I have exhaustively (an understatement) researched this week the following lot of stocks: AGNC, MFA, IVR, ANH, IVS, NLY, CFP, and on (13 total).
I still, to this day, cannot find one that I like better than CIM for the time being. I'm really leaning towards adding AGNC and MFA possibly, but the entry points don't seem quite right at the moment. I might get a little IGD just for the monthly payout, but I don't really like the fundamentals.
I'm also a heavy owner if FSC, but I don't believe it's a great entry point yet, which I am waiting for a pullback to add more. It's another monthly payer.
As an aside, one little interesting security that might be flipped for a quick buck or two is BMNM. It's an OTC so the risk factor goes without saying.
Any opinions/recommendations/suggestions out there would be greatly appreciated.
The thing is, I know what's in RSO's securitizations, I know the history and the performance. CIM is a big crap shoot, all we can do is assume they bought the right RMBS at the right price. If housing tanks worse than expected, where will they be then? Will they have, like RSO, through skill or luck, assembled the correct portfolio, or will it fall apart under stress? Particularly given the large secondary positions?
How many second mortgages would survive a further 20% decay in house prices? 2006 and 2007 were pretty horrible years to write housing debt, but that's where the bulk of their holdings come from. Is the huge discount they purchased the notes at sufficient? How could anyone possibly know, the story isn't half told, depending on which expert you believe. Housing could still be smashed into the ground, eliminating the bulk of the distributable income here. But, a lot of them were recently acquired, after the capital raise, so presumably one could assume management was picking the good eggs, many have already gone rotten by now.
There are things to like. Kicking out the "non-retained" assets and liabilities, they are oversquare in capital vs. debt, which is nice. And the bulk of the "real" debt is repurchase agreements back by agency notes, you can pretty much disregard that. Debt wise, they shine, very little liquidity risk.
But RSO has practically no liquidity risk at all, and as I say, in spite of the horrendously useless GAAP statements they're forced to present, I understand what's in there. 43 commercial notes (give or take, maybe 45 now). There hasn't been a serious credit loss there, and a housing double dip won't effect it directly. Given the yields are close, gotta be RSO at this point. I know, not holding CIM could mean you missed something good. But it's a risk.
Interesting post. However, the yields are substanitially different because you would have to pay a 65% premium over CIM to buy RSO. Closing price friday on RSO $6.94 with a yield of 14.60%. Closing price CIM $4.20 yielding 16.40%. It costs $2.73 more per share (65%) to buy RSO. The per share premium paid for RSO knocks down the yield on RSO to less than 10% on an apples to apples comparison. GLTA
well the first three all gave recomendation i will just agree that cim is one heck of a stock. i have buildt up a nice divide retierment account cim is 5.52%n of it and will add to it after i make a few more paychech. thanks for your message
If you believe CIM is a good buy, stay with CIM. It could break recent 24 months high(4.36) soon since historical low(1.53).
If you can not get out in time, the worst is to wait for the next run and collecting huge dividend payout at the same time.