What Makes Chimera Investment Corp. Different From Other REITs
Parsimony Investment Research submits:One REIT that seems to piquing the interest of many investors right now is Chimera Investment Corp. (CIM). Maybe it's the 15% yield or the $3 stock price (or a combination of both), but it is certainly on investors' radar screens. The stock continues to struggle even though many of its peers are in strong uptrends.
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What makes Chimera Different?
The main difference between CIM and many of its REIT peers is primarily portfolio composition. Over 50% of CIM's portfolio is invested in non-agency MBS, whereas most REITs focus primarily on lower-risk agency paper. While both agency and non-agency MBS have significant interest rate risk, non-agency securities also have credit risk [i.e., they are not guaranteed by government sponsored entities such as Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB)]. Without a government guarantee, the value of non-agency MBS depends largely on the quality of the underlying loansComplete Story »
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