Comments on: Chimera (CIM)

By: efer

efer — Sat, 31 Dec 2011 16:25:43 +0000

hahaha
how’s your prediction of $8 in 2011 doing?
CIM is not sitting at $2.50 at the end of 2011

By: Norm

Norm — Tue, 19 Oct 2010 19:58:20 +0000

I see a $8.00 share price by mid 2011 because of the fincial statement and the dividend yield. Wish I could afford more.

By: hhill51

hhill51 — Tue, 12 Oct 2010 04:33:58 +0000

Thanks. I would expect them to continue to pump out secondaries whenever the book value ratio is 1.2x or so. The basic warning that this portfolio has most of its leverage (the re-REMICs) by selling off 100% of the front-end cash flows still applies. \\ I would hope that the quarterly conference call gets into the detail of how many loans are in foreclosure purgatory, since sale of those REO's is what pays off the front-end bonds, which is what CIM holders need to happen before they get cash. The dividend is being paid based on mark-to-market, and not necessarily supported by cash flows at this point in the portfolio life. That's fine as long as the underlying MBS are proceeding through the meat grinder at expected speeds. \\ I'm basically an optimist (foolish, I know) but I think the servicer banks, title companies and MBS Trustees will work out a way to provide warranties and clean titles so REO's can get sold even before every piece of paper in every file is double checked. If that doesn't happen, and we turn into a nation of squatters, that would be very bad for CIM, because the losses would eat up all of the subordinated back end cash flows they were playing for when they bought the seasoned MBS. \\ That said, the stock still seems willing to trade back and forth in a range from $3.70 or so to $4+, so it can pay 30% over the course of a year for the patient swing trader. You might even collect some healthy dividends along the way. \\ good luck. \\ disclosure: no position at present, but I might re-load for several events, especially if they all come together: 1) Secondary issue depresses price 2) Earnings and 10Q provide big surprise to the upside, resulting in price below book value 3) Sudden resolution of foreclosure mess. \\ Would not hold as part of my core portfolio, because they lack the "hands on" servicing operation that their competitor IVR has. Other mREITs that give this exposure to non-Agency paper, in portfolios alongside Agency paper are TWO and MFA.

By: financialdave

financialdave — Tue, 12 Oct 2010 04:12:52 +0000

Since this was posted in June, do you see any change in the character of CIM as an investment? What financials would you keep your eye on?

Thanks for the article.

By: hhill51

hhill51 — Fri, 01 Oct 2010 13:21:25 +0000

Thanks… It was part of a series around that time. I tried to describe each company’s management philosophy rather than the more typical analyst attempt to tear apart the balance sheet and predict earnings.

By: Canuel

Canuel — Fri, 01 Oct 2010 11:49:40 +0000

Hi Howard,

Nice writeup on CIM — DEC

By: hhill51

hhill51 — Wed, 23 Jun 2010 13:24:33 +0000

I’ll be watching to see whether the shares trade beneath the $3.65 per share where last night’s 100 million share secondary was priced. The cash will be used to pay the current dividend and to invest. New investments will yield MUCH less than the investments made last year.

MFA, for example, quoted yields as low as 7% for seasoned private-label MBS they were buying in their last conference call. As the leading sponsor of re-REMIC transactions last year, CIM has deferred almost all of the cash they will get from their investments.

Although accretive to book value, this secondary may not be accretive to per-share earnings.

By: hhill51

hhill51 — Thu, 17 Jun 2010 15:39:55 +0000

Me, too…. I think it will be two years before the yield curve issues embedded in the spread to swaps becomes real, and at similar yields, I think the credit risk / “complexity” risk here isn’t being adequately rewarded. Having said that, I’ll probably buy for a swing trade again the next time it heads south of $3.70.

By: maxx

maxx — Thu, 17 Jun 2010 15:33:10 +0000

great stuff. Short term I’d stick with amreits.