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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: MCsweet who wrote (44186)	9/1/2011 3:06:17 PM
From: E_K_S	Read Replies (1) \| Respond to of 78594

Hi MCSweet - Possible REIT regulation - I wonder what impact this might have on the preferreds. I would think it would be a positive as any reduction in leverage and/or common share dividends would make the probability of the preferred income stream stronger and less likely to default. It's still a company specific thing. I have noticed that some of the REITs preferreds I follow have sold off a bit in the last few days (maybe 2-3 %). Annaly Capital Management Inc C(NYSE: NLY ) might be one name that could be impacted. They have a preferred Annaly Capital Management Inc P (NLY-PA) 7.67% but it sells above Par and I would have no interest in it. Do any other Reit Mortgage names come up? It will be interesting to see if their proposed regulation extends past REIT mortgage companies and into any REIT that exceeds certain maximum leverage amounts. The SEC's regulation is too little too late as usual. ------------------------------------------------------------------------------------------------------------ I thought this article was a Joke at first - - But it's not. Subprime Mortgage Bonds Getting AAA Rating S&P Denies to U.S. Treasuries By Zeke Faux and Jody Shenn - Aug 31, 2011 11:25 AM PT bloomberg.com From the article:"...Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government. S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy...". ------------------------------------------------------------------------------ EKS

To: MCsweet who wrote (44186)	9/4/2011 8:11:24 AM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 78594

WTM - Why do you think that "the company doesn't look that cheap on a fundamentals basis"? Could you expand on this? Their resent results are bleh. On the other hand their book value and book-value-per-share has grown at 13% annualized for the last 10 years, which is above average for insurers. And the company is trading at about .75 p/book (tangible book AFAIK), which is on par with other insurers/reinsurers. My concerns would be the same as with other insurers: large portion of fixed income securities earning very little (?dependent on what they hold?), weakness in insurance pricing and heightened natural disaster frequency (new normal?).