Cantor Fitzgerald Starts Hatteras Financial (HTS) at Buy; All ARMs, Less Interest-Rate Sensitivity

Cantor Fitzgerald initiates coverage on Hatteras Financial (NYSE: HTS) with a Buy. PT $29.

Cantor analyst says, "Hatteras distinguishes itself, in our view, by the relatively low interest-rate sensitivity of its investment portfolio, which consists entirely of ARMs (the majority of which re-set in 3-5 years), hedged to produce a relatively low net duration (our estimate: 9 months)...Hatteras has had a strong record since its IPO in 2008 (average annual total return of 28%)...We expect (a) Hatteras' existing investments, (b) two 1Q:11 equity raises, and (c) a continuation of the current favorable environment (especially a steep yield curve) for Agency mortgage REITs, to enable it to sustain a peer ROE through 2011. Accordingly, we believe that Hatteras should trade in line with peers (as it does currently)."

For more ratings news on Hatteras Financial click here and for the rating history of Hatteras Financial click here.

Shares of Hatteras Financial closed at $27.60 yesterday.

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