After yesterday's action, it looks like long term rates are rising. I know Annaly tries to maintain a neutral bias and has a barbel approach. But I don't follow it closely. Do you long-timers see Annaly's earnings being higher or lower in say, the next two quarters, if bonds sell off?
Spreads are widening = ++ NLY has low leverage at a time when spreads are better = ++
Not knowing whether or not NLY will leverage at this point = uncertain FFO Uncertainty = -- -------------------------------------------------------------------------
In summary, they are in a perfect position right now. If they decide to unleash the leverage they will have a better portfolio than any other mREIT that has leveraged higher prior to the new spreads. Thus if they leverage then they will outperform all estimates however, it looks like they have a reason for the de-leveraging. Its possible that they may pass on the current spread if they plan to hold course. In the meantime, you will get between 12% & 14%.
Ill take my chances with these guys. In for 150k shares.
If NLY does not increase their leverage or SPO how can they take advantage of better spreads? 3 billion of cash disappeared from last quarter's balance sheet. Refi may hit distributable income and we may see a hard hit in the divy. I hope management can show us something different. JMO
I held the stock for someone else 7-12 years ago, and followed it closely back then. Back then they were really struggling with a narrow spread, even an inverted yield curve, but they always managed to post a great dividend somehow. This company is extremely well managed. Solid fixed income was a great thing in recessions. They never disappointed. Seems to me like we're entering a Goldilocks setup for NLY. The spread should widen nicely. And it's coming back to me about the refinancing risk, like you said. I remember them talking about refinancing hurting them as rates fell. I'm sure that will lessen now.
I'm sure NLY is a buy right now, the question is, who will buy? I'm up to my neck in BAC. I think NLY is just playing second fiddle for the time being. Some people probably sold out and got in banks before the results of the stress test. I know I did with some other perfectly good stocks. But those of you holding for divs should be in great shape, much better shape than when I held it for years. Thanks for the reply and good luck!