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3 Reasons It's Finally Time to Buy Annaly Capital Management

Date post: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.
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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?

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