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How To Play The 20% Yielding 2X Leveraged mREIT ETNs

Published Tue, 01 Oct 2019 10:27:52 -0400 on Seeking Alpha

Investing in and Trading the 2X Leveraged mREIT ETNs
In my first Seeking Alpha article published on June 21, 2013, Federal Reserve Actually Propping Up Interest Rates: What This Means For mREITs, I set forth a proposition that, contrary to the widely held belief that the Federal Reserve was artificially depressing interest rates, it was actually preventing them from falling even more than their then very low levels. Additionally, as described in my July 11, 2013, Seeking Alpha article, A Depression With Benefits: The Macro Case For mREITs, my premise was that government policies shifting the tax burden from the rich and onto the middle class result in much more funds being available for investment relative to productive uses for those investable funds. That tends to put downward pressure on interest rates.
These two articles were the basis for my view that interest rates would be lower and for longer, than was the then current consensus. This was my macroeconomic rationale for investing in UBS ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (MORL) - the only 2X-leveraged mREIT ETN in existence at that time. My logic was that, if the primary risk associated with agency mREITs was interest rate risk, then the best environment for investing in mREITs would be for interest rates to be lower than the market was predicting.
Since my first article was published on June 21, 2013, the total return from MORL has been 147.48% though to September 27, 2019, assuming reinvestment of... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ORCHID ISLAND CAPITAL 5.58   0.0 -0.29 0.96 17.75
AMERICAN CAPITAL AGENCY 15.64   0.0 -1.54 1.92 12.21
ARMOUR RESIDENTIAL REIT 17.26   0.0 -9.30 2.04 12.03
SPDR S&P 500 ETF 301.29   0.0 0.00 5.42 1.82
ISHARES FTSE NAREIT MORTG PLUS CAPPED INDEX FUND 41.97   0.0 0.00 0.00 0.00