I am new to this stock and board. But, I believe that your view is a little bit harsh.
CMO purchases ARM loans, which should be extremely stable (no run-off) in this environment. The Fed has guaranteed you a stable market for ARMs through 2015, which is incredible. The life of a MBS is 3 years, which means a stable portfolio for the life of the pool. And, it is selling at a discount to book.
I understand that there won't be any margin expansion or capital gain, but that is the price of stability. Stability should be somewhere around book value, given the willingness of the Fed to buy everything out there.
I would love to be talked out of this position, so please comment.
I won`t talk you out of your position because I also believe as you do. Personally I do not care that much if CMO were to go to single digits because I NEVER sell a stock for a loss. I never hold enough shares of any given company except ( EPD ) to sell at a loss. I`ll hold CMO til dooms day if thats what it takes. It may be considered Dead Money for awhile but like I said I don`t hold enough shares of any one company to matter.I also ONLY BUY Dividend payers above 3% then the moneys only resting instead of dead.Perhaps a strange strategy, and I`m not knocking them out of the Park, but i`m getting alot of singles and an ocasional Homer.
Based upon investor relations at company, all good news fundamentally. Book value well up, estimating over 13.50 at this time. Same as last year, see charts, nice shake out scaring people to selling essentially dollar bills for 75 cents. All asset of CMO government insured mortgaged, can be sold in a second to realize book value. Great buy at ten, just like last year, when this occurred without any negative news.
Sentiment: Strong Buy