Annaly Capital Management, Inc. (NYSE:NLY)

CAPS Rating: 4 out of 5

The Company owns and manages a portfolio of mortgage backed securities, including mortgage pass-through certificates, collateralized mortgage obligations and other securities representing interests in or obligations backed by pools of mortgage loans.


Player Avatar 702nitro (< 20) Submitted: 10/29/2010 3:58:45 PM : Underperform Start Price: $10.72 NLY Score: +66.63

Great stock to have in portfolio while interest rates remain low, but will be taking a hit in share price sometime 2012 when the FR starts raising interest rates again. In the meantime, Q3 2010 results came in below analyst expectations but Annaly was able to sustain the current dividend per share payout. Things are starting to get a little tight and expect a possible div cut in the next 2 or 3 quarters. At that time I will be out and will be looking for a re-entry point at a lower stock price.

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Member Avatar ravens9111 (57.48) Submitted: 12/27/2010 3:35:08 PM
Recs: 1

The Fed raising rates is only part of the equation. If MORTGAGE rates increase, there will be a lower supply of MBS on the market. There has been a huge refinance boom the past couple years when the Fed began buying $1.25 TRILLION worth of MBS to lower mortgage rates. Now, MBS is set by the private market. The price of MBS is typically based on a "spread" on the 10 Year Treasury rate. As the 10 Year Treasury increases in rate, so will rates for MBS. Once this happens, MBS supply will be cut substantially as refinances become dead. All that will be left are purchase loans in the MBS pool. Even if NLY's "spread" from borrowing by the Fed and the price they pay for MBS increases, the lower volume of MBS will hurt earnings. This could take awhile to play out. Many people who are long NLY want rates to go up so the "spread" increases. However, the opposite is true. The only way NLY can sustain profits is if MBS rates DECREASE so the refinance boom can continue.

Member Avatar bebill (< 20) Submitted: 11/29/2011 6:39:52 PM
Recs: 0

why then is arr doing ok

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