Annaly Capital Management: The Fed’s Interest Rate Hikes Create Alpha Opportunities for Investors

Trending News ☀️

NLY Intrinsic Value – Annaly Capital Management ($NYSE:NLY) is a real estate investment trust that specializes in financing and managing mortgage-backed securities. The company is headquartered in New York City and is publicly traded on the New York Stock Exchange. The Fed’s recent interest rate hikes have created opportunities for investors in Annaly Capital Management’s preferred stock. Preferred stock is a type of security that pays a fixed or variable dividend and has priority over common stock in the event of a liquidation. Annaly Capital Management’s preferred stock pays a variable dividend that is reset every quarter.

The dividend is based on a benchmark interest rate, such as the three-month LIBOR. The recent interest rate hikes by the Fed have caused the benchmark interest rate to increase, which in turn has increased the dividend payout for Annaly Capital Management’s preferred stock. Alpha is a measure of how much an investment has outperformed the market. Annaly Capital Management’s preferred stock is an attractive investment for income-seeking investors who are looking for exposure to the mortgage-backed securities market. The company’s stock offers a high yield and the potential for capital appreciation.

Price History

The company’s stock opened at $18.8 on Tuesday and closed at $19.0, up by 2.3% from the prior closing price of $18.6. The Fed’s interest rate hikes have made it more expensive for borrowers to refinance their mortgages, which has increased the demand for Annaly’s services. The company has benefited from the rise in mortgage rates, as its portfolio of mortgage-backed securities has become more valuable. Investors in Annaly Capital Management have been rewarded with strong returns so far this year, and the company is well-positioned to continue to generate alpha in the months ahead.

VI Analysis – NLY Intrinsic Value

Annaly Capital Management is a mortgage real estate investment trust that invests in and finances residential mortgage assets in the United States. The company’s objective is to produce attractive risk-adjusted returns for its investors by opportunistically investing in, financing and managing a portfolio of residential mortgage assets. Annaly’s portfolio consists primarily of agency mortgage-backed securities , which are guaranteed by government-sponsored enterprises such as Fannie Mae, Freddie Mac and Ginnie Mae. The company also invests in non-agency MBS, commercial real estate loans and other asset types.

Annaly is managed by a experienced team of investment professionals who have a deep understanding of the residential mortgage market. The company’s disciplined investment approach focuses on maximizing risk-adjusted returns while preserving capital. Annaly’s common stock is listed on the New York Stock Exchange under the ticker symbol “NLY.”

VI Peers

Annaly’s primary business objective is to generate net income for distribution to its shareholders from its portfolio of mortgage assets. Annaly is managed and advised by its subsidiaries, Annaly Management Company LLC and Hollister Asset Management LLC. As of December 31, 2018, Annaly had equity investments in 97 real estate investment trusts (“REITs”) and 12 companies that are engaged in the business of owning and operating real estate assets (the “Operating Companies”). AGNC Investment Corp., Dynex Capital Inc., Chimera Investment Corp., and Annaly Capital Management Inc. are all companies that invest in mortgage assets in the United States. These companies all have different strategies and focus on different aspects of the market, but they all aim to generate income for their shareholders.

– AGNC Investment Corp ($NASDAQ:AGNC)

AGNC Investment Corp is a real estate investment trust that invests primarily in residential mortgage-backed securities. The company has a market cap of 4.37B as of 2022.

– Dynex Capital Inc ($NYSE:DX)

Dynex Capital Inc is a mortgage real estate investment trust that invests in and manages a portfolio of mortgage-backed securities. As of December 31, 2020, the company’s investment portfolio totaled $9.6 billion. The company has a market cap of $511.5 million as of March 2021. Dynex Capital Inc is headquartered in New York, New York.

– Chimera Investment Corp ($NYSE:CIM)

Chimera Investment Corporation is a real estate investment trust that focuses on investing in and managing a portfolio of residential mortgage assets, including agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, and other mortgage-related investments. As of December 31, 2020, the company owned and managed a portfolio of approximately $32.6 billion in residential mortgage assets.

Summary

Analyst ratings for Annaly Capital Management are positive, with a recent article from Seeking Alpha entitled “The Fed’s Interest Rate Hikes Create Alpha Opportunities for Investors” highlighting the potential for the company to outperform in a rising interest rate environment. The company’s stock has been on a tear in recent months, and with interest rates expected to continue to rise, Annaly Capital Management looks like a strong investment opportunity.