mREIT valuation & interest rate risk

In today’s hunt for yield mREITs seem to be an increasingly popular choice. The sector offers yields in the range of 13%. With even high yield bonds trading down to yields of ~7% an almost doubling of potential yield is compelling. But have investors chased yield too much and what happens if rates change dramatically? Today I want to do…

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A contrarian view on interest rates

How many times a week do you read that interest rates have no where to go but up? That bonds are terrible investments and will be crushed by rising rates? And when was the first time you started to hear these stories? If you read pretty much any source of investment news then you’ve been hearing these stories for almost…

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mREITs: good risk reward setups in place

Its been a hell of a few weeks for mREITs. From the Friday freakout just over one month ago to the recent week’s 5%+ price declines investors are digesting multiple new risks to the mREIT’s businesses. In response to all this valuations for the sector have come down to a level that represents a very positive risk reward setup. First,…

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mREIT Q2 earnings – environment remains positive

It’s time again to update mREIT earnings results. All of the mREITs that I track have now announced Q2 2011 earnings with MFA finishing up the announcements this morning. Instead of doing separate posts for each of the 7 mREITs on my list I decided to do a summary post for the group. For my previous posts on mREITs see…

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Mortgage REIT friday freakout

Yesterday was sure an interesting day for the mortgage REIT (mREIT) market. Early in the morning trade investors seemed to be fleeing mREITs. At one point the biggest mREIT, NLY, traded down 18% from its opening price then came back to close down about 3% for the day. This was a highly unusual move to say the least. Lets take…

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Mortgage REIT Q2 2011 dividend announcements

I thought today would be a good day to discuss the recent Q2 2011 dividend announcements from the mortgage REIT (mREIT) companies that I track. Six out of the seven mREITs I follow have announced their Q2 dividends. For my previous posts on mREITs see here. Also, today the fed announced their latest policy decision which also has a potential…

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Interest rate risk in mortgage REITs

In several previous posts on mortgage REITs (mREITs) I have discussed the basics of understanding them, that there could be a good investment opportunity in them, and I presented an economic model that breaks down their sources of earnings and dividends. Now, its time to address the very important topic of the risk in investing in mREITs and how an…

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Increasing focus on mortgage REITs

I apologize for the hiatus in posting the last few days. We currently have the RV parked in the Gila National Forest in a pretty remote location with no power, no communications. It’s a 23 mile drive down the mountain to the nearest access. Good thing there is a good barbeque place on the way for extra incentive. Now, on…

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Are bank stocks worth the risk?

“If bank stocks are the best investments you can find for your portfolio, you should fear for you wealth.” Value Investment Institute, March 2011 Pretty strong words. I came across this commentary on banks from the Value Investment Institute and it prompted me to write this post on the suitability of banks for income investors. It’s a great and short…

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Understanding mortgage REITs: Annaly Mortgage

Today I want to delve into a widely misunderstood part of the market – mortgage REITs. This misunderstanding creates some great opportunities for income investors to enhance returns and income without taking on much more risk. I’ll focus my discussion on the biggest and best of the mortgage REITs, Annaly Capital Management Inc, symbol NLY. Mortgage REITs are real estate…

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