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Annaly Capital Management, Inc. Message Board

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  • ecnerp ecnerp Mar 6, 1999 8:59 AM Flag

    REITS/ Mortgage Reits

    We run MNRTA and UMH. Have for thirty years.
    Believe in REITS but not these reits you cant read the
    financials. A portfolio of properties and a long term outlook
    is what we like.We are investing in other reits
    because its a lot cheaper than buying properties. In 1988
    we took mnrta out of overvalued equities and into
    mortgages. In1991 we went back into equities.

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    • Had a look at those two REITS: interesting,
      especially the one with the 19% return
      on
      equity.

      Hey, but what do you think about Annaly?
      What
      happens to them if we get another sharp liquidity
      contraction? (How strong are they
      relative to other
      mortgage REITS?)

      Found another interesting wrinkle
      on the income
      hunt. The Liberty All Star Fund
      (USA) is now
      yielding something like 10.88. Right
      now, it
      is selling at larger-than-usual discount
      to
      its NAV. But, get this: a 10% payout is a matter of
      policy. If they don't make it for the year on NAV, they
      pay as a "return of
      capital," reducing your cost
      basis in the shares.

      I looked through a report
      from late last year.
      They have a good portfolio,
      similar to the
      S&P but not cap weighted. So, its
      probably
      overvalued but not so grossly as the index.

      Kind of
      an interesting idea--a way to take
      part in all
      this common stock craziness, while
      "hedged" by an
      above-average yield.

      I believe that the five-year total
      return has
      been around 19%. They periodically
      offer
      "warrants" for discounted share purchase that
      have given
      quite a kick to that average
      if
      exercised.

      Worth a look anyway.

      • 1 Reply to PHAGE1998_99
      • Have you looked at Pilgrim Prime Rate Trust
        (PPR)? It's a closed end fund that holds a portfolio of
        senior secured corporate loan participations.

        Currently yields a bit over 8% at present price which is a
        slight premium to net asset value. It pays a monthly
        cash dividend.
        Have owned this fund for about four
        years now and price is fairly stable except for last
        fall during the credit crunch when price was hammered
        (due to guilt by association, I guess)and dropped as
        low as 8 1/2. Bought some then that now yields about
        10%.
        Risk of the fund is credit risk of the individual
        companies and general economic risk. However, the loans are
        senior secured instruments which mitigates some of the
        risks involved. Also, fund holds about 120 loans which
        allows for fair diversification.
        Cash dividends are
        declared and paid monthly - which is nice.
        Worth a look
        in the hunt for yield.

 
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