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Annaly Capital Management, Inc. Message Board

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  • reits_r_us reits_r_us Jan 10, 2013 1:41 AM Flag

    Two year mreit returns

    Hey Jump,

    Bad day?? You have been around long enough to figure out(I think) what I was referring to when I said Jonkai drinks Kool-Aid. He will tell you how much better NLY has done than AGNC. There was a time when NLY had a growth spurt from 2000-2002. Good for NLY 11-13 years ago.

    Since AGNC was not around at that time I cannot compare the two companies during that time. To suggest that we compare that time in NLY to AGNC now, would place you in the Kool-Aid camp along with Jonkai.

    No, this time in history is unique with QE, OT, SEC scares, and debt ceiling crises. Be honest. Compare any time in history when the two mReits have been side by side. May 2008 onward. Take the Pepsi challenge...;-)

    C'mon Jump..you challenged me...man up and grab any time frame when the two have been running side by side. Don't be cheap and tell me how much money you made last year in NLY. That has nothing to do with it. I made 100% in AGNC last year. So what? That is how """WE""" traded. That has NOTHING to do with the point of a comparison between the performance of the stocks themselves. Get serious, man up and show me the data??

    Don't be cheap and show a 2 week stretch...have some credibility....

    BTW, you write:

    " I had AGNC and others in 2010 but not in 2011 since it was inflated."

    You know what AGNC vs NLY's return was for 2011(17.4% vs 2.9%). I bet you can't guess which one came out ahead...;-)

    DocReits

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    • I am getting years confused. I meant 2011 for AGNC and 2012 for NLY. It all depends on date picked. I had AGNC late 2011 during the debt ceiling fallout as well as a ton of IVR which hit a double whammy at the time. I got out of AGNC when it hit around $33. Around the same time NLY had dipped to low $15s. Needless to say, if I cherry pick that date to two months out, NLY outperformed AGNC. This is why cherry picking is bad.

      AGNC most certainly outperformed NLY overall the last two years, but then again, at much higher risk given how each company is hedged. This risk was a big deal for someone like me. For example, if I had held AGNC to mid 2012 highs I would not have hedged that position, rather I would have sold outright for a short gain because I simply do not trust them yet. Again, the argument is that companies like AGNC have come and gone over the last 15 years, and when all the dust settled, NLY was one of the few that survived and added value to their shareholders even through very bad market conditions. With NLY I have enough confidence that I am willing to hold them long without much worry, so instead of selling, I hedged. End result is that I got to keep my shares for a good advantage this year (big difference between short and long gains).

      Also as you state, its easy to look in hindsight. There is no guarantee that AGNC will outperform NLY in the future. Even though they both use similar strategies to make money, their hedging and leverage strategies are different enough that certain conditions will benefit NLY over AGNC. In my opinion, AGNC just got lucky the last 2 years. Their high leverage could have easily destroyed them if Romney had been elected. He would have ended the easing and increased interest rates almost instantly. Which means a decline in book and a decline in margins. At their leverage levels, the damage would have been just as astounding as their gains the previous 2 years. NLY would have weathered it much better. Luckily (for both), the worst case did not happen.

 
NLY
11.34+0.16(+1.43%)Dec 26 4:01 PMEST

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