the ravings of religious zealots as seen in the middle east. If you want to find the roots of problems follow the money. It would be nice if we all could just get along but you cannot force folks to get along when they are being persecuted.
    Jun 22, 2015. 03:38 AM | 1 Like Like |Link to Comment
  • ARMOUR Residential REIT: A Broken mREIT [View article]
    The last time I checked on shorting ARR the transaction costs and premiums made it prohibitive. I sold out completely a few years ago in the low 7's and have yet to regret it. At the time all I could see was Ponzi scheme. Bernie only paid out 10%. One thing I know about Ponzi's is the early investors do alright if they do not get greedy and stay too long. So I started watching IPO's and found WMC which is still paying and covering a strong dividend. Only mistakes have been when fear and volatility caused me to sell and regret it. So I have been in and out of WMC the last few years. It has been the investors pet and the shorts regret during that time. Starting to look for a new vehicle as WMC is starting look like it is getting long in the tooth, and I fear problems with balance sheet of WMC will be forthcoming soon. They have started cutting the dividend recently and methinks Western Asset their parent company has started to read their own press clippings after being voted #1 fixed asset fund last year by Morningstar. If you are looking to recoup some ARR losses you could do a lot worse than WMC. I used to like foreign companies for their dividends but the rest of the world is having banking problems, which translate to runs on banks and diminished liquidity. The main reason the strength of the $ and increased inflows of money from overseas. Greece and Duetche Bank are the tipping points, much like Lehman Bros. in 2008.
    Jun 21, 2015. 06:02 AM | 1 Like Like |Link to Comment
  • ARMOUR Residential REIT: A Broken mREIT [View article]
    Reverse stock split, what a laugh. Activity for activities sake is not adding value to ARR. Monthly dividends do not add any value either. Raising dividends miniscule amounts sound like value being added, but really? When income doesn't cover dividends the shortfall can be considered return of capital. Calling return of capital a dividend means you are paying taxes twice. Once when you earn the money twice when it is returned as a dividend. These guys at ARR are to be commended for dreaming up new ways to confound the public shareholders and make it seem that they have are real fiduciaries of shareholders money. Nothing could be further from the truth. I have no explanation as to how these guys have stayed out of jail, only that they are Bankers in the loosest sense of the word. Apparently CRIME does pay very well when you have friends in high places. All I can do is try to shine a little light in dark places and repeat caveat emptor. Ending for the sake of brevity I will quote the greatest philosopher of the 20th century, Doris Day as she sang "que sera' sera'".
    Jun 20, 2015. 11:02 AM | 2 Likes Like |Link to Comment
  • American Capital Agency Corp. And The LIBOR Rate Curve [View article]
    The deal as near as I can figure with Greece and Germany and not the whole of Europe has to do with Deutshe Bank holding so much Greek debt. Deutshe Bank seems to be following Lehmans Bros. into bankruptcy. Personally if I was Merkle I would have Germany invading Greece on the table if they cannot commit to austerity. Since Greece is still grieving over WWII treatment at the hands of the Germans, they may prefer austerity to seizure. The Greeks have become accustomed to generous benefits from the government at the expense of their bondholders. Not good and as always will not last into infinity. Someone has to pay the piper. The time for kicking the can down the road is about to run out. Some are afraid of driving Greece into the arms of the Russians. They would be trading a bitch for a witch. Ask Cuba how it has worked for them. I could go on but rest and relaxation are calling me.


    Jun 13, 2015. 11:06 AM | Likes Like |Link to Comment
  • All Is Not Lost For ARMOUR Residential [View article]
    The original shareholders in Bimini are wishing they could get some of those apples and oranges as they came out with nothing, while Bimini reissued stock and is back in business. On the face of it sounds illegal, but the NY brokerages seeing huge fees agreed to the deal with the regulators in their pockets.
    Jun 2, 2015. 11:14 AM | Likes Like |Link to Comment
  • All Is Not Lost For ARMOUR Residential [View article]
    At best ARR is a Ponzi scheme. At worst it is a straight up SCAM and FRAUD. Presently ARR is in a hurry to get into bankruptcy court so they can disavow all stockholders and start over with a new IPO. That is what they did with Bimini and all signs point to ARR being the same. Caveat Emptor. If you do not believe it try calling their Investor Relations and see where that gets you. Those still holding ARR have my sincerest apologies, but if you think you are going to get bailed out in the future, the Real Estate market is rebounding but these guys book value is still decreasing. I live in Memphis and I have a nice bridge over the Mississippi River I would like to sell you while you are waiting on ARR to pay off. At best you are getting a return of your own money in the form of dividends so you are being taxed twice with ARR. I feel guilty for painting such a rosy picture of ARR because the real story is so much bleaker.
    May 31, 2015. 09:34 AM | 1 Like Like |Link to Comment
  • CYS Dividend Coverage Is Expected To Improve But Higher Hedges Remain A Concern [View article]
    Forgive my ignorance, but the idea of mREITs has to do with borrowing low and lending high. The yield curve is positive the further out the curve you go. Shortening the curve makes returns lower. To me this would seem to be against the whole notion of mREITs. I suppose we can all draw our own conclusions. I hope these guys are much smarter than me and have info I am not privy to. I sure hope their thoughts are towards a positive outcome, unlike the folks at ARR who are in a race to bankruptcy court in order to start over with new stock and disavow the present shareholders. You mention hedges, I suppose good hedges make for great neighbors, but in this case not so much. Hedging interest rates seems like a good idea on the surface but we agree interest rates are headed south. This should translate to a stronger economy and stronger currency. If you put money in the bank today to be removed at a later date, and get back less than you put in, that seems to fly in the face of the notion of" the time value of money." I suppose if you have to pay taxes and need the negative rates for tax write offs, and can justify giving weaker currency to get returned stronger money then negative interest rates can be justified.
    Feb 15, 2015. 12:36 PM | 1 Like Like |Link to Comment
  • REIT Volatility Is A Big Fat Warning Sign [View article]
    Brad: Risk can be your friend or unchecked it can be your enemy. Volatility is the handmaiden of risk. Not likely to have one without the other. The whole market has become riskier and more volatile. REITs having more leverage than the rest of the market are deemed riskier. I say not so much. Their rewards are much higher also in the form of dividends. I know you like to refer to May and June of 2013 as a watershed for overselling. I was in AGNC at the time. I sold out at $33 and bought back in at $23. Timing is not my thing, but I missed the biggest part of the crash. What did I see? Well about 6 or 8 months prior to that a lot FUNDS started buying up mREITs. Well I know they are not in it for the long haul usually, and they need to collect a few dividends and get out before they have to report their holdings to shareholders. Shareholders don't want to think someone is gambling with their money. The selloff was bound to happen, not to the severity that REITs fell off at that time. In June I decided that REITs looked a lot like Ponzi schemes. What I know about Ponzis is those early in do alright, those late to the game not so much. I started looking at issue dates and dividend rates. I came up with WMC nearly 20% dividend. I loaded up and haven't regretted it yet. In fact I took out a margin account to buy $200,000 more of it. Color me stupid but time will tell. Also Blackrock owns over $3,000,000 of WMC. Pretty high praise in my estimation. I like to think the guys running the WMC show know what they are doing, but I thought likewise of AGNC until it was clear they were as inept as the rest of these clowns. They love to tell about their complex hedges and how they are the smartest guys in the room. What I know about hedges is that transaction costs can eat up any profits quicker than a cat can lick his ass. As you can tell I haven't mentioned interest rates yet. Take this away if nothing else blows your skirt up, we are in deflationary times and everyone is lowering interest rates to the point of negative, even safe and sound folks like the Swiss. I may have this backwards but, in a negative interest rate environment I want my money in something that is guaranteed by the strongest government in the world. Interest and principal are guaranteed by a government that is stronger militarily than the next 10 governments combined, since these currency wars throughout history have led to WAR. If you are still reading this you may want to do a little research into a phenomenon I have noticed recently. A lot of stocks pay their dividends at the end of the year. Right after the ex-date the price drops more than the dividend. Since dividends are taxed differently than gains it would behoove a person to sell before the ex-date and buy back in after the dip. What say you?
    Feb 13, 2015. 05:22 AM | Likes Like |Link to Comment
  • REIT Volatility Is A Big Fat Warning Sign [View article]
    I am having a little bit of cognitive dissonance every country in the world is in a race to lower interest rates even to negative rates. All I read on SA is that rates are headed up and the gloom and doom for all REITs. I am no expert but I have my eyes open and my ears to the ground and a strong case can be made for rates falling further. In the light of QE I can understand why folks feel that way, more money chasing fewer goods causes classic inflation. As near as I can tell that money did not make it into the general population, the financial institutions kept it within the financial community. Barring another Tulipmania, South Seas land deal, or a housing bubble bursting we should be ok holding on to mREITs. The default risk is zero as principal and interest are guaranteed by the government. I don't think there are very many investments like that.
    Feb 11, 2015. 09:50 AM | 1 Like Like |Link to Comment
  • Western Asset Mortgage: Are You Ready For The 20% Dividend Yield? [View article]
    Color me stupid, but I fail to see the need for these complicated hedges. As I see it they are buying mortgages that are backed up by the Federal Government. If the folks buying a house miss a payment the government guarantees principal and interest. Where is the risk? When I try to write covered calls the commissions are way higher than buying or selling the stock. Of course if you are depending on LIBOR what could possibly go wrong? As I understand it these folks borrow short term and loan longer term netting 1% or 2%. Then they leverage that 8 or 9 times to pay that 20% dividend. Who is loaning that 8 or 9 times and at what rate?
    Feb 5, 2015. 07:55 AM | Likes Like |Link to Comment
  • Should You Be Worried About Western Asset Mortgage? [View article]
    First of all Western Asset the parent company of WMC, just received the top award for their funds from Morningstar. That is a pretty big deal so they are in pretty good hands. At least that was my understanding. WMC is able to pay more dividend because they hold their hedges to a minimum. WMC has enough earnings to more than cover the dividend. Blackrock owns over 3million shares, you cannot get a much better recommendation than that. There is a rumor going around that all other things being equal people would rather live in their own homes, and that is WMC's business as I understand it. Lately Cramer and a lot of other "gloom and doomers" are certain the sky is falling. I am a glass half full kind of guy and I think WMC will be somewhere north of $15 by the next ex-date.
    Jan 31, 2015. 01:02 AM | 7 Likes Like |Link to Comment
  • ARMOUR Needs To Quit Defensive Approach [View article]
    Dear Sir
    What you are saying is correct to a point. You assume that ARR management has the shareholder's best interest at heart, this clearly is not the case. From the time I started watching ARR they have paid out more in dividends than they were earning. When you call the company no one knows anything and no one who does know is available. As near as I can figure they are trying to get to bankruptcy court as soon as possible, and start over with new stock, and the older stockholders are left holding the bag. With all due respect, this is what they did with Bimini. Check it out. They are much more dependent on new blood coming into the game than taking care of present stockholders. I know this makes it sound like a Ponzi scheme and should be illegal but the investment bankers charge huge fees on the new stock, investment bankers are above the law and play by different rules than the rest of us. You speak of over doing the hedging. Not if you have a brother in law or friend selling those hedges. Hedging
    is something akin to picking up pennies in front of a steam roller while blindfolded.

    Jan 30, 2015. 12:52 PM | 3 Likes Like |Link to Comment