1. ery high leverage at over 8, and to save money, modest hedging, so the pop in mortgages rates in Jan will have slashed the BV to be reported in a week. In contrast, MTGE leverages less for its agency backed mortgages (6 range), and is well hedged against interest rate spikes.
2. WMC did noit reserve any earnings as a piggy bank the way MTGE does.
3. Kain has demonstrated an uncanny ability to increase BV thru interest rate movements, but WMC is an unknown.
4. MTGE just launched a good substantial new equity with its SPO that timed tghe rise in mortgage rates to the best spread in many months.
5. MTGE has acted on its charter to bvuy highly profitaable, risk adjusted, commercial mortgages, but WMC has yet to buy in the commerial market.
I'm afraid that WMC is about to report a severe cut to its BV, and thus will not be able to launch a SPO very well to take advantage of the interest rate profit spread that just materialized.
Based on this guesswork analysis, I rolled out of WMC and into MTGE on its SPO dip.
Thanks mr hiller. U did not mention spreads which I believe move in opposite direction to bv. Have they not widened to increase earnings for wmc? And are not earnings/spreads, hence divs the name of the game? BV seems to be only good for spos and spos only cause sharp price declines which only help those on the sidelines with uninvested capital.