CYS sold a big chunk of their higher coupon MBS last year at a significant gain and paid out a big special dividend in December. They had to reinvest the proceeds in lower coupon securities. Higher hedging costs and lower spreads have led to lower earnings. CYS is sticking mostly to lower risk 15 year MBS primarily as there is less extension risk in this category and mgt is not willing to pay up for prepay protected paper at high premiums given the risk of premium erosion if rates rise. As agency spreads begin to widen out a bit (as they did in 1Q) earnings and dividends should begin to improve. We are currently bumping along the bottom at the current 11% dividend yield. Add in the 10% or so discount to the current marked to market BV and you get 20%+ upside here without making any heroic assumptions.