I mentioned yesterday the technical strength in the Mortgage REIT market (
Thank You Readers - Found a Bull Market - 4 Mortgage REITs). I did a lot of digging last night (and still plan to do more) but I decided to make the plunge with one of the names today. I chose
MFA Mortgage Investments (MFA), and began a start position of 1.0% of fund @ $10.89.
I also have considered:
- Annaly Capital Management (ANY)
- Capstead Mortgage (CMO)
- Anworth Mortgage (ANH)
Readers mentioned Chimera Investment (CIM) as another way to invest in this trend, but I have not looked closely at it yet.
I also discovered, lo and behold, an ETF from iShares which is a quick and easy way to get all the major players in one ETF:
iShares FTSE Mortgage REITs (REM). So I considered that as well.
Playing any of these companies is essentially a bet on the competence of management so it not quite so easy to model that like you would a normal business. So my first inclination was the ETF. But when
I looked at the composition I saw:
- Annaly Capital 24.7%
- Thornburg Mortgage 9.5%
- MFA Mortgage 8.0%
- Redwood Trust 6.5%
- Capstead Mortgage 4.8%
So this ETF is heavily weighted in the top handful of names, especially the top position, with a quarter of weighting toward Annaly. Since Annaly is a Cramer pick it probably has some of its upside already within the stock performance... and I already own the 2nd name in this ETF, which I started this week (how ironic?) (
Beginning Stake in Thornburg Mortgage (TMA)) So buying this ETF would be a 35% stake in 2 positions, one of which I already own.
So of the remaining 3 choices,
MFA Mortgage is the largest (almost double in market cap vs CMO or ANH), and the other 2 were up quite a bit today anyhow -
Capstead Mortgage up nearly 10% - so maybe if I had been ready to buy yesterday I'd do a basket of
MFA Mortgage and
Capstead Mortgage. Again, I have nothing scientific to offer you - the prowess of management will determine ultimate success. I want to have exposure to the trend overall and judging by the 3 month performance of the 3 names I was considering (as seen below) - they are all generally in the same ballpark.
