Annaly Capital's Diversification Out Of Agency MBS

On the 12th of November 2012, Annaly Capital (NLY), one of the large cap US Agency mortgage REITs, announced the proposed acquisition of CreXus Investment (CXS) for a price of $12.5 per share. CreXus is a commercial mortgage REIT that does not only invest in agency residential mortgage backed securities but also in commercial mortgage loans and other commercial real estate debt. It also invests in commercial real estate property, commercial mortgage-backed securities and other commercial real estate-related assets.

In conclusion, Annaly Capital's move to acquire CreXus may be enough to put a floor on the company's share price. Annaly has sufficient cash from operations to support the acquisition. The acquisition will help reduce the downward pressure on Annaly Capital's net interest margin and, ultimately, to improve its bottom line. Therefore, we recommend investors to long Annaly Capital in order to benefit from this proposed acquisition. Read more