Mr. T Boone Pickens is long oil, if he were short oil, he would be telling a different tale.
Heavy commercial exposure to oil field financing and heavy exposure to personal financing for oil field workers, discouraging general outlook for Canada's economy in light of falling commodity and oil prices. The bank seems to be doing everything OK but hard to make money in the current economy.
Whether they are making money or not, they cannot stop. They will continue until someone puts them out of their misery :).
The debt they hold is mostly agency stuff and is not subject to credit risk. That doesn't mean that this is a good investment, just that they do not own any bad debt.
There is no evidence that there is an investigation underway. Please show the math that gets you to your fair value calculation. Thanks.
The book value is shown at $4.61. That doesn't mean this is a good investment, just that the book value is $4.61.
You have done better than most with this stock. But even though you played it perfect you made no money. Think about it.............. when you play it perfect you should make a boatload.
You are probably right about the movement of oil prices. However, the value of oil company stocks and the price of oil will not bottom at the same time.
ARR has lagged most MREITS during 2014, 2013 and 2012. Management at this company is not very good. You would be smart to keep your money in your pocket.
I sold and took the loss. After dividends I lost about 20% on ARR, but going forward the risk to the share price is too big to stick around. ARR could drop another dollar in a couple months if interest rates even flinch, worse yet it could continue to fall until lights out. Sometimes you have to know when you are beat. ARR in a bad investment.
The share price has fallen $2.73 during the last year and they have paid out $1.37. That is a loss of $1.36. They will not call the shares back unless they go over $25 and that is about $7.50 higher than it is now. By the time 2044 comes around this company will have been long gone, and all you money as well. Please look for a better investment, the deck is stacked against you on this one.
I would chose almost anything else. The 4.5 cent dividend is insufficient for a stock with this much risk. The share price could fall 30% or more during the course of a month or two if interest rates start to twitch. It can happen so fast you will wonder what happened.
Many of the shares held by Vanguard, Black Rock, etc are held in index funds. Small cap index, REIT index, Financial Services Index.........Make no mistake, ARR is a very risky stock. During the last two years the dividend has not covered the fall in the share price and the dividend is too small to compensate for the risk going forward.
For the risk of owning ARR, the return is insufficient. The share price will crater when interest rates move and a 4 or 5 cent monthly dividend will make very little difference in the total return.
If the share price stays flat it is a 13% return. If the share price falls then that reduction is share price impacts the total return. For example, during 2014, the share price fell from $4 to $3.70 or .30. If that happens during 2015 the the effective return would be the 12 mos. x .04= .48 minus .30 = .18 or about 4.9%. This is a risky investment for that small of a return.
The calculation of total return has to account for the decline in the share price, from $4.00 to $3.70. If the shares were originally purchased for $3.70, then the 14.56% would be correct.
Your assessment of earnings, dividends and share price are accurate. But the performance of ARR lags comparable MREITS. Compare ARR share price, earnings, book value and dividends to two other agency REITS: NLY and AGNC. ARR's performance lags during every time period. There is nothing unique about the MREITS, they all do the same thing. Some guys are better at it, and these guys are just not as smart as some of the other players.
The mortgages currently held by MREITS are already marked to market and consequently some of the forward interest rate risk is already in the book value of these share. In other words, when mortgage rates eventually do rise, the book value of these shares may not fall as much as some are anticipating. The underlying bonds are already priced for market risk, the discount to MREIT book value is redundant to some extent.