Disaster Strikes Mortgage REITs: What Investors Need to Knowhttp://www.fool.com/investing/general/2013/07/26/disaster-strikes-mortgage-reits-what-investors-nee.aspx Amanda Alix
July 26, 2013
When Hatteras Financial (NYSE: HTS) declared second-quarter earnings earlier this week, it was not a pretty sight, as earnings per share missed the mark by $0.04. But that wasn't what set the stage for the carnage that spread throughout the sector: Hatteras reported a huge -- more than 20% -- drop in book value from the first quarter, sending the stock down more than 10% on Wednesday.
Everyone got stung
This constant battering of mREITs is understandable, of course, as investors used to seeing big dividends from this sector worry about more cuts to those juicy payouts. Last week, fellow ARM-buyer CYS (NYSE: CYS) started another upset for mREITs when it also reported a decrease in book value from last quarter of nearly 19%.
As earnings season progresses, what can investors expect?
More trouble on the way
Short-term, things will be less than rosy. For example, American Capital Agency will declare second-quarter earnings on Monday and will very likely throw everyone into a tizzy. American Capital Agency started the book-value plunge worries with it