Friday's Mortgage REIT Sell-Off Overdone - FBR Capital (NLY) (AGNC) (TWO)

Analysts at FBR Capital believe Friday's bloodbath in the mortgage REIT sector was "largely an overreaction by the market, driven by a modestly better-than-expected employment report, which got traders anxious that the Fed would taper QE3 sooner than later."

The firm said while mortgage REIT should have sold off, they shouldn't have sold off more than the decrease in book value, which was only approximately 3%-4%.

"Given that it's arguable that the MBS sell-off largely overshot considering it was the worst MBS trading day in modern history, it could then be justifiable that the mortgage REIT sell-off was too harsh as well. Broadly speaking, we think the group (both agency and hybrid mREITs) got undeservedly whacked, and from a trading perspective looks attractive in the short term."

He added, "We think that as many investors and traders come back from the long July 4 holiday and take a look at their screens, they will be surprised to see what unfolded on Friday, which could support stocks in early trading."

Mortgage REIT stocks:
American Capital Agency (Nasdaq: AGNC)
Annaly Capital Management, Inc. (NYSE: NLY)
Chimera Investment Corporation (NYSE: CIM)
ARMOUR Residential REIT, Inc. (NYSE: ARR)
MFA Financial, Inc. (Nasdaq: MFA)
Two Harbors Investment Corp. (NYSE: TWO)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Heineken NV (HEIA:NA) (HEINY) PT Raised to EUR77 at RBC Capital
• Meta Platforms Inc. (META) PT Lowered to $500 at Oppenheimer
• HSBC Upgrades UPS (UPS) to Buy, 'Back to earnings growth'