Arlington Asset Investment Corp. (NYSE:AI)

This stock has been rising steadily for the last several months and looks to me like it may continue to do so.

It has strong free cash flows, a deflated P/E ratio, a healthy revenue and profit margin, apparently sustainable dividends. My only worry is that the mortgage crisis is not over. A tentative buy.

Since they invest in mortgage backed securities (high quality), this is pretty much a contrarian move. They have high debt, but then they use leverage to purchase MBSs. Currently trading at 1.12x earnings, it pays an almost 7% dividend. Their ROI is 28%, so they seem to be making pretty good money for their efforts.

AI is no longer a REIT and no longer owns a part of FBCM. It is now an investment company which owns at a substantial discount to par a basket of primarily non-Agency mortgage backed securities. They are not leveraging this portfolio and will simply reinvest the 12% cash yield while they wait for jobs and housing to improve over the next couple of years which will increase the value of their securities. A dividend declaration is possible here.

Overall the Management Team is young and inexperienced. No past performance record in the current Economic conditions and hence the 20-1 reverse Stock split to make a failing operation appear solvent.

Friedman Billings is on the dole to upgrade Level 3 Comunications stock?
Conflict of interest? network services for upgrade

Friedman Billings upgraded but didn't say Level 3 Communications stopped the integration of networks to save Quarterly losses.

Friedman Billings upgraded but didn't say Level 3 communication is letting Juniper M160 routers go into End Of Life Cycle to save money so Quarterly losses look less.

Friedman Billings states less Quarterly losses so upgrade.
Friedman Billings doesn't say this is because the integration of the 6 purchased companies has stopped CONTRADICTORY to what stockholders have been told

CEO Jim Crowe keeps pumping his spin about the failed integrations.

I've been bearish on FBR for a while and some time in early 2008 did the math. I thought the company was worth $1.5/share when it was trading at $3.50. It was apparent the traders were not pricing in the writedowns that were obviously coming according to FBR's own filings. Hence, I stayed out.

Now, however, I redid the math given that they're back into the mortgage REIT business. They hold $3.2B of GSE backed debt. With that debt up 10% since the bailout this week alone, that should translate into a direct $250M increase in net tangible assets for FBR Group and another $90 for FBCM (of which FBR owns half).

So, unless my math is wrong, FBR should have a net liquidation value in the range of $500M to $620M assuming no further writedowns. Now, if they lose say half of their remaining non-GSE portfolio (a $100M writedown) that would leave them with net tangible assets of $400-$500M which is 60% to double up from the current market price.

Is there anything I'm missing? They are like a levered-up version of PIMCO's total return fund holding a ton of GSE paper when the spread with the 2-year treasury is sinking as we speak. I thought that bad boy should catapult up on the news but either the market doesn't care or is yet to catch up on the news (or my math is flawed).

Any thoughts?

FBR has cleaned up their act, as far as we know, relinquishing their subprime-related assets. The 2M shares of insider buying is a nice sight, but that doesn't mean the company is necessarily healthy and undervalued. However, long term debt has declined over the past few years, and it seems that the company is managing its resources better. Although this company is in a tough market, it is undervalued (like many other companies) and can outperform the S&P if FBR's basement really is clean.

No analyst coverage anymore after the stock went below $2. FBR had profit of 30 cents per share in Q1 vs. a loss of $1.73 in Q4....not many have picked up on the balance sheet clean up last year, well before most other financiala were hit with write down. Huge upside...

An investment banking firm that provides investment banking, institutional brokerage and asset management services and invests as principal in mortgages and mortgage securities and merchant banking investments.

Maybe a double dipper possible

Friedman, Billings, Ramsey is a relatively new company in the institutional brokerage business. They were founded in 1989 which I believe means they haven't been around long enough to royally screw themselves like a Bear Stearns -- take that for what it's worth.

mortgage crisis, not over

near bottom price, bargin stock for coming few months

winner

Beaten down due to mortgage exposure which is now gone. It has other revenue sources.

Starting coverage December 2007. Believe worst is behind FBR - assuming no below-board activities are discovered.

Oversold

Another great stock! Target $5+