Can't seem to find news on this guy. What happened? Rather large seller appeared out of the blue intraday, and I don't have a decent news feed. I'm assuming some knowledge bout the dividend or some business practice got released.
Nly
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Not really a big deal, just that usually it's news that pushes this thing around if the volume is >50k shares over a few seconds. But, today, there were moves in excess of a few cents in both directions, with moves involving over 500k shares over a few seconds.
I assumed it was news driven, but could not find anything news related.
Market down and TLT down ... LT rates are going up - the Fed screwed the pooch with a premature QE3.
mReits with massive leverage move up when TLT goes up and crushed when it goes down.
mReits with massive leverage move up when TLT goes up and crushed when it goes down.
In theory mReits will go down at an accelerated rate compared to TLT since they're basically just TLT on leverage.
I forget which is which, but NLY/AGNC are 5&10 times leveraged.
Of course it might take awhile to happen ...
Even high dividend plays are at risk moving forward if Treasuries start to rise.... the Fed's interference really has things out of whack, and eventually things will return to a more normalized state (no QE/Twist) and it won't be pretty.
I forget which is which, but NLY/AGNC are 5&10 times leveraged.
Of course it might take awhile to happen ...
Even high dividend plays are at risk moving forward if Treasuries start to rise.... the Fed's interference really has things out of whack, and eventually things will return to a more normalized state (no QE/Twist) and it won't be pretty.
mREITs getting crushed today. I reduced exposure there myself.
That 500k share move I saw yesterday was a predictor; I'm a dope. I should have put on some shorts. I'm more of a scalper, unfortunately.
That 500k share move I saw yesterday was a predictor; I'm a dope. I should have put on some shorts. I'm more of a scalper, unfortunately.
Thanks for the explanation. I really appreciate it. This forum is hit or miss; I like getting concrete answers like this to look into.
Here's an article with more details on leverage:
http://seekingalpha.com/article/913251-comparing-mortgage-reits-the-winners-and-the-risks-part-1
I wouldn't touch any of them cause I think long term rates are going up.
If you want yield you're better off in preferred stock - you still have interest rate risk but at least you control when to take gains or losses. PFF makes for a decent ETF but I think it's at a top (along w rest of market.) Or you can pick a bond ETF (also toppy now IMO)
http://seekingalpha.com/article/913251-comparing-mortgage-reits-the-winners-and-the-risks-part-1
I wouldn't touch any of them cause I think long term rates are going up.
If you want yield you're better off in preferred stock - you still have interest rate risk but at least you control when to take gains or losses. PFF makes for a decent ETF but I think it's at a top (along w rest of market.) Or you can pick a bond ETF (also toppy now IMO)
Uh, no. The best thing in the world at the moment for the mREITs would be TLT going down (i.e., long rates moving higher).
mREITs are getting hammered because rates are too low, not because they're moving up.
1. These guys basically borrow short, lend long. Low long rates cut their net interest margin. Absent an increase in leverage, they earn less.
2. Low rates (particularly as they lower MBS yields) combined with banks' growing willingness to lend could lead to a refi boom - meaning mortgages on mREIT balance sheets priced at 105 will get called away at 100 - devastating to book values.
Other than that, there's a lot of value in what you said. Carry on.
