Overall Score: 1
Trading Chart: 1
Analyst Opinion: -1
| Strong Buy | 0 | |
| Buy | 7 | |
| Hold | 16 | |
| Underperform | 0 | |
| Strong Sell | 0 | |
Insider Trading: 1
Large purchase Kevin Keyes on 8-8-11 of 50,000 shares at $17.13. Numerous exercises without evidence of sales, quite bullish considering the negative tax implications of exercising stock and not selling sufficient amount to pay taxes.
Management Discussion and Analysis: 0
Company is extremely vulnerable to changes in financial market conditions and liquidity in mortgage related assets
The potential limiting / winding down of Fannie and Freddie will negatively impact securities NLY invests in
A considerable portion of assets are guaranteed by Freddie and Fannie which may be jeapordized depending on the Government’s role
Prepayment rates might rise depending on various Government loan programs negatively impacting income
European crisis will have a negative impact on liquidity for assets NLY is invested in as well as financing provided by various affected banks
NLY relies on short term borrowings to invest in longer term assets
Current debt:equity leverage is 5.4:1 (target is between 8 and 12:1)
Counterparty risk in repurchase transactions
NLY investments are subject to credit risk. At least 75% of securities must be high quality MBS and short term investments. The remaining 25% have to BBB or higher. The portfolio is structured to maintain at least an overall rating of “A”
NLY is subject to various REIT and REIT related tax legislation
Authorized capital stock doubled from 1,000,000,000 to 2,000,000,000
Company is exempt from being regulated as an investment company, but the SEC is considering making changes to prevent this
Net Income dropped to $344.5mm as a result of a $1.8bn unrealize loss on interest rate swaps.
Economic Net Interest income rose $697 mm as interest earning assets rose $29.7bn with interest bearing liabilities rising $24.2bn
Average prepayment rates were 17%, 27% and 19% in 2011, 2010 and 2009
Stock Performance Relative to Market: -1
Sector Outlook: 0
Cash Flow: 0
| 2009 | 2010 | 2011 | ||||
| Interest Income | $3,580 | $2,683 | $2,923 | |||
| Interest Expense | (480) | (428) | (576) | |||
| Net Interest Income | 3,099 | 2,255 | 2,347 | |||
| Other Income | 238 | 271 | 152 | |||
| Realized Gains (losses) on swaps | (882) | (735) | (720) | |||
| Unrealized Gains (losses) on swaps | (1,815) | (319) | 350 | |||
| Expenses | (237) | (172) | (132) | |||
| EBIT | 402 | 1,300 | 1,996 | |||
| Amortization | 794 | 664 | 253 | |||
| EBITDA | 1,196 | 1,964 | 2,249 | |||
| Unrealized Gains (losses) on swaps | 1,815 | 319 | (350) | |||
| Taxes | (61) | (37) | (42) | |||
| FCF | 2,951 | 2,246 | 1,857 | |||
| CFO | 2,420 | 10,863 | 10,817 | |||
| CFI | (25,120) | (13,846) | (7,338) | |||
| CFF | 23,411 | 1,761 | 2,885 | |||
| Net Income | 344 | 1,267 | 1,961 | |||
Peg Ratio: 1
| P/E | 42.54 | |||
| 2011 | 2012 | |||
| EPS | 0.37 | 1.93 | 421.6% | |
| PEG Ratio | 0.10x |
Valuation: 0
Value Pro Valuation will not work with a REIT
Catalyst:
Interest Rate Stability, Economic and Political Stability, Recovery in mortgage market