by selling inventory
I think the other day I did some research on the appreciation of portfolios, selling of assets for gains and was trying to find out just how long an agency could do this. I remember that I came to the conclusion many Mreits are not just selling off securities but actively trading. I thought what they may be doing is buying some agency in the open market, repackaging them with some of the portfolio investments, hedging and selling to third parties as a separate profit center. What confirmed this to me was reading some of NLY's 10-k or something saying they do not trade securities as do other Mreits. I may be off on this any if anyone has any insight, it would be appreciated.