Upcoming Articles (CIM-A, NLY-F, VGSH) + Charts on Rexford and Digital Realty
We’ve got a few articles coming up on Seeking Alpha. I’ll summarize them briefly.
CIM-A
(CIM-A) is not attractive:
- Baby bonds offer higher yield + less volatility + less risk of anything going really wrong.
- Want the upside from a scenario where rates fall? The 10-year Treasury has more upside in that scenario.
- Want really low volatility? Treasury bill ETFs are still paying over 4%.
The only reason for picking CIM-A is hoping the price goes higher, but the best catalysts (like lower rates) would still benefit alternatives more. It’s not horrible. You can’t short it. But there are no great reasons to pick it.
NLY-I (and NLY-F and NLY-G)
(NLY-I) and (NLY-F) are okay, but not great:
- The negative worst cash to call is a problem.
- I’d like them if the worst-cash-to-call was really small.
- The risk of a call is heating up.
Even (NLY-G) trades at a negative worst cash to call. That supports my view that NLY might decide to call the shares and issue new preferred shares a lower floating spread.
I don’t like NLY-G here. I doubt NLY will actually call NLY-G, but the spread is just too thin. If rates decline, investors may be really disappointed with the falling yield.
VGSH
This is a short-term Treasury ETF:
- The expense ratio is great at 0.04%.
- I would prefer to see a higher price per share to minimize the bid-ask spread.
- I prefer to use ETFs where the effective duration is around 3 months rather than nearly 2 years.
The higher duration creates a bit of extra price volatility. It’s definitely not bad, but I am still looking to minimize the volatility.
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Other Notes
I don’t have upcoming Seeking Alpha articles on these, but I did want to share some notes and charts. We had some members asking about Rexford (REXR) in Discord today. I also pulled a chart on Digital Realty (DLR) to share.
Rexford
There are a few charts our subscribers asked about for this industrial REIT.
Rexford Price and NAV
We’re starting with the price to NAV (Net Asset Value). This chart isn’t perfect because TIKR still hasn’t responded to my suggestion of allowing the user to force both lines to be on the same X axis. However, I’m still a big fan of using TIKR charts.
This chart demonstrates the share price and consensus NAV over the last 5 years. Consensus NAV estimates have declined materially, but nowhere near as much as the price.
Rexford Price to NAV 5-Year Chart
This is the ratio for price to NAV. It’s pretty clear that the price to NAV ratio is pretty close to historic lows.
Rexford Price to NAV 10-Year Chart
We’re zooming out a bit. We can see that price-to-NAV actually fell slightly further back in late 2015. That was really cheap.
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