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Anyone still holding Mortgage Reits?
Old 05-19-2018, 09:04 AM   #1
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Anyone still holding Mortgage Reits?

I still have a few stocks of Mortgage Reits. This post isn't an argument for or against Mreits. I have a small position in them because I like the income they provide. I am aware of the 2/10 year spread. I am also aware that the few stocks I own in this sector have survived the 2008/2009 downturn.


So with all this in mind, does anyone still own Mreits? If so, what is your reason for doing so at this time? If not, I will certainly not argue with anyone who doesn't like them now. I know they are interest rate sensitive. But for those who still hold them, would anyone be willing to share why they still hold them?
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Old 05-19-2018, 11:59 AM   #2
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Quote:
Originally Posted by UnrealizedPotential View Post
I still have a few stocks of Mortgage Reits. This post isn't an argument for or against Mreits. I have a small position in them because I like the income they provide. I am aware of the 2/10 year spread. I am also aware that the few stocks I own in this sector have survived the 2008/2009 downturn.


So with all this in mind, does anyone still own Mreits? If so, what is your reason for doing so at this time? If not, I will certainly not argue with anyone who doesn't like them now. I know they are interest rate sensitive. But for those who still hold them, would anyone be willing to share why they still hold them?
I dumped the 2 mREITs I had about 18 months ago when it seemed rates would FINALLY start to creep up, and that nearly all (AFAIK) utilize short-term debt for long-term mortgages, and would get burnt to a crisp when rates rise. I lost a few preferreds in 2008/2009 when several mREITs went under, so I was a bit gun-shy and didn't want to take any chances. I sold both the 2 commons and 2 or 3 mREIT preferreds I had, since I didn't want to take the chance again.
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Old 05-21-2018, 10:03 PM   #3
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Quote:
Originally Posted by UnrealizedPotential View Post
I still have a few stocks of Mortgage Reits. This post isn't an argument for or against Mreits. I have a small position in them because I like the income they provide. I am aware of the 2/10 year spread. I am also aware that the few stocks I own in this sector have survived the 2008/2009 downturn.


So with all this in mind, does anyone still own Mreits? If so, what is your reason for doing so at this time? If not, I will certainly not argue with anyone who doesn't like them now. I know they are interest rate sensitive. But for those who still hold them, would anyone be willing to share why they still hold them?

I don't own them simply because they are not tax efficient, but if not for that I would probably own some. I'd probably use an ETF like REM.

I think the inflation scare is overblown. I don't think the economy is in that great of shape. I suspect Q2 GDP will get dropped to 2% or lower, just like almost all the other quarters for the last decade. I think the Fed is going to hike us into a recession. Probably have an inverted yield curve by the end of the year, recession in 2019-2020.
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Old 05-22-2018, 04:41 AM   #4
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I own NRZ which is actually poised to gain as interest rates rise. Very hard to explain what they do, but I understand it when I read it, but sure couldn't explain it here.
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Old 05-22-2018, 05:29 AM   #5
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I have some AGNC. It's up about 22%, over the time I've had it. However, I can't remember when I bought it, although the last time I sold some was in 2017. And unfortunately, since Scottrade got taken over by TD, it's harder to search for older transactions. So, I can't gauge what the average annual rate of return is. Probably not a whole lot, by now.


BUT, there's the dividend, on top of that, currently at around 11.4%. So, the fact that the stock price is positive, PLUS the 11+% dividend, puts a smile on my face. And yeah, I realize it can be a risky stock. My holdings represent a small portion of my whole portfolio, maybe 2.2%. So even if it went to zero, it wouldn't bankrupt me.
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Old 05-22-2018, 06:46 AM   #6
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I’ve owned a REIT fund (VGSLX) in a deferred account for more than 10 years, but it’s only about 2.5% of our portfolio. Perf info below.
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Old 05-22-2018, 10:55 AM   #7
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I too have a small percentage in VGSLX. At one point it seemed like it was doing well but I haven't looked in the last year or so.
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Old 05-23-2018, 06:50 PM   #8
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I own NRZ which is actually poised to gain as interest rates rise. Very hard to explain what they do, but I understand it when I read it, but sure couldn't explain it here.


Same here. I bought it several years ago when I thought rates were about to shoot up! Itís about how they buy the differences between the payoff and the current rates. Apparently NRZ is one of the few mreits that will do well in a rising interest rate environment.
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Old 05-23-2018, 07:02 PM   #9
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Same here. I bought it several years ago when I thought rates were about to shoot up! It’s about how they buy the differences between the payoff and the current rates. Apparently NRZ is one of the few mreits that will do well in a rising interest rate environment.
NRZ isn't actually an mREIT (for some reason, they get lumped into that category by various quote systems)- they own the rights to service the mortgages. They pay money to be able to collect the payments/service the mortgage over the mortgage's life. Kind of like how someone would 'pay' to do a newspaper delivery route or a bread delivery route. The reason they do well in rising rates is that they make money by servicing the mortgage over the entire 15/30 year mortgage life. If someone refinances, then they lose the mortgage to service, and they are out their investment. But if rates rise, odds are slim that someone will refinance that away, so they continue to earn money servicing the mortgage for another 10-20 years (until they sell the house and move).

I've been a holder ever since they were spun off. Unfortunately, I didn't back up the truck and go whole hog when they were in the single digits (yes, this puppy could have been had at like $7 back in the day....and even back then they were paying well over $1 in dividends!)
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