My fear is of dollar collapse or (an hopefully temporary) currency crisis in which NLY goes from teen price to a single digit price. Is ”the U.S. dollar risk” also your opinion?
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That’s not my personal fear — the risk for Annaly, as for all the mortgage REITs, is that the yield curve flattens … as it has been showing some signs of (admittedly with limited success) with the fed trying to push down mortgage rates and 10-year bond rates. The secondary risk is regulatory and/or systemic change in the mortgage market (ie, if lots of refinancings get done quickly and easily because of govt. decree), worries about the currency collapsing are way down the list for me when it comes to mortgage REITs. Not to say that it wouldn’t be a problem if it happened, but they have much more specific and industry-specific risks that I worry about more than I worry about the collapse of the dollar as an impact on NLY specifically.
I don’t currently own NLY or any of the competitors or any “regular” banks, which depend on the same yield curve for their basic income, and I’m not particularly tempted to invest in any of them today, but if I did own a mortgage REIT it would probably be NLY because of their large size and experience at managing through swinging interest rate environments.
Oh Great Sage you are right on – first we bailout the banks and today we are going to bailout Fannie/Freddie mortgage holders with lower cost mortgages. Mike Farrell Chairman at NLY must have foresawn this as he has reduced his leverage and cut the dividend ahead of this announcement. Of course this is just more pressure on our fragile banking system.
Nly and chimera are both fine so long as the government continues to follow its stated goal of surpressing interest rates. I believe they said they would do this through the end of 2012.
Thanks for the replies, and that timely Travis NLY analysis tonight.
Non-sequitur: Prompting comes by way of a CNN bulletin that Greece is being relieved of fifty percent of its debt. My long shot gambles, which should make a Jimmy the Greek blush. There are two Grecian banks of which I am speculating long. NBG, National Bank of Greece and ALBKY, Alpha Bank. Both are down to about 50 pennies each. NBG reportedly has 600 branches, and had a year or so ago made an offer to buyout the smaller Alpha Bank. I had anticipated the Europeans finally agreeing to do something, and hopefully the action is banker bullish. But if not bullish, at the least Greece is not dissolving, they’ll always need banks, and perhaps the “Euro union” would bail ’em from “bankruptcy,”
NLY should be fine at least through the end of 2012. Besides, these guys are the best in the business. I just bought some more myself.
I have owned both NLY and CIM over the years and think they are quite safe. I currently have a fairly large position in CIM which I have held since Feb 2010. I am down a bit but the dividends received more than compensate for the current slight capital loss.
Back in the 90’s I called Annaly and spoke with Farrell and was quite impressed with him. For my money he’s one of the best and he’s assembled an expert team.
/* Phil */