S&P 500 Could Use Another Financial Stock — and Why Not A Mortgage REIT?
The logic for Annaly over American Capital Agency Corp. (AGNC) boils down to a longer history as a public company, a bigger market cap, and deeper trading liquidity.
A shift would, for obvious reasons, change the composition of funds like SPDR S&P 500 ETF (SPY), Vanguard S&P 500 (VOO) and iShares Core S&P 500 ETF (IVV), though the effect of one stock is subtle to the point of negligible.
You can’t say the same thing about the effect on the stock, though. KBW says adding index funds’ estimated need of 112 million shares, should Annaly be chosen, implied seven full days of buying volume — or four days’ worth for American Capital.
This stock is not going anywhere until NLY reports higher dividend payments to justify taking it in the shorts on short term book value. The market is bailing on bonds or anything that acts like bonds right now. All of it going into equities. Higher divis better come fast or the market will recognize that with the US economy seemingly on the mend that by next year there will probably be even more pressure on book value. I am long and under water but just trying to keep it real. The big test will be what happens next quarter. I am not sure even a flat divi for Q3 is going to be acceptable.
This stock has come back from much worse situations than this, so I'm not worried one bit. The company has strong management and that's why they could even be considered for addition to the S&P 500. It would be great if it happened, but won't be the end of the world if it doesn't.
I almost purchased LINE, instead of adding to my current position in NLY. LINE is down over 30% in 2-days due to an SEC probe and the shaky footing they now have concerning the BRY acquistion. Bottom line is the I went conservative by adding to my NLY position and now I'm very glad I went that route with that extra money. I know the additions I made to bring my overall cost average down will look very good in the future.