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Chimera Investment Corporation Message Board

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  • saltynacho saltynacho Aug 20, 2010 8:42 AM Flag

    Salty, Thought I'd find you here

    Hey Dave -

    This was my answer to Dan's question from another board.

    Hey Dan -
    These are 2 stocks (NLY & CIM) to consider parking some cash while the Fed keeps interest rates LOW. You get a good ROI in the form of divvys - but don't expect much in growth. You'll need to be prepared to exit either of them, IF/WHEN the Fed starts to raise interest rates. OR..... more importantly, when you need the cash to do some "bottom fishing" later this year.

    Both companies have a very simple business model.
    They both borrow money at extraordinarily low rates (average cost of funds was 2% this quarter) and then use that money to purchase securities that typically yield 4%-5%.
    The spread on the interest income is where they make all their cash.
    They are REITs -
    1)Annaly Capital Management (NLY) - Current annual yield is 16.6%
    2)Chimera Investment Corporation (CIM) - Current annual yield is 17.6%

    Take a look at these and see IF you feel comfortable with either of them in your portfolio.

    Hope that helps!


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