Posts tagged nly

Part 4 of our summer 2011 investments features a real estate investment trust or REIT.  Annaly Capital Management Inc, or NLY, is one of the best for a shorter term investment.  This stock is currently trading near its 52 week high at $18.50.  As you can see by the chart – the stock has been trading between 17 and 18.50 in the past 52 weeks.

From NLY’s profile

Annaly Capital Management, Inc. is a Maryland corporation that commenced operations on February 18, 1997. It owns, manages, and finances a portfolio of real estate related investment securities, including mortgage pass-through certificates, collateralized mortgage obligations (or CMOs), agency callable debentures, and other securities representing interests in or obligations backed by pools of mortgage loans. The Company’s wholly-owned subsidiaries offer diversified real estate, asset management and other financial services. The Company’s main business objective is to generate income for distribution to its stockholders, mainly from the net cash flows on its investment securities. RCap is its wholly-owned broker dealer taxable REIT subsidiary which generates fee income. It is mainly engaged in the business of investing, on a leveraged basis, in mortgage pass-through certificates, collateralized mortgage obligations and other mortgage-backed securities representing interests in or obligations backed by pools of mortgage loans issued or guaranteed by Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae) and the Government National Mortgage Association (Ginnie Mae) (collectively, ‘Mortgage-Backed Securities’). It also invests in Federal Home Loan Bank (FHLB), Freddie Mac and Fannie Mae debentures. The Mortgage-Backed Securities and agency debentures are collectively referred to herein as Investment Securities.

There are some risks with NLY.  The fat 14% dividend is very appealing.  With the inevitable rise in interest rates the stock and dividend is surely to go down.  NLY basically makes it’s money by borrowing near zero percent and keeping the difference.  As rates rise the spread gets smaller.  This is still a stock I’d like to own for the rest of 2012.  I have been long NLY since around $17.90.