Looking Back

Jessbee’s comment on the last post raised a question regarding high ROCE and high dividends. Basically, the question was why that shouldn’t automatically be the preferred investment, under the assumption that all are doing the same business model, anyway.

You can get a start seeing the distinctions by checking out this post about two imaginary amREITs, one called Risky REIT, and the other called Conservative REIT. There are literally as many variations on these themes as there are management teams in the sector.

I’m going to go back and read my previous summaries of the group before putting out the promised group report based on the latest round of earnings reports and calls.

As before, I won’t be giving investment advice, nor will I be trying to predict earnings or dividends. I will try to spot any shifts in strategy from what I thought the management teams were doing when I wrote those summaries last June and July. I’ll also be able to see mistakes or omissions I made, and learn from them.

Since I had to look them up anyway, I thought I would put all the links together here for my current task, and share the list with readers so they can also have an easy way to refer back.

After the break, I’ll list the companies I reviewed and provide a link to each write-up.
Though I’ve mentioned some other residential mortgage REITs and a couple of commercial mortgage REITs along the way, only the residential MBS investor series is here, down to about $200 million in market cap at the time.  I may get inspired to include some others (eg RWT, WAC, RSO, GKK, ABR…)

Intro

Annaly

Chimera

MFA Financial

Hatteras Financial

Capstead Mortgage

Anworth Mortgage

American Capital Agency

Invesco Mortage

Cypress Sharpridge

Two Harbors

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One Response to Looking Back

  1. Jim D says:

    HH,

    In your writeup about AGNC, you write:

    “Kain is definitely showing his years of training at Freddie Mac, where he had all the analytic firepower of Blackrock at his disposal. I see that in the main hedging book, a book of swaps that are designed to hedge against adverse financing environments (i.e. protect income) rather than hedging to protect book value. They are hedging around half their repo cost exposure, and that is further divided into two thirds shorter duration (1 to 3 years) and one third longer than 3 years but less than 5 years.”

    You talk about operations or hedging designed to protect income as opposed to book value. Some of us might be more concerned about just that, ongoing income over book value and stock price. In your coming writeup I wonder if you could include a comment about those companies that might operate in such a manner. I’m not that concerned about book value or pricing as some multiple of it. Within reason, of course. I can accept actions taken which might even hinder book value if it protects ongoing income. After all, are not these income investments? It seems that income investments are always at a disadvantge as the market is focused on stock price, hence book value concern, over the stable flow of income to the investor.

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