by Michael Aneiro
Speaking during a presentation this afternoon, DoubleLine Capitalās Jeff Gundlach was again praising mortgage real-estate investment trusts now that theyāre trading at significant discounts to book value following a months-long rout. Gundlach, ever the opportunistic investor, had still been down on REITs not even three months ago based simply on valuation, but now he likes them at current values. Hereās Gundlach today:
The mortgage REITs look cheap now, just like closed-end bond funds look cheapā¦ Prices are trading at about a 10% discount to book value. I think they represent value but I donāt think theyāre going to go higher anytime soonā¦. I think I would focus on the agency REITs, I think they will outperform over a cycle.
Gundlach again specifically mentioned Annaly Capital Management (NLY) both as a proxy for the sector and as an attractive individual investment, even as he says he thinks the dividend could fall further:
The yield there even at a dollar type of dividend is near 9%. Youāre going to have a lot of volatility, I donāt think youāre going to see price gains soon. But Annaly is a well-run mortgage REIT.
Looking across the mREIT sector Tuesday, Annaly was down 2.1% to $11.48, and American Capital Agency Corp. (AGNC) was down 2.03% to $22.67. CYS Investments (CYS) was flat at $7.76. Hatteras Financial Corp (HTS) was up 1.1% at $18.01 and AG Mortgage Investment Trust Inc. (MITT) was down 1.44% at $17.11.
