Liquidation in mortgage REITs picks up where it left off on Friday, with nearly the entire sector lit up bright red. Leading today's decline is CYS Investments (CYS -4.6%) after being cut to hold at Wunderlich. No details are available, but presumably the analysts there read the papers: interest margins are declining and mortgage refinance activity (prepays) is on the rise. [View news story]
This sell off is utterly idiotic. So what if NIM and refi's on on the rise? Look at the yeilds vs any other fixed income or preferred alternative!! So what if yeilds are even cut in half? The credit quality is high and increasing...this isn't a bad sign.
"Rates go down you get killed, rates go up you get killed," says hedge fund manager Brad Golding, summing up the situation for mortgage REITs. The days of double-digit yields are over - at least at Annaly (NLY) - where new co-CEO Wellington Denahan-Norris calls it "fantasy" to think the company can just jack up leverage to replicate the returns of the past. [View news story]
Are NLY, ARR, AGNC, MTGE, TWO...and so on, "bad" deals at 50% of the current dividend when HYD, HYG, PFF and the like average ~ 6%? I don't think so...I also don't expect a 50% cut is mREIT dividends...I've been long mREITS for a long time. I bought more yday. I'm buying today... I reserve the right to change my mind.
Liquidation in mortgage REITs picks up where it left off on Friday, with nearly the entire sector lit up bright red. Leading today's decline is CYS Investments (CYS -4.6%) after being cut to hold at Wunderlich. No details are available, but presumably the analysts there read the papers: interest margins are declining and mortgage refinance activity (prepays) is on the rise. [View news story]
"Rates go down you get killed, rates go up you get killed," says hedge fund manager Brad Golding, summing up the situation for mortgage REITs. The days of double-digit yields are over - at least at Annaly (NLY) - where new co-CEO Wellington Denahan-Norris calls it "fantasy" to think the company can just jack up leverage to replicate the returns of the past. [View news story]