3 reasons it's finally time to buy annaly capital management
Post on 17-Sep-2014
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Mortgage REITs faced a tough environment in 2013, and it may be in for more of the same in 2014. But there are still three great reasons to buy this industry giant.TRANSCRIPT
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3 Reasons Its Finally Time to Buy Annaly Capital Management 3. Annalys a survivor Rising and volatile interest rates made 2013 a difficult environment
Source: Treasury.govBut CEO and Co-founder Wellington Denahan-Norris has faced difficult environments in the past
Source: BlockShopper Long IslandLike the housing bubble
Source: Treasury.gov**mREITs earn the difference between short-term (green) and long-term (blue) interest ratesAnnalys dividend plummeted Source: Nasdaq.comBecause Annalys focused on protecting itself against risk It survived And has a total return of over 80% since 2009
Source: John Maxfield2. Extremely low leverage Mortgage REITs use leverage (borrowing) to magnify returnsLeverage = Debt/Shareholders Equity
Annalys leverage is MUCH lower than peers
The negative effects of lower leverage Book value per share down 23% from 2012 to 2013
Interest income down 12% from 2012 to 2013 ButIt limits losses from interest rate riskOrThe loss of securities value due to rising interest rates And It gives Annaly HUGE buying powerOr Liquidity to seize opportunities as they arise 1. ValuationAssets Liabilities = Book Value
Annalys trading at a 8% discount to its book value Some of the discount is due to: Poor returns in 2013Future interest rate uncertaintyRecent dividend cuts
Though A 23% discount to its historic price-to-book value should compensate your uncertainty
Is This a Better Dividend Option Than mREITs?