Beaten-Down, 12.30% Dividend Payer Annaly Capital Management Is A Buy

Annaly Capital Management Inc. (NLY) is a mortgage REIT. It has historically been a large investor in agency residential mortgage-backed securities (RMBS). However, this may be changing with its recently announced proposal to acquire CreXus Investment Corp. (CXS). Although CXS is externally managed by the Fixed Income Discount Advisory Company (FIDAC) -- a wholly owned subsidiary of NLY -- the acquisition of CXS would still be a significant expansion of NLY into the CMBS and the non-agency RMBS areas. At the time of this announcement, NLY already owned 9,527,778 shared of CXS -- about 12.4%. The CXS buyout is an expansion of NLY's effective portfolio into riskier, wider interest rate spread securities. It makes a lot of sense in the current extremely narrow interest rate spread agency RMBS market. It makes more sense when you realize NLY has recently sold some of its agency RMBS to capture their currently... Read more