This is a no-brainer. Short Treasuries, Short M-REIT's, rates are rising and rising fast. This is easy money at this stage. BOND COLLAPSE is coming and watch China they will mint gold on the short trade.
Don't forget. Japanese investors/institutions are buying MBS at a fed-like pace. I'll bet you'd short Two Harbors, eh? If what I am saying sounds cryptic.. you might need to look deeper into the various ways certain mREITs manage their portfolio. I sometimes wonder if these types of posts are real.. or computer generated spam. Please answer that one.
Annaly (NLY), American Capital Agency (AGNC), Chimera (CIM), Armour Residential (ARR), Invesco Mortgage (IVR) and Hatteras Financial (HTS) are all major U.S. listed mREITs that offer dividend yields between 12% and 17%. The only reason that long investors consider these stocks is for their dividend.
Spreads have been declining for the past year. Dividends have been cut by almost all of these. With short term interest rates at zero, there is no way they can go down. Smart investors I mean really smart investors look for investments that have enormous upside potential with very little downside risks. WELL you are sitting on a gold mine here. Short (Short Term) Treasuries, they are near zero, short MBS they are somewhat close to zero, and short M-REIT's, who play the spread between short term and long term rates and leverage it, these guys will get killed when rates turn.
THE RISK: Short term rates stay at zero or the same, your short trade stays neutral, nothing loss. If you bought TBT Ultra Short 10 yr treasuries at 58 you are up 10% to 64. This was a no brainer. Still time to play the short trade, individual short M-REIT's who yield too high and have declining fundamentals. Leverage will kill these guys in rates move.