Revision: since CIM operates on leverage, sustained low interest rates will push down the yield curve reducing the spread and profits made from the spread. You're assuming that low interest rates help when in point of fact, reducing interest rates do not help (as evidenced in the falling dividends over the last 18 months), increasing interest rates help.
However, the bond market is beginning (just) to roll over because there is little to be gained and a lot to be lost when interest rates reverse course and increase.
That and we'll see what Chimera has in store with its future securitzation business.
The level of interest rates is not as important as the "spread" in interest rates (one way to determine spread is by looking at the difference in yield between 2 year Treasuries and 10 year Treasuries). In other words: Interest rates can be low and the spread high and; on the other hand, Interest rates can be high and the spread low.
We have quite few things going for the longs: ECB flooding the markets with cash will probably help push MBS up as free cash look for reasonible returns around. Treasuries (and AAA securities) are paying almost nothing, and overflow will certainly go to high yield. The book value is from December (10% ago in S&P and with $T less of liquidity from ECB)
Also, consistent insiders buying is something you just can not ignore.
I just hope CIM has picked up some more securities last couple of months
Chimera stated that it determined investments in securities rated less than AA, non-rated non-agency securities and other subordinate securities should be evaluated for impairment under ASC 325- Investments-Other - Beneficial Interest in Securitized Transactions.
What does it mean----Nothing. Nothing fundamently wrong with the stock.