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Annaly's (NLY) Board Nods for $1.5B Share Buyback in 2021

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Zacks Equity Research
·3 min read
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Amid these testing times when numerous companies have witnessed lower returns or issued dilutive equity capital, Annaly Capital Management, Inc. NLY has announced that its board of directors has authorized a new share repurchase program that enables it to buy back up to $1.5 billion of its outstanding shares of common stock.

The program expires on Dec 31, 2021, and replaces the company’s existing $1.5-billion share repurchase program, which matured on Dec 31, 2020. This demonstrates its commitment to enhance shareholder value and return on equity.

Specifically, during 2019, the company repurchased 26.2 million shares of its common stock for an aggregate amount of $223.2 million, excluding commission costs. Also, it repurchased around $209 million in common stock from the start of 2020 through Oct 28, 2020.

Further, the company noted that share repurchases made in connection with the program will be implemented in either the open market or in privately negotiated transactions. Ultimately, such efforts are strategic fits as it provides immediate book value accretion and additional flexibility within Annaly’s capital-allocation framework.

Admittedly, given the size and scale of the company along with its focus on Agency investments, Annaly has compelling opportunities to expand near-term earnings and this is likely to translate to higher shareholder returns.

Ahead of a volatile economic environment in March last year, Annaly has increased its equity allocation into the Agency space that has been benefitting from unprecedented Fed support. In fact, the Fed has purchased more than $1 trillion in Agency MBS assets, with a particular focus on lower-coupon specified pools. This has created an environment of significant specialness within the to-be-announced market and given significant equity allocation in such assets, the company is well-poised to achieve book value gains and significant profitability.

Moreover, Annaly’s internally managed structure is a positive as it will enable the company to realize meaningful cost efficiencies, resulting from lower management fees and permit scalable growth in the best shareholder interests.

Shares of this Zacks Rank #1 (Strong Buy) company have rallied 31.4% over the past six months compared with the industry’s growth of 30.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.



Other Stocks to Consider

AGNC Investment Corp.’s AGNC Zacks Consensus Estimate for 2021 earnings has been revised 1.7% upward to $2.37 over the past two months. The company currently carries a Zacks Rank of 2 (Buy).

Starwood Property Trust, Inc.’s STWD earnings estimates for the current year have been unchanged at $1.88 over the past month. The company currently carries a Zacks Rank of 2.

Two Harbors Investments Corp’s TWO earnings estimates for 2021 have been revised 14% upward to 90 cents over the past two months. It currently carries a Zacks Rank of 2.

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