Fears that Chimera Investment (NYSE: CIM ) would be delisted by the New York Stock Exchange today have been allayed. At least for another month, anyway.
For those of you that have been following this saga over the last year, you know that Chimera has failed to file its requisite financial statement with the SEC for over a year and counting. It's taken a hiatus to correct accounting irregularities that have overstated its net income by an estimated 66% since 2008.
Beyond the fact that this leaves Chimera's investors in the dark, it's also drawn the ire of the NYSE, which requires that listed companies stay current on their regulatory filings. In September, the exchange gave Chimera until today to file its 2011 annual report, leaving many, myself included, to wonder whether today would be the beginning of the end for the high-yielding mortgage REIT.
In a press release issued after the market closed yesterday, Chimera announced that it's been granted a an additional 30-day reprieve. According to the statement: "The extension granted by the NYSE, which is subject to review by the NYSE on an ongoing basis, provides the Company until February 15, 2013 to file its 2011 Annual Report on Form 10-K with the Securities and Exchange Commission. During the extension period, trading of the Company's shares on the NYSE will remain unaffected."
Even though shares in the company are rallying on the news today, this doesn't change the equation. On the bear side, which I ascribe to, Chimera and its de facto parent company Annaly Capital Management (NYSE: NLY ) exhibit a number of glaring issues that should discourage all but the most risk-loving of investors from speculating in the eventual outcome of these events.
Among other things, as I covered here, many of Chimera's top executives are related to Annaly's executives or directors, Annaly's board has a track record of ignoring shareholder votes, and there's even reason to believe that Chimera has started taking steps to liquidate its portfolio.
On the bull side, however, mortgage-backed securities have rallied over the last year as the Federal Reserve continues to pour $40 billion into the market every month courtesy of QE3. In addition to bolstering MBS-focused hedge funds, this has potentially put mortgage REITs in a position to capitalize on the trend in the short run -- though, as I discussed last year, the pressure on yields will make itself felt in the long run.
Either way, it looks like investors have at least another month to wait before learning about the true condition of Chimera's financial position. In the meantime, I strongly encourage you to check out our new in-depth report on Chimera that I recently put together. It discusses both the strengths and weaknesses of the company and concludes with an overarching perspective on its stock. To access this pivotal report instantly, simply click here now.