Looks like that NLY is not reinvesting CPR proceeds in new agency MBS. Nor have they decided the best course of action is to increase the buyback. But the best use of funds is to acquire CXS
CreXus Investment Corp. is a real estate investment trust (REIT). The Company is a commercial real estate company that acquires, manages, and finances, directly or through its subsidiaries, commercial mortgage loans and other commercial real estate debt, commercial real property, commercial mortgage-backed securities (CMBS), other commercial real estate-related assets and Agency residential mortgage-backed securities. The Company also engages in long-term sale-leaseback and build-to-suit transactions with companies in the United States. The Company is managed by Fixed Income Discount Advisory Company (FIDAC). FIDAC is a wholly owned subsidiary of Annaly Capital Management, Inc. (Annaly).
The NLY bid for CXS is 12.50 which is above book at 11.93 at 3Q12. I find this very interesting indeed.
I took a quick look at this.
I don't see this adding a ton of value since CXS yeilds around a 10% dividend.
This might help pad them a bit if QE infinity goes on for a very long time since they can focus a bit more on commercial vs agency backed.
But for myself, for non agency reits, I would still stick with MTGE, TWO, NYMT, or WMC over a combined NLY/CXS.