ETRACS Monthly Pay 2XLeveraged Mortgage REIT ETN (NYSEMKT:MORL)

CAPS Rating: 4 out of 5

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Member Avatar mplaut100 (< 20) Submitted: 6/5/2014 6:40:55 PM : Outperform Start Price: $20.43 MORL Score: -1.76

The stock currently yields over 20%. That alone will outperform the indexes.

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Member Avatar TSIF (99.96) Submitted: 4/28/2014 7:58:51 PM : Outperform Start Price: $19.20 MORL Score: +0.37

MORL is a dividend play, I try to add one from time to time, especially when I believe the market will be sluggish. I have added dividend plays in 2009, 2010, and 2013 that couldn't keep up with S&P benchmark run. Some are still negative, but I'm happy with compounding over time.

IN the case of ETRAS 2X leveraged, however, it's hard to say if the dividend is reliable.
1. Many real estate REIT's are dependent on low interest rates. During threats of the Fed backing off buying interest rates have risen and real estate REIT's that depend on low interest rates have depreciated much sharply than the dividend gain.

2. Leveraged anything is trouble and black magic.

3. Fees appear to be low, but leveraged, turnover of assets and fees are generally combinations to get to the poor house sooner. Leveraged assets contain more volatility and we are seeing high volatility currently in most market sectors. Many of the sub components are already leveraged, which is what generates the high dividends of mortgage based REITs.

Still there are large quarterly dividends and smaller monthly dividends. $21.50 is 30% off the 52 week high, and appears to be near NAV.

I would need more DD to fully understand this one. Essentially if you duplicated this ETN, you would be heavily margined which I only do in real life when I'm trading short term.

This Seeking Alpha, Lance Brofman article appears to be a good next DD step.
http://seekingalpha.com/article/2167743-ubs-leveraged-etns-separating-fact-from-fiction

Pocketing the 18% for now and riding along.

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Member Avatar lsorren (< 20) Submitted: 7/22/2013 5:27:08 PM : Outperform Start Price: $15.51 MORL Score: +15.64

MORL offers massive dividends (2x MORT index). As mREITs recover from the unwarranted June 2013 selloff up to the real end of QE3, this ETN should increase in value while also providing a more than healthy dividend.

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Member Avatar panda72 (99.83) Submitted: 5/4/2013 9:30:40 PM : Outperform Start Price: $16.92 MORL Score: -15.79

Real money yield play. Yield has not met expectations but capital appreciation has greatly surprised. I ordinarily bet against leveraged instruments but this one is an exception. The tracking is monthly rather than daily so you only get hit with 12 yearly errors and I think very highly of the underlying mortgage REIT industry. Once the dividend stabilizes at something close to double the average of the big boys in REIT space, this should do very well.

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