the ongoing credit crunch spread over to the most secure area of the mortgage market this week, hitting nly's shares. the curious thing is, nly hasn't really done anything wrong here. the company is far less leveraged than its peers that are facing margin calls, it still holds the highest-quality paper in the market, and the balance sheet is still positioned well for earnings to benefit from future rate cuts. but the reality at this moment is that ceo mike farrell may have to raise more capital, and the stock may come under further pressure on the prospects of a dilutive secondary offering. the company has survived system-wide shocks like this before, and i'm keeping a very close eye on the situation for an attractive entry point - somewhere slightly below 15 probably. i don't believe that fnm and fre are going away. nly is no tma, but as long as that firm and the carlyle capitals of the world continue to sputter and default on margin calls, nly stock will remain under selling pressure.
disclosure - do your own DD; none, but looking to buy a little lower
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment