It's safe to say that fear is dominating the mortgage REIT sector, with shares of Annaly Capital Management (NLY 1.33%) and American Capital Agency (AGNC 0.99%) down by double digits since the beginning of the year. To a certain extent, the fear is warranted given what's happened to these companies' book values; both are off by 20% year to date. At the same time, there's an argument that these companies' current discounts to book value are excessively pessimistic -- shares of both are trading for 0.84 times book value. If this is the case, then investors may want to consider establishing a position.
In the video below, Motley Fool contributor John Maxfield delves into this question, particularly as it relates to Annaly Capital Management. As John explains, even though he's not a big fan of the mREIT's management team, it's hard to deny that the current sentiment around these companies as well as their valuations are otherwise strong "buy" signals.
