Seeking Alpha
All posts from Seeking Alpha
Seeking Alpha in Seeking Alpha - Read, Decide, Invest.,

PennyMac Mortgage Investment Trust: Why Not Consider This 11% Yielder On The Sell-Off?

Just about two and a half months ago I wrote a piece about PennyMac Mortgage Investment Trust (PMT) because the mortgage REIT convinced me with an attractive investment portfolio, positive sensitivity to rising interest rates, good book value growth, and a competitive dividend yield.

'Traditional' mortgage REITs invest mostly in agency and non-agency residential mortgage-backed securities. But the universe of potential mortgage-related investments is much larger: PennyMac, for example, also invests in mortgage servicing rights, which have the nice feature of increasing in value when interest rates rise, distressed residential whole loans, prime non-agency loans etc.

(click to enlarge)

Source: PennyMac Mortgage Investor Presentation

The expectation of rising interest rates has hurt mortgage REITs like Annaly Capital (NLY) in the past, and mortgage security portfolios can come quite a bit under pressure when interest rates start to rise and the company has inefficient hedges in place. Therefore, alternative mortgage REITs … Read More …