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Annaly Capital Management, Inc. Message Board

  • gorgeearthworks gorgeearthworks Aug 25, 2011 1:50 PM Flag

    Good entry point?

    I'm still waiting to buy below my ave. PPS @16.65. Maybe tomorrow?
    The 2yr charts show good entry points were below 17.

    thoughts?

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    • If there is fear in the market, why not a statement by the management of REITs?

      In HF and PE world, managers make themselves available for comment to investors as they all have "skin in the game".

      And truth be told, managing expectations (not just risks) is part of the deal when investors sign up; lucrative terms for compensation comes with accountability.

      MBS experts (not stock analysts) are seeing a new paradigm of volatile price action of MBS securities, mainly due to changing sentiment around prepayments and perhaps new supply dynamics whereby dividends will likely be cut in coming months.
      Should not management demonstrate leadership and manage even the POSSIBILITY of lower dividend expectations? Rather than leave the public investor guessing and in the dark?

    • Not a chance.....I think the only thing that will happen, is a rise in share price, BV, dividends, and more shares outstanding.

    • Prices for every coupon are still higher than they were just 1 month ago. I'm hearing a bunch of appeal to authority and fearmongering. This drop is similar to that in early Feb which was met with a universal yawn. I guess we'll just see how things go, but I'm certainly not yet "spooked."

    • thats exactly right....FEAR of what he'll say. will that really change anything for these stocks? who knows, but the fear is what is bringing the market down. Will this change the dividend for this quarter? or the next?

    • It is not the drop in FNMA 4.0 that is spooking the market.
      It is the drop of FNMA 5.0, 5.5, 6.0 on a RELATIVE basis to everything else (hedges) in such a short time.

      You can ask anyone who trades the MBS market and they will tell you this is the most significant price drop of 2011.
      This truth speaks volumes.

    • >The negative convexity that has failed to show up for over 3 years in AGCY MBS is now in full effect (because of fear of prepayments).

      I don't see it. BTW, interest rates have been rising for the last 5 trading days.

    • >The negative convexity that has failed to show up for over 3 years in AGCY MBS is now in full effect (because of fear of prepayments).
      Anyone with access to real-time prices of the very liquid and active AGCY TBA market can tell you of the price collapse over the past 5 trading days.

      I admit I don't have level 3 quotes, but...dropping from 105 to 104 (on the FNMA 4.0) is a collapse? After a run up of over 4X that during the last month?

      http://www.mortgagenewsdaily.com/mbs/charts.aspx?Product=FNMA40&interval=5

      The risk should not be overstated or understated. On the other hand, there's two sides to every trade.

    • Too much risk right now with these reit's and NLY...I sold out this morning. Will wait until I hear what the Fed and the Administration will do. The rumor about them buying longer term bonds and flattening the yield curve scares me too much.

      Nothing wrong with waiting until you get a clearer picture of your risks.

      • 2 Replies to onvicarwe
      • Me too, hit my stops at 17.60 and sold 9000 shares at a profit. Too much risk right now. Waiting for a re-entry point.

      • 1) Short term rates will remain low due to fed rate being low till 2013.
        2) Flattening would happen by lowering long-term rates. This would increase book value nicely as asset values would go up more than hedges go down.
        3) Agency REITs do not trade based on a imaginary yield percentage. They have traded based on book values historically. NLY's average book value multiple is around 1.2x (We are slightly below that now) -- It is rare to see an agency REIT go below book for ANY period of time, if I was management i'd immediately do a buyback with the prepayment money if it happens (laugh).

        So if flattening happens, yields will go down (very slowly over time as prepayments are reinvested). The share price will not go down, in fact should go up, as book value goes higher.

        So yeah, I bought more NLY and AGNC today :).

        -Fernando

 
NLY
11.86+0.09(+0.76%)4:00 PMEDT

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