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CS Adjusts Ratings on Chimera, MFA Financial and American Capital Agency
By Market News Video Staff, Monday, December 20, 1:37 PM ET
If investing in mortgage REITs hasn't been crazy enough this month, a few major names in the sector saw their ratings adjusted by Credit Suisse (NYSE:CS) on Monday morning. In fact, three of the top five holdings of the iShares FTSE NAREIT Mortgage Plus Capped Index Fund (AMEX:REM) saw their ratings adjusted, leading to some noticeable shifts in the sector.
Starting with the good news, Credit Suisse upgraded shares of Chimera Investment Corporation (NYSE:CIM) from neutral to outperform as the firm believes Chimera can sustain its high levels of ROE and its solid dividend. Currently, the dividend stands at 18 cents per share, yielding investors a robust 17.1% given the current market price of CIM. The firm also increased its price target on shares of Chimera from $4.00 per share up to $4.50. On the news, CIM was trading higher, gaining about 1% and trading at $4.25 per share.
Credit Suisse also issued a report on American Capital Agency (NASDAQ:AGNC), stating that it believes the active management of the portfolio should continue to generate strong returns for investors. Credit Suisse initiated coverage on the stock with an outperform rating and a price target of $32.50 per share. So far today, the news has driven AGNC higher by 1.5% to $29.77 per share.
And with the positive news, comes some negative news for mortgage REIT investors. Credit Suisse downgraded shares of MFA Financial from outperform to neutral citing valuation. Relative to other names in the sector, MFA has less upside for investors given the firm's price target of $8 per share and its yield trails the sector as a whole. In trading on Monday afternoon, MFA shares were slightly lower, falling 0.25% so far.
These three stocks account for more than 20% of the iShares FTSE NAREIT Mortgage Plus Capped Index Fund (AMEX:REM). For a full list of stocks, visit the REM Holdings page. And for a list of other ETFs that hold shares of MFA, AGNC and CIM, visit the following links.
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