adios
01-21-2004, 07:08 PM
Methinks the demise of the residential home building industry is quite premature. Fannie Mae's profits more than doubled as it closed very near it's 52 week high. Fannie Mae has a leveraged MBS portfolio trading at a multiple of 11.7. Countrywide is trading at a multiple between 7 and 8 on next years earnings and it has accumulated a substantial MBS portfolio as well. Fannie Mae's leverage makes Countrywide look like an unleveraged cash rich entity /images/graemlins/smile.gif. Good week on CFC so far but I think CFC will trade down a little from it's current price in the very short term. Novastar (NFI), Friedman Billings Ramsey (FBR) and Impac Mortgage (IMH) are MREITs on the moon somewhere this week (all at or near ALLTIME highs).
Reuters
Fannie Mae Profit More Than Doubles
Wednesday January 21, 5:02 pm ET
By Richard Leong
NEW YORK (Reuters) - Fannie Mae, the biggest buyer of U.S. mortgages, on Wednesday said its quarterly profit more than doubled as low interest rates boosted demand for home loans and losses on its interest rate hedges declined sharply.
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But the company repeated its outlook for slower growth in 2004, albeit still higher than the mortgage industry, and said profit margins will likely return to "more normal levels."
Fannie Mae (NYSE:FNM - News) reported fourth-quarter net income rose to $2.12 billion, or $2.21 a share, from $952 million, or 94 cents a share, a year earlier.
Fannie Mae's 2003 net income totaled $7.9 billion, or $7.91 a share, up more than 70 percent from a year ago.
The Washington, D.C.-based company said fourth-quarter operating earnings, which exclude accounting of market value changes of its interest rate derivatives, rose to $1.77 billion, or $1.77 a share, from $1.67 billion, or $1.66 a share, a year earlier.
On that basis, analysts on average had forecast that Fannie Mae would earn $1.75 share, according to Reuters Research, a unit of Reuters Group Plc.
Fannie Mae and its smaller sibling Freddie Mac, which were created by Congress to increase home ownership, buy home loans from lenders to free up money so they can make more loans.
For the fourth quarter, "mark-to-market" unrealized losses on Fannie Mae's derivatives to hedge its interest rate positions fell by $1.75 billion from a year ago. Mark-to-market refers to recognizing the market values of the hedge instruments at a particular time, although no actual losses or gains were incurred because the positions were not unwound.
After a record 2003 boosted by 45-year low mortgage rates, there is still plenty of life in the U.S. housing sector. The Mortgage Bankers Association's gauge of new loan requests to buy homes hit an all-time high last week, and U.S. December housing starts hit their highest level since February 1984.
Fannie Mae shares ended up $2.67, or 3.66 percent, at $75.67, near its 52-week high on the New York Stock Exchange (News - Websites) .
REGULATORY CLOUD
Fannie Mae and Freddie Mac have been under heavy government scrutiny after Freddie Mac admitted last year to manipulating its earnings to smooth out volatility. The scandal intensified calls for the government to tighten oversight of the entire U.S. mortgage finance system and to create a new tougher regulator for the two government sponsored enterprises.
"We believe that Congress will not enact any changes to our regulatory status that would harm our ability to perform our mission," Fannie Mae Chief Executive Officer Franklin Raines said in a statement.
U.S. Senate Banking Committee Chairman Richard Shelby, in an interview with Reuters, warned against dismantling key advantages Congress grants to Fannie Mae and Freddie Mac.
Shelby feels these certain advantages still help to lower mortgage rates for Americans to buy homes.
Still some investors are wary. "The political and regulatory fallout could be stiff," said Ted Parrish, co-portfolio manager with the Henssler Equity Fund, about regulatory changes not affecting their Congressional given advantages.
Earlier this month, Parrish sold more than 200,000 Fannie Mae shares which his fund and other accounts he manages had held for nearly a decade.
SLOWER 2004
Fannie Mae and Freddie Mac earn fees from guaranteeing home loans and income from mortgage loan and securities investment.
Fannie Mae said its interest margin, a barometer of profitability, could fall in the first half of 2004 and hold around 100 basis points, down from 120 basis points in 2003.
Fannie Mae's investment portfolio, which has been its earnings engine, shrank at an annualized rate of 10 percent in December to $898.4 billion, hurt by heavy refinancing and aggressive mortgage buying by banks and other investors.
The company said its portfolio could continue to shrink into the first quarter of 2004, but growth should resume in the second half, keeping the 2004 target above expected growth in overall U.S. mortgage debt of 8 percent to 10 percent.
Fannie Mae said it should meet analyst consensus forecasts of $8.01 a share for its 2004 earnings.
If you wanted a stock that flies under the rader screen so to speak, pays around a 10% yield, employs virtually no leverage, and is trading at just about book value you should look at American Mortgage Acceptance Co (AMC). A short synopsys describing AMC.
American Mortgage Acceptance Company is a real estate investment trust that originates and acquires mortgages secured by multi-family properties, which may take the form of government-insured first mortgages and uninsured mezzanine loans, construction loans and bridge loans. In addition, the Company indirectly invests in subordinate commercial mortgage-backed securities and may invest in other real estate assets, including non-multi-family mortgages, issues guarantees of construction and permanent financing, and makes standby and forward loan commitments. The Company is governed by a board of trustees comprised of three independent trustees and two trustees that are affiliated with Related Capital Company (Related). The Company has engaged Related AMI Associates, Inc., an affiliate of Related, to manage its day-to-day affairs.
Reuters
Fannie Mae Profit More Than Doubles
Wednesday January 21, 5:02 pm ET
By Richard Leong
NEW YORK (Reuters) - Fannie Mae, the biggest buyer of U.S. mortgages, on Wednesday said its quarterly profit more than doubled as low interest rates boosted demand for home loans and losses on its interest rate hedges declined sharply.
ADVERTISEMENT
But the company repeated its outlook for slower growth in 2004, albeit still higher than the mortgage industry, and said profit margins will likely return to "more normal levels."
Fannie Mae (NYSE:FNM - News) reported fourth-quarter net income rose to $2.12 billion, or $2.21 a share, from $952 million, or 94 cents a share, a year earlier.
Fannie Mae's 2003 net income totaled $7.9 billion, or $7.91 a share, up more than 70 percent from a year ago.
The Washington, D.C.-based company said fourth-quarter operating earnings, which exclude accounting of market value changes of its interest rate derivatives, rose to $1.77 billion, or $1.77 a share, from $1.67 billion, or $1.66 a share, a year earlier.
On that basis, analysts on average had forecast that Fannie Mae would earn $1.75 share, according to Reuters Research, a unit of Reuters Group Plc.
Fannie Mae and its smaller sibling Freddie Mac, which were created by Congress to increase home ownership, buy home loans from lenders to free up money so they can make more loans.
For the fourth quarter, "mark-to-market" unrealized losses on Fannie Mae's derivatives to hedge its interest rate positions fell by $1.75 billion from a year ago. Mark-to-market refers to recognizing the market values of the hedge instruments at a particular time, although no actual losses or gains were incurred because the positions were not unwound.
After a record 2003 boosted by 45-year low mortgage rates, there is still plenty of life in the U.S. housing sector. The Mortgage Bankers Association's gauge of new loan requests to buy homes hit an all-time high last week, and U.S. December housing starts hit their highest level since February 1984.
Fannie Mae shares ended up $2.67, or 3.66 percent, at $75.67, near its 52-week high on the New York Stock Exchange (News - Websites) .
REGULATORY CLOUD
Fannie Mae and Freddie Mac have been under heavy government scrutiny after Freddie Mac admitted last year to manipulating its earnings to smooth out volatility. The scandal intensified calls for the government to tighten oversight of the entire U.S. mortgage finance system and to create a new tougher regulator for the two government sponsored enterprises.
"We believe that Congress will not enact any changes to our regulatory status that would harm our ability to perform our mission," Fannie Mae Chief Executive Officer Franklin Raines said in a statement.
U.S. Senate Banking Committee Chairman Richard Shelby, in an interview with Reuters, warned against dismantling key advantages Congress grants to Fannie Mae and Freddie Mac.
Shelby feels these certain advantages still help to lower mortgage rates for Americans to buy homes.
Still some investors are wary. "The political and regulatory fallout could be stiff," said Ted Parrish, co-portfolio manager with the Henssler Equity Fund, about regulatory changes not affecting their Congressional given advantages.
Earlier this month, Parrish sold more than 200,000 Fannie Mae shares which his fund and other accounts he manages had held for nearly a decade.
SLOWER 2004
Fannie Mae and Freddie Mac earn fees from guaranteeing home loans and income from mortgage loan and securities investment.
Fannie Mae said its interest margin, a barometer of profitability, could fall in the first half of 2004 and hold around 100 basis points, down from 120 basis points in 2003.
Fannie Mae's investment portfolio, which has been its earnings engine, shrank at an annualized rate of 10 percent in December to $898.4 billion, hurt by heavy refinancing and aggressive mortgage buying by banks and other investors.
The company said its portfolio could continue to shrink into the first quarter of 2004, but growth should resume in the second half, keeping the 2004 target above expected growth in overall U.S. mortgage debt of 8 percent to 10 percent.
Fannie Mae said it should meet analyst consensus forecasts of $8.01 a share for its 2004 earnings.
If you wanted a stock that flies under the rader screen so to speak, pays around a 10% yield, employs virtually no leverage, and is trading at just about book value you should look at American Mortgage Acceptance Co (AMC). A short synopsys describing AMC.
American Mortgage Acceptance Company is a real estate investment trust that originates and acquires mortgages secured by multi-family properties, which may take the form of government-insured first mortgages and uninsured mezzanine loans, construction loans and bridge loans. In addition, the Company indirectly invests in subordinate commercial mortgage-backed securities and may invest in other real estate assets, including non-multi-family mortgages, issues guarantees of construction and permanent financing, and makes standby and forward loan commitments. The Company is governed by a board of trustees comprised of three independent trustees and two trustees that are affiliated with Related Capital Company (Related). The Company has engaged Related AMI Associates, Inc., an affiliate of Related, to manage its day-to-day affairs.