Stockchase Opinions

Srikanth Iyer Annaly Capital Management Inc. NLY-N TOP PICK Jul 09, 2012

(A Top Pick Aug 24/11. Up 8.22%.) A REIT that floats with mortgage payments as dividends. Based upon a portfolio of AAA rated residential mortgages. Share price will stay flat because it is like an equity bond but pays a 13% dividend yield. ROE is 12 times and PE is 7 times.
$16.870

Stock price when the opinion was issued

investment companies funds
It's the ideal tool to help you make quicker, more informed decisions for managing and tracking your investments.

You might be interested:

SELL

See comments under American Capital Agency (AGNC-Q). The stock has been bumping along in a range and paying a dividend. There is a new CEO in place. The relative strength is not good. There are quite likely a number of headwinds from different perspectives here.

DON'T BUY

Mortgage REITs. These tend to attract a lot of investors. The yield is very high, between 12% and 15%. They use debt to lend it as mortgages. The stock has been in decline. Why get a high yield vehicle when you are going to lose it all on capital? It is better to focus on high quality real estate.

DON'T BUY

A mortgage REIT. They leverage the slope of the yield curve, to invest in mortgages. Rising rates are not necessarily a good thing for them. It really all revolves around their ability to leverage the spread in the yield curve. There is also some reinvestment risk. If existing pools of mortgages are maturing at higher rates than what you can invest in, that impairs profitability.

DON'T BUY

It is a mortgage REIT making money by borrowing on the short end of the curve and lending on the long end. The portfolio is much larger than the capital they have to play with, so there is volatility. If rates go up next year it creates refinancing risk for them. He is not comfortable with the leverage in the portfolio.

COMMENT
How to play a zero interest rate? A high yielding stock into residential mortgage backed securities. Slow growth is good for them, but when things go haywire it can fly apart. The dividend can be somewhat variable.
RISKY

Dividend dropped 12%? He has not looked at this one for a few years. It is a rolling of US mortgages and real estate instruments and comes with a high yield. He has never found these types of products to make money for investors. You may not want this long term -- perhaps for a short term trade.

DON'T BUY
Don't get sucked into the large dividend. Hasn't liked this for a long time.
SELL
Pass. Forget the dividend; don't buy it for this. Sell it. The stock itself hasn't done much.
DON'T BUY
The dividend is safe, but capital appreciation will be nil.
premium

🔒 Premium Content Alert – This buzzing stock opinion is accessible only to Premium members

Discover an exclusive list and analysis of the stocks that are trending on social medias—accessible only to our Premium subscribers. With a keen focus on the stocks that are setting social media ablaze, this weekly feature offers an invaluable lens through which to evaluate market movers. Say goodbye to the endless scroll through social media timelines; we curate the buzz so you can invest your time as wisely as your money. Unlock Premium Now.

TOP PICK

Founded in 1997 as a real estate investment trust (reit), annaly is a leading mortgage reit listed on the new york stock exchange (nyse: nly). annaly's principal business objective is to generate net income for distribution to shareholders through the prudent selection and management of our investments. since inception, annaly has paid over $13 billion in dividends to shareholders. Social media mentions are up 300% in the past 24h.