Hey Len, long time no read ....
I had 40,000 shares of WMC in the spring, but bailed when the the MREIT crash ocurred. Took a little abuse on that, but at least I got some decent prices when I invested the proceeds. So, I am a little cautious now. WMC is currently my only MREIT holding.
Where do you think the price goes? I'm thinking the bloom is off the AGNC rose. Even with a $0.75 divy, the price should be about $15.00 - $17.00. I'm not short, but I am pondering an entry for AGNC.
WMC is holding. There are a lot of differences between WMC and AGNC including composition of portfolio and hedging strategies. It'll be interesting to see what happens. AGNC is going to take the route of more share buybacks.
Thanks, Jack ...
I added a few shares this morning, but I only have 6,750 [only 250 this morning buying with a divy] .... not nearly what I had last year with MTGE. Pretty much done buying for now.
I have a gob of NCV which just keeps going up a little everyday. I added a little more a couple of weeks ago, but haven't added lately ... still chugging up the hill though.
I did not find that number where you said it was; can you be more specific? Also, you have to use taxable income as a measure of payout ratio ... is that what you are using? EPS is not correct as a measure of payout. For those people referring to retained earnings, those are GAAP basis also, and not taxable ... although I don't know if there is much difference.
As postnasaldrip45 points out, there was no ROC in 2012. I sort of doubt that it has jumped to 162 in six months when they are booking deals like crazy, and have no loans in arrears. However, maybe you can indicate where I'll find that.
P.S. I really like it when you tell people they're morons 'cause that way I can tell you're really smart.
First, not all REIT's are considered highly risky, and not all pay high dividends. The equity REIT's often pay in the area of 3% - 5%. They actually own and manage the real estate, and typically aren't leveraged beyond the debt incurred for the mortgage.
Other REIT's and BDC's - like RSO - use leverage to goose their earnings, and typically pay 8% and above. It is the leverage that investors view as "risky." Why? Because it's another variable that can affect earnings greatly; it is largely beyond management's control; and it is volatile.
Now, is it safe to hold these investments over the long term? Well, I do, but it is not safe ... nothing is. It is a lot safer than a short-term trade. Especially with your entry prices; you're not likely to see an unrealized loss so the dividends are great.
In short, your plan makes sense and works for the most part, but it doesn't mean other investors are wrong ... they just may have other investing strategies and techniques.
The direction of the move in MBS prices is not the real issue. MREIT's can handle up or down as long as the change is slow. It's their extant portfolio that doesn't move so quick. In May and June, the drop in MBS prices was explosive and unprecedented ... that was the problem.
I agree. I have been a big believer in WMC. I had 40,000 shares before May, but the May - June experience has made me cautious. If they killed, it would be no surprise to me. GL
It's possible, but we don't know the effect of hedging, etc. This is a simple business in principle, but a complex business in practice.