I bought some CIM preferreds in my high risk bucket back in 2020 too, but sold them off in late 2021/early 2022 above $25 (part of freeing up funds to buy UAN). Gain was nice, didn't want to hold long term. I also bought some of their preferreds at IPO and flipped them.
CIM is a little further "out there" on the risk spectrum IMHO. Higher risk types of loans, lots of leverage. Actively acquiring new portfolios (go big or go home?).
I think can probably do OK so long as things work as they anticipate. My worry would be that with all the leverage and riskier loans, a black swan event might push them off their tight rope.
I think they would struggle to get a dramatically better rate on a new offering to try to redeem their preferreds. the notes they issued 5 months ago were at 9.25%. However, if rates keep falling, who knows?
From their presentation:
? Our residential mortgage loan portfolio is comprised of Reperforming Loans (RPLs), Non-QM Loans,Investor Loans, Business Purpose Loans (BPLs), and Prime Jumbo Loans and it represents a significantpart of our business and growth strategy.
? We use leverage to enhance our returns and to finance the acquisition of mortgage assets through several funding sources including repurchase agreements (repo), warehouse lines, unsecured debt, and, most importantly, asset securitization.
? Our total leverage ratio is 3.9x and recourse leverage ratio is 1.2x
If someone held a gun to my head and made me choose, I would probably buy their notes (CIMN, CIMO). They aren't due until 2029, but at least they have to be redeemed at some point.
Anyway, sorry for rambling on. Nothing here is advice or recommendation. I am sitting in a waiting room just writing random thoughts, so not worth much.
Disclosure: I bought some of the CIM preferreds at IPO (years ago),flipped them, then got out.
I do not now own,nor do I have any current plans to purchase anything from CIM |
