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Accept Your Fat Mortgage REIT Gains


  • We’ve been telling investors for the last 2 months that price-to-book ratios were too good (too low) to last.
  • We’ve included tables to reflect the discounts to trailing book value. Thanks to reader feedback, those tables are organized better than before.
  • We’re including a few recent ratings, along with the index cards for those REITs. The estimated book value within the index cards uses current (as of this week) estimates.
  • We’re going neutral several mortgage REITs and two ETFs. We’re going bearish on WMC because it is WMC and trades too close to The REIT Forum’s estimate of book value.
  • Looking for a helping hand in the market? Members of The REIT Forum get exclusive ideas and guidance to navigate any climate. Get started today »

This research report was produced by The REIT Forum with assistance from Big Dog Investments.

Your feedback has improved this series week after week. Thank you, readers, for all you do.

Due to the dramatically higher than usual volatility in the sector, we’re planning to post this series a little more frequently than normal. That allows us to provide more ratings and ensure readers of our public work still have recent numbers.

The topics we discuss are going to be extremely relevant to the residential mortgage REITs. The table below uses BV as of Q1 2020 (if the company has reported earnings):


Company Name


Price to Trailing BV

BV Q1 2020



Orchid Island Capital






Capstead Mortgage Corporation






American Capital Agency Corp.






Annaly Capital Management






Dynex Capital






ARMOUR Residential REIT






Two Harbors Investment Corp.






Cherry Hill Mortgage Investment






Arlington Asset Investment Corporation






Western Asset Mortgage Capital Corp.






Chimera Investment Corporation






Ellington Financial






Anworth Mortgage Asset Corporation






Invesco Mortgage Capital




MFA Financial




AG Mortgage Investment Trust, Inc.




PennyMac Mortgage Investment Trust






New Residential Investment Corp.






New York Mortgage Trust






iShares Mortgage Real Estate Capped ETF



VanEck Vectors Mortgage REIT Income ETF


Note: Some mortgage REITs such as AGNC and ORC have reported

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This article was written by

Colorado Wealth Management is a REIT specialist who began his decades-long investment career in a family-owned realtor office before launching his own company and embracing his drive for deep-dive REIT analysis. He holds an MBA and has passed all 3 CFA exams. He focuses on Equity REITs, Mortgage REITs, and preferred shares.

He leads the investing group The REIT Forum. Features of the group include: Exclusive REIT focus analysis, proprietary charts and data models, real-time trade alerts posted multiple times a month, multiple subscriber-only portfolios, and access to the service's team of analysts and support staff for dialogue and questions on the REIT space. Learn more.

Analyst’s Disclosure: I am/we are long NLY-F, NLY-I, AGNCO, MFO, NYMTM, TWO-B, MFA-C, ANH, NLY, AGNC, NRZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (57)

11 Jun. 2020
@Colorado Wealth Management Fund
NYMTM and NYMTN - suspended dividends. That's no fun.
Colorado Wealth Management Fund profile picture
Suspended quite a while back. Earnings call sounded positive. Wouldn't be surprised if they bring them back this quarter. It isn't guaranteed, but it is still quite possible.
Thanks for the thoughtful article! What do you think of DX? This is the 2nd time they have lowered the dividend in the past year? Time to bail?
Colorado Wealth Management Fund profile picture
Valuation looks pretty good, momentum is scary at the moment.
You timed that CIM sell pretty well. New warrant and Debt issued.
Colorado Wealth Management Fund profile picture
Thanks. I rather liked it. Decided I needed to send the information public quickly. Had a full trade alert for subscribers in real-time.
I sold off 1/3 of my MREIT holdings on the run up and probably getting back in today. Sold calls on NLY insteading of selling outright, I still think 10% to 20% Discount to book should be good price for most Agency MREITs. You can add your CIM back on the Fed Discount today.
DKB2 profile picture
And that alert was timely indeed! Thanks again and Happy Trails...
Hi. I really like your articles. I am invested in two mREITs that have a good discount to book value, approximatly 50% if taking company statements from Q1 reports. These companys are Granite Point Mortage Trust and Exantas Capital. I wonder why you don't mention these companys in your articles?
Colorado Wealth Management Fund profile picture
This series does residential mortgage REITs, those two are commercial mortgage REITs. I haven't streamlined a process for doing a similar series on commercial mortgage REITs. I've just been running this one and making observations on what works and what doesn't work for the presentation.
madbeachman profile picture
Wild trading in MITT today, after hitting a high of $7.89 yesterday morning, it fell 43% to a low of $4.50 this morning. Now it is up 35% from the low to be up for the day at $6.07.
It's like someone knew something... but then they were wrong.

Note: I have no position in the common but a medium sized position in the preferred-A.
Thank you for the helpful article CWMF...I noticed on your chart that AI is trading at the biggest discount to BV amongst the agency-backed mREITs. What’s your position on AI?
Colorado Wealth Management Fund profile picture
High risk than most investors think. Can be a useful tool for trading though.
BartAtTheRanch profile picture
Thanks for the article. Do you guys ever cover STWD (Starwood)? Bart
Colorado Wealth Management Fund profile picture
We do not cover STWD. Nothing against the company, just not in our coverage group.
With AI trading at one of the largest discounts to book value is there a reason there's not more said about them? Using the BV metric it would seem like one to buy. Thoughts? Thanks in advance.
I have the same questions about AI...I just noticed that they just declared no 2Q dividend for common shares. That’s surely holding it back from trading at a valuation closer to its peers. But I’m unsure if there are other factors as well.
They sold lots of the assets and kept lots of dry powder. Hard to earn money with low amount of assets. G&A Expense probably more than net interest income for Q2. Also Management has not done well in the past.
Thanks for the update. Very useful, as usual. 
Are you sure about the 0.30$ dividend for CIM? The dividends for the preferreds have been declared by the company, but I didn’t see an announcement regarding the common stock yet.
Colorado Wealth Management Fund profile picture
I guess the company answered this one for my with the declaration last night. We were pretty confident that would be the number so we had it plugged into the sheets already. Great question. I forgot to mention in the text that the dividend rate for CIM was our projected rate (now official).
MFA is still in forbearance, It's third forbearance. They're on the hook for a $100 million if they can't satisfy the forbearance they agreed to with their counter-party's. Very much high risk still.
Colorado Wealth Management Fund profile picture
Still high risk. The improved availability of the credit markets over the last two weeks should be a huge boost though.
Getting the forbearance was a boon. I'm way up on my common shares and the only question now for me is do I take the profits or hold out for more. Q1 earning coming 6/16. This is the first Index Card I have seen from CWMF on MFA common and it gives me some numbers to consider... so many thanks!
@Colorado Wealth Management Fund Thanks for keeping the non-professional small money traders informed. Really appreciate the information you provide. ORC +71%, AGNC +26%, CIM +49% with limit stops set on all to preserve some gains.
Colorado Wealth Management Fund profile picture
Congrats. Excellent returns on those positions. You managed to buy when fear was high, giving you great entry prices.
The only reason MREITs did not follow MORL on the road to zero is fast intervention by the Federal Reserve. If Powell acted just 2 weeks later, every non-agency MREIT would be insolvent. These are extremely leveraged instruments. Know what you own.
Not quite old boy. MORL went to ZERO because of the acceleration clause that the hired hands of UBS worked into the prospectus.
As a bag holder of WMC, I appreciated your comment.
I've actually had thoughts about how wonderful it must be to have Jennifer Murphy's job and sit around watching money go up in flames, knowing you get a fat check either way.
Colorado Wealth Management Fund profile picture
It does sound quite nice. Can't argue with that.
Charles Catalano profile picture
Thanking readers for their input is awesome. Sub for life here. I'm sitting on almost 500 shares of IVR at a cost basis of $3.63. I think even if the Q1 2020 earnings results which come out on June 22nd (confirmed) are really bad, I'm staying where I am. If we're paid that 90% share dividend on June 30th with the per share price of $7.00-$8.00, that's fine too. KBW can say anything they want, I'm not changing my position.
Colorado Wealth Management Fund profile picture
KBW's analysis appears to match up with ours reasonably well. I would run away from IVR.
madbeachman profile picture
I was able to sell IVR short yesterday at $6.50 and only a 5% borrow cost. I plan to close it after they report and IVR trades down below NAV.
If management was correct on the last NAV estimate even big upside since then should have NAV below $3.80 when they report. Something can always go wrong but I'm comfortable with this one.
I sold credit spreads with a 6 to 7 range for about 0.40 with July expiration. Seems very low risk also but now I am having second thoughts in the low probability the stock pops and someone exercises the call and I can't exit quickly enough. I should have shorted, didn't expected such a low borrowing cost.
GearDownBigShifter profile picture
I made quite a bit on morl for a while with its 26-30% dividend during peak months. However I certainly agree that it’s wasn’t for faint of heart- and always read the fine print! (Recall). Keep learning every day, thanks for the great articles and informative comments.
Ha ha hah...! Even though I recently bought WMC, have seen some appreciation and was hoping for more, I loved your snide, "...because it is WMC" slam. I also own IVR and MAC from their recent lows, so please don't deep-six them, too, okay? Joking of course, read your posts with full consideration from beginning to end.
Colorado Wealth Management Fund profile picture
Thank you. I wouldn't want to be long IVR here. Valuation looks very stretched.
galicianova profile picture
Colorado, what is thy current stand on NRZ?
Colorado Wealth Management Fund profile picture
A little bullish, but far less than a week or two ago. We lowered our allocation from 6.4% (rounded) to about 1.25%. Gains between 71% and 153%.
galicianova profile picture
yes, i got at 4$ and left at 6.60$. Seems far too early. so the leading present goodies at this time are NLY and CHMI?
Colorado Wealth Management Fund profile picture
Don't forget AGNC. That is our most recent purchase. Not a large position, as we are reducing risk and raising cash. However, we did use some of the proceeds from selling CIM to open an AGNC position.
haleakala profile picture
Thanks for the consistent superb analysis, and level-headed approach during the crazy days of March and April, through today. After 2+ years of following you, from theory to battle testing, I can safely say you really know your stuff. Kudos.
thank you so much for your great articles. since the crash I've grabbed ORC and GPMT for great gains. also did well with puts with MITT when it undeservedly exploded to 8. keep up the well written concise articles.
Colorado Wealth Management Fund profile picture
Thank you! I've been enjoying this format. Keeps it brief and easy to understand. Hoping to start running a series like this on equity REITs. They haven't been volatile enough to warrant several articles per week though.
MORL used to be a big mortgage REIT’s. Without notice closed and the stock was worthless. I wouldn’t touch these mortgage REIT’s.
LOL It was a stupid ETN that should not have been allowed to trade.
Exactly. At least I had enough self control to steer clear of that "winner".
Uninformed commentary at it's finest... Morl was a leveraged structured product. No retail investor should have been touching that with a ten foot pole. Completely different from investing in an individual company.
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