I hear ya on the 15% discount to book-I also bought some on the 10th. Pulled the trigger a little to early obviously. My concern is do we have to look at these in place hedges as a reduction in future book value if prepayments cannot be reinvested with sufficient spread.
At this stock price and given management conservative policy and past action (additional) prepayments should go into (additional) stock repurchase. This should help stabilize book value and limit the downside risk for the stock price. Just my 2 cents. I'm not sure how existing hedges may impact book value in the current prepayment storm scenario. Hopefully, we will hear about in the conference call.
Interesting read for MREIT investors: http://www.bloomberg.com/news/2012-10-16/investors-abandon-home-loan-reits-under-fed-assault-mortgages.html
NLY just announced 1.5B buyback program. ANH had already gone form expansion to contraction mode years ago.... looks like the others MREITS are now following suit. For owners at current prices the risk-adjusted returns should be attractive.