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iShares FTSE NAREIT Mort Plus Cp Idx Message Board

  • retaoba retaoba Nov 13, 2012 1:39 PM Flag

    Anyone have a read on why this is cratering so much?

    Potential tax on dividends the reason?
    If this is held in an IRA, that does not matter.
    Don't think it has run up enough for heavy tax selling.
    With nObama reelected, rates should stay low for the foreseeable 4 years or so, giving companies in this ETF access to low priced capital and ability to maintain a profitable spread, yes?

    Sentiment: Strong Buy

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    • If we go over the fiscal cliff and the bush tax cuts are not extended. Taxes will go up on dividends. But dividends from mREITs do not qualify as dividends but instead ordinary income. So this is not the reason for the sell off. I think the reason for the sell off is because REM is up 20% for the year +10% in dividends and people are probably trying to handle pre 2013 taxes in case we go over "the cliff"

      Currently it seems oversold to me. But the problem is REM has so much of its porfolio in NLY and AGNC that whenever something bad happens to either one of them they both drop an equal amount then REM gets hit almost as bad cause it has both.

      Sentiment: Hold

    • re dividend taxation, currently, dividends paid by REM and by mREITS are taxed as ordinary income. Tax changes such as a reduction in the prefential treatment of qualified dividends from operating companies will not impact the relative attractiveness of holding REM or m REITS in general. Question now is has the effect of continual QE been reflected in the share prices of mREITS held by REM? REM and mREITS are way oversold here from a technical standpoint. The question is more of a fundamental one. I would assert that REM is attractive at this level.

    • My guess is that the cratering is primarily due to QE Infinity kicking in. Ben is buying mortgages thus reducing the spread between short & long term rates and therefore the REITs are expected to do less well. That's the best that I can figure out anyway.

 
REM
12.38-0.10(-0.80%)Sep 18 4:00 PMEDT

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