Credit Suisse cuts Chimera Investment (CIM -0.9%) to neutral from outperform, citing lack of catalysts to support further upside.
The market's current premium for CIM is justified due to its history of book value stability, continuing to earn more than its dividend, its accelerated pace of new securitization activity, and discipline in raising common equity.
Sees better potential for returns in outperform rated names including New Residential (NRZ +2.3%), PennyMac Mortgage (PMT), Redwood Trust (RWT), Two Harbors (TWO +0.4%), and Ellington Financial (EFC -0.1%).
In the past six months, Chimera has risen 6.4% vs. financial sector median performance of -4.0%.
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