Annaly Preferred Shares: Inflation Hedge Workout Scenario With Expected 15.55% Return By March 2023

Summary

• Despite trading above par value of $25.00 not even a year ago, NLY.PG now trades at $22.68 despite no new risks to company.
• May NLY stock offering with proceeds of $639m could liquidate NLY.PG. Another stock offering was announced days ago with estimated $659m in proceeds upon closing.
• $9.6b in stock equity can be thought of as a 2390% margin of safety over NLY.PG’s liquidation value of $385.56m.
• Fixed-to-floating feature starts on call date of 03/31/2023. Given rising interest rates I believe it's likely that Annaly Capital will redeem these shares near or around their call date yielding a 15.55% return with minimal risk.
• If shares are not redeemed, you can lock in an estimated long term yield of 8.46%.

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Annaly Preferred Shares (NLY.PG) currently trade at $22.68 with a par value of $25.00 due to the broad market selloff and relatively low base yield. I believe that it’s likely this will trade at par value again by its

Analyst’s Disclosure:I/we have a beneficial long position in the shares of NLY.PG either through stock ownership, options, or other derivatives. 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.