Investing

Short Sellers Showed Mixed Outlook in Mortgage REITs (AGNC, NLY, ANH, CMO, CIM, HTS, IVR, MFA)

Jon C. Ogg

Investors are looking for yield, but many investors and speculators are betting against the highest dividend yield sectors.  There are perhaps no higher dividends to be had than in the mortgage REIT sector with what are usually double-digit dividend yields of late.  The mid-January short interest changes by the end of January were not uniform.  Maybe these were bets changing on certain mortgage REITs or maybe they were just random exits.

With so many mortgages potentially about to be refinanced (and foreclosures smoothing out), there is a wide disparity among investors about how this will impact mortgage REITs and other companies which own millions and billions worth of mortgage-backed securities.  The changes in these are using the settlement date of January 31, 2012 as the ‘end of January’ date and January 13, 2012 as ‘the mid-January’ date on each.

American Capital Agency Corp. (NASDAQ: AGNC) saw a drop of almost 6% in its short selling activity at 6,713,920 shares short at the end of January versus 7,123,932 shares short in mid-January.

Annaly Capital Management Inc. (NYSE: NLY) saw a large boost in the short selling activity as the short interest grew by over 11%  to 42,106,536 shares at the end of January versus 37,855,015 shares short in mid-January.

Anworth Mortgage Asset Corporation (NYSE: ANH) just reported earnings that were light by one-cent per share.  This one saw the largest of all gains out of the more active mortgage REITs.  The gain in the short selling was 13.6% to 4,687,369 shares short at the end of January versus mid-January’s reading of 4,126,104 shares short.

Capstead Mortgage Corporation (NYSE: CMO) saw a drop of more than 8% to 2,741,572 shares short at the end of January against 2,985,938 shares in mid-January.

Chimera Investment Corporation (NYSE: CIM) saw a 6.5% gain in short selling to 21,660,433 shares in the January-end short interest over 20,332,455 shares short in mid-January.

Hatteras Financial Corp. (NYSE: HTS) saw almost a 4% gain to 3,888,086 shares in the short interest as of the end of January versus 3,743,204 shares short in mid-January.

INVESCO MORTGAGE CAPITAL INC. (NYSE: IVR) sae only about a 2% drop in the short interest to 5,368,017 shares at the end of January versus 5,491,174 shares in mid-January.

MFA Financial, Inc. (NYSE: MFA) saw a gain of only over 1% to 14,764,109 shares short at the end of January versus 14,581,056 shares short in mid-January.

JON C. OGG