CYS Investments: Strong REIT Play For 2012
CYS Investments (CYS), like most REITs and stocks in general, has a reason for optimism this week. The recently passed and aptly-named STOCK (Stop Trading on Congressional Knowledge) Act signals good news for REITs like CYS Investments, for reasons both obvious and obtuse. Although it seems like a rather obvious already existing law should have already covered this situation, this law’s primary purpose is to prevent members of Congress, the President and other Federal workers with access to information from participating in insider trading. The obtuse look at how this law may affect the market is more related to our attitude toward the market, and toward anything the federal government is involved in, including agencies such as Freddie Mac and Fannie Mae.
CYS Investments, only founded in 2006 a couple years before the market’s long vacation from prosperity and its IPO only happening in 2009, focuses on the residential mortgage-backed securities market. With its specialization on pass-through securities, the stock relies on how well interest income, the cost of borrowing, and hedging activities are managed. These are a lot of concurrent activities, and an overall positive economy offers the best chance for long-term success.
American Capital Agency (AGNC) is another one of those mortgage REITs that focuses on the RMBS market, including pass-through securities, and influenced by how Fannie Mae and Freddie Mac are perceived in the housing market. Formed in 2008, is has only known a market in recession, still managing to perform very well, including outperforming CYS Investments but mirroring its rises and falls. To continue reading, click here.