TWO, The Lagger of the Peer Group. But Not For Long
Lately the stock has been lagging companies like AGNC and MTGE.. But that is now going to be unlikely going forward. TWO looks attractive here at $9.55. I remember being short TWO back when it was near $14 lol. But now it's time to get long. TWO should always have a premium to peers as the management team is amazing. I think Fair value is $13 or about 1.25x my current estimate of book value.
Given the current economic environment and the continued antics of the Government, I think that TWO will be trading at a discount to BV for a while.......
I think it would take a 100 basis point drop on the current 10 year T-Bill bringing it back to May 2013 levels to foster any kind of premium pricing. I'll be happy just to regain a BV NAV and no further decreases in dividends but that's a tough road ahead as fundamentals don't support those levels at the current time.
remember, capital raises when we get back above book will just add to our income because the company can average it's yield up on the asset yield side of things... Getting back above book is important.