mREIT Chimera Investment Corp (NYSE:CIM) is selling a new issue of fixed-to-floating rate preferred.
The issue is not priced as of yet.
The preliminary prospectus can be found here.
The mortgage REIT has 2 perpetual preferreds currently outstanding–one of which is a 8% f-t-f issue (see below) which is being knocked down today on the news of a new issue.
While we are not fond of most mREITs there may be a flip opportunity on this one if the coupon and spread are reasonable–we shall see.
12 thoughts on “mREIT Chimera Investment Selling Fixed-to-Floating Preferred”
Everyone has biases, but that shouldn’t become an impediment to making good trading decisions, especially in situations that involve social stigma.
Nike is a good example of a trading opportunity that arose after the ‘crowd’ decided they didn’t like Colin Kapernick as the face of their new ad campaign…a sentiment which proved to be short lived.
Likewise, overreaction to the SEC suit involving Dr. Frost created a trading opportunity in the preferred shares of Ladenburg Thalmann Financial Services…a company associated with Frost but unrelated to the lawsuit.
True, Citidel….But I try to stay in my little niche corner as trading and holding has done well for me there. If I would get out of my comfort zone this is when I would get a smack down. I have been spoiled just trading on strict buy/sell imbalance of quality illiquids. I bet it has been 5 years since I have owned a preferred that has ever come close to dropping a buck after I bought.
And I am guilty as charged on bias against LTS. I just wont own it at any price.
7.75% till 9/30/25
Then 3mL + 4.743%
I hate these spreads. That’s a much tighter spread than AGNCN or NLY-F, and a much riskier REIT.
Thanks Roger–will get a note out shortly.
Why the bias against MReits?
Why the bias against MReits?
Hi Xwords59–no real bias–I just don’t like to invest in anything I have to put much brain power into analyzing–plus beyond preferreds and baby bonds my holdings of REITs, common stocks etc. is simply very, very limited.
Tim, consider yourself very open minded compared to me…I have total bias against Mreits, Shippers, and BDCs. I actually made money off all 3, but just decided one day a couple years ago, I am not messing with those three areas.
Hi Grid–I think we are similar–I have owned baby bonds and preferred of all of those categories, but don’t think I have ever owned any common shares.
I’m with you on the brain power thing. I’m an enrolled agent (active) and retired CPA. I take my hat off to Scott Kennedy and his SA articles on Mortgage REITs that analyze the inner workings of many of them. But frankly I still can’t predict changes in interest rates and what derivatives a specific MREIT might have in place after the last reporting period to mitigate interest rate risk. I do realize that such factors mainly affect the common stock and not preferred (hopefully).
Also, I was involved in the savings and loan business in the early 1980s and remember that many financial fireballs were tarred and feathered by those times. I see MREITs as sort of savings and loans with more sophisticated attempts thru derivatives to protect their business model.
Call me lazy and or stupid but I’ll stick to equity REITs where my experience in owning and managing commercial property investments has helped me understand ( I think) what’s going on.
Hi RazorbackEA—we match up well in regards to mREITs–I am not a fan of black box stuff–and yes Scott Kennedy does good work and I use it for the preferred stock end of the mREITs.
RB, its not my business to criticize any persons investments. But I would be willing to wager a nice sum, the vast majority of those who invest in Mreits either have no understanding or the most rudimentary aerial understanding. Which may be fine…I tried to understand Mreits..I mean truly understand them…The tiny nuts and bolts of it…And failed miserably.