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Chimera Investment Corporation Message Board

  • Sunburst_Mt Sunburst_Mt Mar 1, 2012 4:09 PM Flag

    What CIM said; what it means

    CIM: "It said the change will not affect the economic book values, actual cash flow, dividends or taxable income that it previously announced for any period."

    What it means: Nothing

    No doubt they are goofing around with valuations of the current portfolio based upon some revised wing nut theory.

    Does not affect economic book value. That means no restatement. Dividend is in tact. They did us a favor by announcing early.

    Remember: distributions are based upon 90%taxable income, not book income. For a loan to be recognized as bad under tax rules it has to be written off.

    Did insiders buy or sell?

    They bought. Big time.

    Is the yield superior, excellent, good, average or lousy. It's superior.

    Does the current fed policy favor or disfavor this stock. It favors it.

    Is the capital structure good. Out here we have an expression that answers that. "you bet"

    All positives. I am short some puts which makes the gift price we are looking at even better.

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    • 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.

      Disclosure: I own CIM.

      • 2 Replies to eric_landstrom
      • 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.

      • any financial institution operates on the spread (difference between yield and costof funds).

        rates have been low for quite a while thus no effect on the spread.

        in CIM's case for a REIT they have a high equity position which (zero cost) makes the spread even better.

        warehoused loans are always financed with short term money which exists until matched maturities can be effectuated on the other side of the balance sheet.

    • 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.

    • Major Collapse is now imminent!

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