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Silver Wheaton Corp. Message Board

  • mardermj mardermj Nov 15, 2012 12:12 PM Flag


    Junk bond funds are taking a shelacking in the wake of the fiscal cliff, and unfairly so. Looking for bargains there in the next few weeks.

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    • I won't go near debt issues.

      • 1 Reply to moses_on_wall_street
      • Why no debt issues? Irates are stable if uncharacteristically and artificially low. MREITS are being put off while new home builders are surging for no reason whatsoever. MREITS are cheap relative to any recovery, and irates will remain low long after we say bye bye to Uncle Ben. And yesterday they sold off and presented shares at $5.70- 6.50 numbers not seen since the flash crash.

        ARR is yielding nearly 20% at $6.50. ARR’s $13.3 billion portfolio of agency securities consists of 78.6% fixed-rate agency securities, 100% of which have 20-year final maturities or shorter and 21.4% are adjustable rate mortgages (ARMs) and hybrid ARMs. The ability to ramp up the adjustable percentage of holdings in the unlikely event of increasing interest rates appeals. That, as well as portfolio insurance, is a big plus.

        ARMOUR invests in fixed-rate mortgages AND hybrid adjustable-rate and adjustable-rate residential mortgage-backed securities (RMBS) issued or guaranteed by U.S. government-chartered entities. This is Key: floating-rate loans don’t get prepaid, so ARR can avoid the kind of situation that AGNC is running into. When rates eventually rise, so will its portfolio interest income but that won't occur till 2018. At yesterday's firesale, lemming left the building. When they do, they’ll lift the stock higher, and i’ll already be well-positioned for the ride back to just under $8.

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