NLY [Archive]

**shu_wd** Thu Apr 12, 2007 10:32 pm

NLY
Hi Blast, this one probably is not a value stock, but can you give some insight since you are a REIT expert. thanks

**blast_investor** Fri Apr 13, 2007 3:02 pm

Re: NLY
Hi shu_wd,

Cramer seems to be very enthusiastic on this stock and this stock went up recently. I am going to take contrary view on this. My take on this stock is: avoid.

My main rational on this stock is risk of its mortgage business. This has nothing to do with sub-primer mortgage debacle recently because NLY has zero sub-prime mortgage, and most if not all of NLY mortgage holding is AAA backed by quasi-government sponsored companies.

The main risk on this stock is interest rate risk just like any bond. NLY essentially is leveraged bond investment. 5 years ago NLY and its peers (FB, FBR) was trading at book value with 20% yield, then was time I invested lots of money in this sector. Now, the yield is 5%, and stock is above its book value, not very attractive.

The consensus view on long bond in the market is for rate to drop. This might be true in short term. However, in the long run, I am still worried about inflation and long bond interest rate from now has fair amount of possibility to go up. Rate going up will be devastating for this stock.

From risk/reward point of view, this stock is poor in the long run even though short term outlook may not be bad.

shu_wd wrote: Hi Blast, this one probably is not a value stock, but can you give some insight since you are a REIT expert. thanks

**Markopolis** Sat Apr 14, 2007 6:07 am

OPX Opteum
( OPX )Opteum reit I'm not sure if they are going pull it together long term I dont know to much about them.

http://treasurehuntingquest.blogspot.com/