Bad Call

That could mean many things.  For example, my recent purchase of NLY at just over $17 a share.

While that was close to the book value, and nothing in the economy says to me that the yield curve will flatten or invert any time soon, they did have a conference call coming up.

That call happened at 10 AM today.  The chart tells a story better than a thousand words.  Somebody wanted out, and they dumped more than 4 million shares at about the time Mike Farrell was finishing his opening remarks.

Global Warming? This looks more like a glacial crevasse than a stock chart.

A few lucky bottom feeders got shares at $14.09.  Chances are they were market-makers, and they didn’t have to wait long to flip those shares for a $2 profit.  Nice.

Last night, when the news of Annaly’s earnings came out, the stock took an after-hours dive.

At least it felt like a dive until today.  I even wondered whether it was a head-fake in the thinly traded after hours session meant to scare income investors.

After all, the worst of the news, in my opinion, was already out:  that they were cutting the quarterly dividend from 75 cents to 65 cents.

Sympathy moves southward are hitting the other amREITs.

Strangely enough, AGNC is relatively untouched, down just over 1%, even though it trades to the fattest premium to book value in the group.

Market pundits are doing their usual thing, making up reasons for what is really a mass of correlated but disconnected decisions by investors and traders.  Today’s reason du jour is the recently-reliable Greek situation.

Unless there is huge undisclosed levered holdings of Greek debt hiding on the major Wall Street banks’ balance sheets, chances are that we won’t see a repeat of the Lehman-induced disappearance of financing for amREITs.

So, the amREITs still have plenty of financing available.  As a group, they have lower leverage than just about any time since they began trading.  The Fed just told us, again, that they won’t be raising short term rates any time soon.

I’ll stand pat, and kick myself for not holding out a few more days before adding to my NLY, ANH and CMO.

Nice call (not).

hh

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3 Responses to Bad Call

  1. Tom D says:

    The mREITS have had poor market action for months. I decided to pullback only into CMO PrB several months ago. It’s paying over 9% annually on a monthly basis which is good for income investors as opposed to dividend scalpers and speculators who need the mREIT equity leverage.

    Much of Greek sovereign and bank debt is held by German banks which is why Angela Merkel had to move but not without dumping on us indirectly through the IMF whch is taking a subbordinate position…. what a laugh.

    • hhill51 says:

      I suffer from what you call “funnymentals”…. I hope you’ve done well in your alternatives. I feel like I’m running in place.

      • Tom D says:

        “Funnymentals” came from Jack Schwager’s “Market Wizards” interview with Ed Seykota, the great futures technical trend trader.

        Jack asked Ed, “What are your thoughts about using fundamental analysis as an input in trading?”

        Ed replied, “Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them ‘funny-mentals'”

        My guess is that Seykota’s put-down of fundamentals would include those we “think” about as well as “read” about. The worst funnymentals of all, in my view, are economic and political. That’s what we read and think about the most.

        But there are rare exceptions to the rule. Clearly John Paulson nailed the fundamentals of the housing market and how to trade his insight. The rest of us had best not assume we have that talent. Nor may Paulson ever repeat.

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