I know, the personal alarm company crew has registered those words (can you really own exclusive rights to a normal English phrase?)….
I’ve fallen into a value trap and I can’t help buying more.
Several stocks were called away through covered calls again last Saturday, an event I hope continues to happen every month. It left me starting this week with more than 15% cash in the IRA’s.
After replacing some of the called-away stocks (IOC, ELN and DNDN), I still had some cash lying around, and I made the plunge for yet more amREIT stock. I know, group leader NLY cut their dividend after making pretty definitive claims that they had foreseen the whole Agency buy-back issue, and avoided it by holding over 70% in fixed-rate MBS instead of ARMs.
Needless to say, the stock price fell and the fallout extended to the amREITs that hold mostly ARMs that haven’t yet announced dividends. Fear will do that.
As far as I’m concerned, nothing has changed. The spread between the yield of the MBS and the funding will continue to be historically fat for another four to eight quarters, in my opinion.
The ARMs will continue to be the less risky MBS to hold from a book value standpoint and because the adjustment of the coupons limits the damage that will be done to earnings once the Fed starts ratcheting rates up again.
In the mean time, if I can own these bonds for less than I would pay if I bought them in the market, I will.
In Agency REIT land, that leaves me long ANH, CMO and MFA. I’m watching NLY for a re-entry point. Would love to buy it again around $17 a share, but don’t know if that will happen.