Protect-Your-Capital

MFA LONG - UPDATE with more levels to watch

Long
NYSE:MFA   MFA Financial, Inc
Within 90 Days
PT #1 : $3.38
PT #2 : $3.78

Within 180 Days
PT #3 : low $4.00 range
PT #4 : $4.54

Stock has been beaten up last couple of weeks because of ER miss and they did not reinstate a dividend for their common stock. In essence, they gave notion they will pay a dividend before October in order to avoid excise tax (REITS must have a % of taxable income to shareholders). Preferred stocks are up because they will be paying a dividend to preferred stock holders. MFA will be required to pay 90% of their taxable income by October, as of now they have a taxable income of .10 cents per share. This would mean that a minimum 9 cent dividend would need to be paid by October to avoid a 4% excise tax; This amount can increase if taxable income increases, too. (This is to the best of my knowledge. Correct me if I am wrong). Their BV is ~$4 and has a bit more potential to move up (recovering unrealized losses) depending on credit spreads going forward. They have deleveraged, and are in a position to leverage themselves with assets as the markets direction in the near future becomes more clear. Funding has gotten more expensive but marginally. They've reduced the MBS exposure and are running a portfolio of whole loans which protects MFA if things begin to get worse.

In the short term, I expected them to come out of forbearance on or around June 26th (end of the month) which they did. I believe that they will reinstate their dividend relatively soon, and before October. Depending on how much it is and the progress MFA / Economy has made will dictate as to how far they will run.

With another stimulus package looming I feel this is bound to break to the upside. If some type of enhanced unemployment benefits get extended past July, I believe you will see a small pop in mortgage reits as risk may tick up a little bit.
Trade active: Picked up some shares to lower CB. Looking like a triple bottom
Trade active: Hourly looking like we may get a decent bounce in the AM.
Comment: PPO looks it wants to cross, RSI peeling up, and triple bottom is my reasoning. We've got some time before dividend announcement so likely pumps and sells off again. I'll be rinsing a portion of my position.
Comment: Trending sideways for a while, next leg higher soon. They added 50 cent increments to options trading.
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