By Michael Aneiro, Barrons
Speaking on CNBC just now, onetime mortgage REIT hater Jeff Gundlach of DoubleLine Capital was singing the praises of mortgage real-estate investment trusts, along with closed-end funds, now that they’re trading at significant discounts, particularly following the months-long rout for mREITs.
Here’s Gundlach:
There is plenty of yield right now in the bond market, but it’s not in Treasuries. I’m talking about closed-end funds, I’m talking about mortgage REITs. These are vehicles that are trading at 10% discounts to their net asset values, or for REITs versus their book value….
They’re generating yields where it’s not that hard to put together a basket of investments that yields 8%, but people don’t want to buy these investments now due to fear and loathing….
As a group, Gundlach said of mREITs and closed-end funds “I think those preserve capital over the next 12 months and I can see a return of 15%” for some given their current discounts.
Gundlach specifically mentioned Annaly Capital Management (NLY) as an attractive investment now. Back in June Gundlach was predicting a further price drop for NLY and saying he’d be a buyer at $12 if it fell that far. It’s trading at $11.50 today.
Elsewhere across the mREIT sector, it’s mostly unchanged Thursday. American Capital Agency Corp. (AGNC) is nearly unchanged at $22.55. CYS Investments (CYS) is similarly steady at $7.79. Hatteras Financial Corp (HTS) is up 8 cents at $18.43 and AG Mortgage Investment Trust Inc. (MITT) up 1% at $17.49.
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