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NLY - A Forensic Analysis Of My Current Position

|About: Annaly Capital Management, Inc. (NLY), Includes: UVXY
Summary

BUY BUY! BUY!!

HEDGE HEDGE! HEDGE!!

Then emulate Rip Van Scrooge.

As the rising waters of a short covering Fed inspired rally lifted all the boats in my portfolio today (except for my UVXY Calls which dropped by over $2 - YAY!) I decided to roll out some stuff, and buy some stuff. All my buying centered around averaging down on the income producing mREIT NLY. I now am the proud father of 50,000 shares.

It's now 19.98% of my portfolio. Amazing.

If you look at the last column figure you see $9.35, that's my average cost before Call premiums are deducted, so lets do that.

Here's all of them:

  • $2,963.33
  • $2,763.33
  • $2,397.00
  • $11,887.44
  • $526.53
  • $2,632.63
  • $658.17
  • $11,666.81
  • -$572.95
  • $2,487.00

= $37,409.29 net credit.

divided by 50,0000 shares = $0.7481 credit per share or $9.35 - $0.7481 = $8.6019 net cost per share in a cash account.

$1.00/share dividend X 50,0000 shares = $50,000.00 income.

= 11.62 % yield on adjusted cost in a cash account.. 

Of course I'm in a portfolio margin account, so I gotta better yield. Here's what my holdbacks look like:

So those shares actually cost me $114,500.00 or $2.29 each.

$2.29 less the net premium credits of $0.7481/share = $1.5419/share net adjusted cost.

$1.00 div on actual $1.5419 share cost = 64.85% return.

yeah yeah I have to pay some margin interest. How much is that?

My margin interest rate is 3.48% until the Fed cuts, and then it will be less.

So what am I paying? 

Well they loan me $6.31/share X 50,000 shares = $315,500.00. 

3.48% of $315,500.00 = $10,979.40/year.

So what am I really making?

$50,000.00 Income

- $10,979.40 margin interest

= $39,020.60 net income.

= 50.6136% actual net return on capital invested.

Not too bad for an old fat bald guy with alzheimer's.

"..BUT WHAT ABOUT THEM PUTS?.." yells someone from the bleachers.

I left them out of the calcs as they will get rolled out a year before I'm wearing them and you do not get dividends on Options.. I did collect a nice premium when I sold them though:

$10 Puts for 1/1/2020:

= $18,872 holdback - $10,299.52 premium = $54.57% return

$10.00 Puts for 11/15/2019:

= $16,736.00 holdback - $4,556.95 = 27.22% return

So if they ever are put to me the net share cost will be lower than $10.00

As always...........

YRMV

PS: I bought some more today (6/4). Average share cost now $9.31.

PSS: I bought some more today (6/6). Average share cost now $9.26. 

Disclosure: I am/we are long AMZA, UVXY, NLY, REML, SMHB.