about 6 months. I was looking at putting some expiring CD money to work and see CIM has taken a big fall in stock price.
Why? Is it safe to buy here in educated opinions.
Still doing my DD on others too but want to ask this question to serious REIT traders.
See my blog at http://www.theyuha-silver.blogspot.com I think CIM is safe and so do the insiders in the company, they just bought 200,000 shares recently. Make it one of your smaller holdings, AGNC would be a stronger investment. Always insure your REITs or any stock with silver and gold, gold may come down some though. I have the insider buy charts on my blog. Many insiders are buying into REITS now including CIM, RSO, IVR and others. I think in September the markets will recover.
Just be aware that mREIT dividends are not 'qualified', thus subject to ordinary income tax rates (true, just like CDs). In an IRA or best yet a Roth IRA, fantastic.
As a result, I'm concentrating my exposure to mREITs in my Roth IRA.
Just a little food for thought. I don't follow the other two stocks you mentioned (STON, GOV) but out of curiosity I did look up GOV's business model. Just to play devils advocate and present a potential risk which you may have already considered........GOV's description says that it owns property's which are leased to governments. One risk that might be worth looking into is the current over-bloated nature of most government in the US (Federal, state, municipal). Some states are doing well (Texas) but the vast majority have no choice but to seriously cut the fat soon and that would likely mean reducing the size of services and walking away from leases. If this happens I would not want to be the owner of commercial property that leases to the gov't. It should also be considered that many Gov't agencies require very unique and expensive TI's (tenant improvements). This presents a problem because even if GOV decided to lease to private companies to fill vacancies, most private companies would want the space to fit their own needs which could be very expensive to retrofit. To be fair on the benefit side of a government REIT is that they typically sign long leases. FWIW, just some food for thought.
IMO, CIM is a great buy at $3 and below. As a primarily non-agency Mreit, CIM's two major risks are credit risk and interest rate risk. Thanks to Bernankes recent comments pegging short term rates until 2013.........interest rate risk is virtually off the table. The remaining risk: credit risk is still a very real factor, but IMO CIM is well positioned, first of all CIM is not paying par for the securities it purchases and as a result, some of the credit risk it takes in non-agency securities is already discounted. On the other hand, unlike NLY, CIM has the opportunity to acquire securities at some deep discounts since non-agency will likely continue to selloff along with the market, while agency (NLY) will most likely trade up to reflect their safer status. In short, CIM will no doubt be more volatile over the coming months-year, but IMO will benefit longer term from the excellent buying opportunities that management will have during the broad market selloff.
CIM's problems have nothing to do with credit or interest risk.
Interest has been at near 0% for years already, and the geniuses at FIDAC have managed to lose money and decrease dividends, despite issuing what is now a whopping ONE BILLION shares.
Of course CIM is not paying par for bad paper.. DUH, everyone knows that.. the problem is that even if they pay a low price and the paper becomes worthless because of mortgage defaults, CIM LOSES MONEY. Get it?
for those who keep on dreaming about CIM hitting $4 again.. keep on dreaming.. stocks on the housing sector keep on getting downgraded.
sure, CIM will eventually make money, but RIGHT now there are tons of other sectors that offer far more potential for recovery than CIM.
is CIM safe?
not really, i wouldn't buy CIM until knowing for certain we are NOT heading again into a recession.
Park you money in NLY.. it is safer, and better liked by institutions.
Just compare the charts of CIM vs. NLY, that alone should give you an answer.