The capacity is very good right now in the repo markets, but it does move around. And all of our counterparties have all their own issues, and we like to diversify our sources of financing and types of financing. And, of course, we’re a REIT, so whatever we earn we’ve got to pay out, and it goes out to you all in the form of dividends to our shareholders.
We’re now three years plus as a public company, and we’re very proud of the track record thus far. And we hope to continue to deliver these results. Essentially, since our IPO we’ve just about doubled our initial public investors’ investments, since that June 2009 IPO.
On the expense ratio side, I actually said in the IPO roadshow that our goal was to become the most efficient provider of access to these markets, to our investors. And by these markets I mean the agency mortgage market, the repo market, which is very difficult for you to access yourself, and the interest rate derivatives, basically the hedging markets, the swaps markets.
So if we’re the most efficient provider of access to these markets than anyone else, then we will always be able to generate a better return. And when returns were in the 15%, 16%, 17% neighborhood, the investor base really didn’t focus on expense ratio.But now we’re in a low teens investment environment, and I think the market is beginning to realize that this expense ratio load and efficiency and quality of management really is a pretty significant differentiator, and we think this really matters to our shareholders and ultimately, obviously, the multiple on the stock.So let’s move to the mortgage investing environment. Rates are low. The Fed is our biggest competitor for assets, in a very significant way. And the Fed’s activities in the markets and the expectations of more activity in the market is driving the absolute level of rates. A 7/1 hybrid ARM, par priced - this is very theoretical - would yield about 1.4% right now. There really is no such thing. The entire market is a premium market. Read the rest of this transcript for free on seekingalpha.com
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV