by Travis Johnson, Stock Gumshoe | July 7, 2023 5:17 pm
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Source URL: https://www.stockgumshoe.com/2023/07/friday-file-brookfield-gets-more-insurance-y-plus-a-midyear-look-at-teaser-performance/
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Could U please do a paragraph on the meaning of “par” in the Mortgage Backed Securities world?
It sounds like probably the sum if everybody paid off all their mortgages with full interest (not early, no defaults). But I’m better to ask than to guess!
It’s the same as any bond — the 3% mortgages that were made five years ago still trade, they just have to trade at a discount to compete with the new 7% mortgage bonds being created today. Par is the face amount of the bond, and the principal that is eventually repaid — so if you buy at a discount, you also get some capital gains if the house is sold or refinanced and the mortgage is repaid early (as most are).
It’s a little more complex than a plain vanilla corporate bond, since those are usually interest-only and standard mortgage bonds amortize with each coupon, so mortgage-backed securities don’t have one big payment at the end to
Repay principal, but the basic idea is similar.
And here’s to the good ship Markel!
Travis,
Good discussion about the yachts. Could you write a paragraph or two about how the brokerage companies make money. My brokerage does not charge a commission on any trade and I have seen ads that one could invest as little as $1 with no commission. How do they get the funding to pay the crew on their yacht?
One piece of an answer is that brokerages can also sell additional services for a fee. Like options contracts, for example.
I was surprised to discover that Schwab does not permit reinvesting dividends in BAM or BIP. I emailed BAM and got this response: “Thank you for your email.
Unfortunately, the Depository Trust Company (DTC) terminated its DRIP program with the U.S. and other country brokers for all Canadian companies in 2014. As a result, Brookfield is unable to offer a DRIP plan for beneficial shareholders who hold their shares within a brokerage account outside of Canada.” Since there is frequent discussion here and on Seeking Alpha about people reinvesting dividends in these stocks, I am somewhat mystified.
The company doesn’t have to have a formal DRIP in place for brokers to reinvest dividends on behalf of their customers. I think Vanguard and Fidelity will both automatically reinvest dividends for BAM shareholders (if so instructed).
And, of course, with $0 commission trading,
you can always reinvest the dividends yourself. I haven’t ever used Schwab, not sure what their policies are.
Can confirm, my Vanguard Roth reinvests my BAM dividends for me.
Is anybody aware of an ETF that is heavy on Brookfield an/or Travis’ insurance favorites, preferably accumulating and registered in Ireland (due to withholding tax for us non-US citizens) with a low TER ? (Or any website where I can search for such a funds?)
I am always on the lookout for potential short sales. I just ran a Yahoo screener (price above 30.00, book value less than zero and net income less than zero). It returned 27 results. Naturally, most of them are up 2% and more today alone.
One of them caught my attention, Altisource Asset Management Corporation (AAMC) based in the Virgin Islands.
Profit margin and Operational margin both below -100%
Return on assets -7.70%, Return on equity -25.55%
EBITDA -10.79M
Net income -15.22M
Diluted EPS -7.67
Book value/share -53.58
Operating cash flow -29.63M and Levered free cash flow -18.82M
All numbers taken from Yahoo statistics for the company.
Granted it is a very small company but how the heck is this trading at $56.40 a share?
It is too small to short but I was wondering, Travis, if you have heard of this company? Am I missing something?
Nope, I’ve never heard of them. They do asset management, with a specialty in real estate.