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Annaly Capital Management, Inc. Message Board

  • ps56k ps56k Dec 21, 2012 12:00 AM Flag

    NLY vs other REITS - all the same ?

    Have held NLY for awhile, recently even added to my position.
    But now, at the end of the year, looking forward with the long term low interest rates, thinking of selling for a small loss of about 10%....

    Someone has suggested swapping for MTGE, and doing it Friday or on the /12/24 date to get the div and a "better reit".

    My thought is - if everyone is playing the same game of borrowing at low rates and holding the mortages - isn't everyone playing with the same hand of cards ? Why, or how would one REIT be better than another if everyone is working with the same "paper" and the same game ?

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    • Hindsight is 20/20, but the time to sell NLY was 3 months ago.

      • 1 Reply to nnsoren
      • yeah.... was balancing the declining PPS against the DIV -

        Now, can't really decide to jump back in with AGNC or MTGE,
        based upon what will happen for the coming years with the static low interest rates, along with the Fed playing in the same MBS sandbox as all these mReits ??

        So - do you go with just agency MBS, or drift to the outside with hybrid non-agency paper ?
        All of these mReits will have to do the same dance to keep their divs in double digits...

    • weewillie08 Dec 21, 2012 2:02 PM Flag

      Well, then sell at a 10% loss. It will re-enforce yout logic and make you more comfortable with the trade. But it's still a 10% loss. I personally hate to do that, even though I have at times; I personally don't see NLY at this point in time as a stock that needs to be sold at a loss just to protect your investment. I would suggest, if you don't need the money immediately, to just hold. NLY appears to be under capable management, and the Fed can't just keep buying $40B in MBS without positive results. Why not just hold and see if the Market destructs? If it it runs down, use a cash position to pick up equities and wait. Sooner or later, you will rake in big returns. Anyway, just MHO.

      • 2 Replies to weewillie08
      • "" the Fed can't just keep buying $40B in MBS without positive results.""

        UH,no...they have been buying for most of the year with no results. That is why they are doing it again, so they can hopefully get results. If they had gotten positive results they would not be extending the buying.

        My guess is a continuation of "No" results. Secondly, "positive results" for whom? Certainly not Agency mReits like NLY who compete in the same market(Agency) as the Fed. Do you realize that the Fed buys the same long term Agency paper as Agency mReits? Now think....the Fed prints Fiat money(out of nothing) to buy the same paper as NLY has to buy with real earned dollars. Do you see that as a "positive" environment?

        Sell NLY and buy AGNC/MTGE/WMC!!


        Sentiment: Strong Sell

      • If you had good timing this morning, you could have switched to MTGE at a decent price.
        NLY has held up today, so you could have exited NLY without taking a beating on the down market today, and rolled into MTGE which at one point was down about 1.5%.
        And then get your dividend tomorrow.

        But who knows, if the market gets beat down more due to the fiscal cliff uncertainty, there may be other great opportunities to rotate.

        WeeWillie, the best thing I did in reits was exit out of NLY and HTS a long while back and move into different reits.
        Since then, those have been two of the worst performing reits.
        My gains have been way better in other reits.
        Sometimes you need to (and/or should) rotate and re-balance your holdings.

    • ps56k, this would take a book to answer.

      I'll give you the quick answer.

      In the QE environment which has been tough, some are managing it better than others.
      Also some reits are more aggressive than others.
      Some reits are hybrid meaning they can invest outside agency MBS.
      Not all reits invest in the same loan types. Some go after ARMs instead of tradition 15/30 year fixed.
      The list goes on and on.

      • 1 Reply to xxavatarxx
      • Then you add management which is a key difference between mReits. So, look at history. This is not brain surgery. Gary Kain manages both AGNC and MTGE. Pull up a chart and compare the performance of these two to NLY. Then add in the dividends handed out by all three, over any time frame.

        Then explore management's blunders in the past(NLY) with spinning off CIM and dumping much of their non-performing paper(they still retain lots) into the creation of the same. Then look at CIM's history. You begin to get the picture that NLY's management is toxic and the long term trend, both in PPS and dividend payout goes in the wrong direction....down!

        Switch to AGNC/MTGE and/or WMC. No comparison to NLY.


        Sentiment: Strong Sell

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