Annaly Capital Management Inc. (NLY-N) Stock Predictions - Stockchase
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Annaly Capital Management Inc. (NLY-N)

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Annaly Capital Management...

NLY-N

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Annaly Capital Management Inc. (NLY-N) SAVE Apr, 25, 2019, 2:53 am

10.14 0.06 (0.6%)

About Annaly Capital Management Inc. (NLY-N)

Annaly Capital Management is one of the largest mortgage real estate investment trusts. The company borrows money, primarily via short term repurchase agreements, and reinvests the proceeds in asset-backed securities. More at Wikipedia

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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.

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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.

investment companies/funds
0 0 0 0 0
0 comments
Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$9.890
Owned Owned
Yes

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.

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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.

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Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$10.080
Owned Owned
No

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.

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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.

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Derek Warren

Asst Vice , Lincluden Investment...

Price Price
$10.850
Owned Owned
Unknown

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.

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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.

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Cameron Hurst

Chief Inve, Equium Capital Manag...

Price Price
$9.520
Owned Owned
Unknown

COMMENT

With this, you are borrowing on the short end of the curve and lending on the long end, so it is very much a spread business. You are using a lot of leverage when you do that. The rule of thumb is that you typically want to buy them when they are trading at a discount to BV. He doesn’t own any of these, because there is a significant risk if interest rates move up too quickly. There is reinvestment risk and prepayment risks. However, for the most part the dividends are safe and you are getting a good entry point.

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With this, you are borrowing on the short end of the curve and lending on the long end, so it is very much a spread business. You are using a lot of leverage when you do that. The rule of thumb is that you typically want to buy them when they are trading at a discount to BV. He doesn’t own any of these, because there is a significant risk if interest rates move up too quickly. There is reinvestment risk and prepayment risks. However, for the most part the dividends are safe and you are getting a good entry point.

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Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$9.350
Owned Owned
No

SPECULATIVE BUY

You want to buy when it is at a discount to book and it is now at $.80 on the dollar.  These mortgage REITs have a habit of cutting the distribution if the rates flatten.  Not a bad one to own if you want to take a flyer and get a decent yield.

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You want to buy when it is at a discount to book and it is now at $.80 on the dollar.  These mortgage REITs have a habit of cutting the distribution if the rates flatten.  Not a bad one to own if you want to take a flyer and get a decent yield.

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Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$10.700
Owned Owned
Unknown

COMMENT

A mortgage-backed securities lender in the US. Highly levered. They lend and then get free funding from the Fed and distribute out 100% of their earnings. Because you are getting 13%-14%, all you want it to do is just stay stable. If you think the Fed is going to raise rates, it generally hurts them. On the opposite side, they have the underlying security of US housing improving every day. 2 out of 3 years you will make 14%-15%, but you could be down 20% in one year. You have to be very careful. This probably would not be the greatest timing to get in.

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A mortgage-backed securities lender in the US. Highly levered. They lend and then get free funding from the Fed and distribute out 100% of their earnings. Because you are getting 13%-14%, all you want it to do is just stay stable. If you think the Fed is going to raise rates, it generally hurts them. On the opposite side, they have the underlying security of US housing improving every day. 2 out of 3 years you will make 14%-15%, but you could be down 20% in one year. You have to be very careful. This probably would not be the greatest timing to get in.

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0 0 0 0 0
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Paul Gardner, C

Partner an, Avenue Investment Ma...

Price Price
$10.450
Owned Owned
No

COMMENT

There is a lot of volatility in the sector. He doesn’t own any of the mortgage REITs, although he does think they are starting to represent pretty decent value here. Simple explanation. They borrow on the short end of the curve, lever it up 6 or 7 times and invest it in the long end of the curve in the form of mortgages. You have seen interest rates go down which have increased their reinvestment risk, so the returns they were getting 3 or 4 years ago they were no longer getting, which resulted in dividend cuts. Results have stabilized somewhat. The rule of thumb is that you want to buy these when they are trading at about $.75-$.85 on the dollar in terms of book value. If you own, it is a pretty decent place to get high yield, just recognize that there is going to be a lot of volatility embedded within these.

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There is a lot of volatility in the sector. He doesn’t own any of the mortgage REITs, although he does think they are starting to represent pretty decent value here. Simple explanation. They borrow on the short end of the curve, lever it up 6 or 7 times and invest it in the long end of the curve in the form of mortgages. You have seen interest rates go down which have increased their reinvestment risk, so the returns they were getting 3 or 4 years ago they were no longer getting, which resulted in dividend cuts. Results have stabilized somewhat. The rule of thumb is that you want to buy these when they are trading at about $.75-$.85 on the dollar in terms of book value. If you own, it is a pretty decent place to get high yield, just recognize that there is going to be a lot of volatility embedded within these.

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0 0 0 0 0
0 comments
Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$11.490
Owned Owned
No

HOLD

Has been somewhat cautious on this in the last 3 years. They borrow shorter-term debt and lend money on the long end of the curve. They make money on the spread in between, except that they lever up their borrowing versus their lending at a ratio of about 6 to 1. This means they are very sensitive to changes in the yield curve. It is his expectation that over time, the yield curve will flatten. Doesn’t think you will see an erosion in NAV at this time. Usually want to buy these when they are trading at about $.85 on the dollar, which is where they are right now. Very risky.

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Has been somewhat cautious on this in the last 3 years. They borrow shorter-term debt and lend money on the long end of the curve. They make money on the spread in between, except that they lever up their borrowing versus their lending at a ratio of about 6 to 1. This means they are very sensitive to changes in the yield curve. It is his expectation that over time, the yield curve will flatten. Doesn’t think you will see an erosion in NAV at this time. Usually want to buy these when they are trading at about $.85 on the dollar, which is where they are right now. Very risky.

investment companies/funds
0 0 0 0 0
0 comments
Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$11.620
Owned Owned
No

DON'T BUY

Hasn’t owned any US mortgage REITs. 

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Hasn’t owned any US mortgage REITs. 

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Andy Nasr

VP & Inves, Sentry Investments...

Price Price
$11.280
Owned Owned
No

COMMENT

Part of a group of US mortgage REITs. They buy up mortgages and put debt on those mortgages. This is a very dangerous situation and he doesn’t like any of these. Wouldn’t sell it right now because it is so far down but, if you get a lift, then you should Sell.

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Part of a group of US mortgage REITs. They buy up mortgages and put debt on those mortgages. This is a very dangerous situation and he doesn’t like any of these. Wouldn’t sell it right now because it is so far down but, if you get a lift, then you should Sell.

investment companies/funds
0 0 0 0 0
0 comments
Derek Warren

Asst Vice , Lincluden Investment...

Price Price
$10.200
Owned Owned
No

COMMENT

Mortgage REITs have got hit very hard. With these, you are buying longer duration mortgages and borrowing short term to fund them. You are collecting the yield difference between the longer-term bonds and the way you are funding them. When that spread compresses, you start to see earnings press as well. Also, book values come down because the value of the bonds you have purchased have come down as well. Mortgage REITs are probably trading at a 10%-15% discount to their actual BV. Dividends look sustainable but there will be a fair bit of volatility.

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0 0 0 0 0
0 comments

Mortgage REITs have got hit very hard. With these, you are buying longer duration mortgages and borrowing short term to fund them. You are collecting the yield difference between the longer-term bonds and the way you are funding them. When that spread compresses, you start to see earnings press as well. Also, book values come down because the value of the bonds you have purchased have come down as well. Mortgage REITs are probably trading at a 10%-15% discount to their actual BV. Dividends look sustainable but there will be a fair bit of volatility.

investment companies/funds
0 0 0 0 0
0 comments
Michael Missagh

VP & Sr. P, Sentry Investments...

Price Price
$10.420
Owned Owned
Unknown

DON'T BUY

(Market Call Minute) Mortgage backed security lender and fed backing out is hurting them.

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(Market Call Minute) Mortgage backed security lender and fed backing out is hurting them.

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Paul Gardner, C

Partner an, Avenue Investment Ma...

Price Price
$12.280
Owned Owned
Unknown

SELL ON STRENGTH

US Mortgage REIT with yield at 15% at times.  He got out last year.  If it recovered a little. He would get out.

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US Mortgage REIT with yield at 15% at times.  He got out last year.  If it recovered a little. He would get out.

investment companies/funds
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0 comments
Derek Warren

Asst Vice , Lincluden Investment...

Price Price
$13.260
Owned Owned
Unknown

COMMENT

This is affected by 2 things. 1) Short rates. They borrow Short and buy mortgages on the longer end of the curve and they lever that out, which is why they can pay out the huge dividend yield. 2) They were buying bonds effectively at premium and paying 105. As a bond gets closer to maturity, the 105 becomes Par because they pay you back at the price you bought it at which creates a reduction in BV. Part of the $85 billion that the Fed has been buying is also mortgages, which is one issue. This will do worse if short rates go up.

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0 0 0 0 0
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This is affected by 2 things. 1) Short rates. They borrow Short and buy mortgages on the longer end of the curve and they lever that out, which is why they can pay out the huge dividend yield. 2) They were buying bonds effectively at premium and paying 105. As a bond gets closer to maturity, the 105 becomes Par because they pay you back at the price you bought it at which creates a reduction in BV. Part of the $85 billion that the Fed has been buying is also mortgages, which is one issue. This will do worse if short rates go up.

investment companies/funds
0 0 0 0 0
0 comments
Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$13.880
Owned Owned
Unknown

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