Annaly Capital Management, Inc. (NLY), American Capital Agency Corp. (AGNC): What Makes mREITs Inappropriate for Retail Investors?

Investment thesis

Annaly Capital Management, my favorite mREIT, is currently trading at an 11% discount to its book value, while American Capital Agency and ARMOUR Residential are trading at 12% and 32% discounts, respectively.

Since Annaly Capital Management, Inc. (NYSE:NLY)’s net interest income is positively linked to changes in interest rates and it has other positive stock price drivers, I believe now is an appropriate entry point. However, ARMOUR and American Capital Agency Corp. (NASDAQ:AGNC) have no positive stock price drivers. Therefore, I recommend investors stay away from both the stocks until the Fed finally exits the Agency MBS market.

Further, I believe proper due diligence could lead to a thorough understanding of the mREIT business model and fewer losses for the retail investors.

Adnan Khan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Adnan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article What Makes mREITs Inappropriate for Retail Investors? originally appeared on and is written by Adnan Khan.

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