By Bear Fight:

King of Bonds, Jeffrey Gundlach spent time with Bloomberg’s Tom Keene this week to discuss his view of the markets and the best place for investor’s capital. With over $30 billion of assets under management Gundlach’s Doubleline Capital is focused on providing strong risk adjusted returns for shareholders. Gundlach is an astute investor and serious investors should heed his advice.

During his discussion with Tom Keene, Gundlach discussed how investors were not being adequately compensated for short to medium duration bonds. According to Gundlach, investing in short-term bonds is like signing up to get a suitcase full of cash in two to three years. Simply Gundlach would rather have his suitcase full of cash now.

Gundlach’s flagship $25 billion DoubleLine Total Return Bond Fund (DBLTX) has returned 4 percent this year, beating about 95 percent of rivals. Gundlach’s fund held about 78 percent of assets in mortgage-related securities as of

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By Felix Salmon:

Many thanks to Ben Walsh for putting this chart together for me. What you’re seeing is JPMorgan’s (JPM) excess deposits – the size of the bank’s deposit base, minus the amount of its loans – both in absolute terms and as a ratio. Either way, it’s going up and to the right.

(click to enlarge)

JPMorgan

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By Sammy Pollack:

Barclays (BCS) today announced the sale of its $6.1 billion dollar stake in asset manager Blackrock (BLK). BCS has held the stake for nearly three years. As shown by the chart below, BLK shares are slightly higher than where they were three years ago.

Sale Price

BCS is selling BLK at a price that is reasonable. The stock is not near its lows and not near its highs. However, I believe the sale price was not that important for BCS as the British bank wanted to raise capital.

Rationale

Considering the situation in Europe, BCS probably realizes that things are about to get very difficult over there. In the end, the entire European banking system will likely need to be recapitalized. For BCS, selling its BLK stake represents a good way to raise capital. The alternatives would have been to issue debt, or do a large stock sale. Considering that

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By Roddy Boyd:

Theology and high finance rarely intersect but one place they likely met is at the Toronto headquarters of insurance conglomerate Fairfax Financial Holdings (FRFHF.PK) in the winter of 2003.

It was there, in the bitter cold of that early February, that V. Prem Watsa, Fairfax’s founder and chief executive, along with a handful of his closest colleagues, conceived a transaction whose effect has been nothing short of miraculous.

Certainly it didn’t seem like much: A then little-known insurance company buying a block of shares in an even less well-known reinsurer it already virtually controlled hardly sparked chatter among insurance industry rivals or on Wall Street’s trading floors.

But it should have.

Fairfax’s purchase of 4.3 million shares of Stamford, Ct.-based Odyssey Re, increasing its stake to just over 80% from 74%, was the most consequential transaction in Watsa’s career. Though few understood it at the time, the March 2003 deal

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By ZetaKap:

Are you looking for mid-sized companies that still have room to grow? Are you after very high dividend yield stocks, with yields over 10%? Are you after stocks that analysts are calling ‘buy’ or ’strong buy’? Looking for undervalued stocks? For ideas on how to start your own search, we ran a screen.

The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses “forecasted” numbers, it does offer the benefit of illustrating analysts’ expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing

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By Doug K. Le Du:

Whether you are considering buying or selling, understanding the potential or actual annual rate of return of a preferred stock investment is important to any strategy. But accurately calculating this key value can be a bit tricky.

There are a variety of calculations, each of which use a variety of assumptions and, therefore, offer values that can vary. The calculation that you use depends on how closely these assumptions align with your objectives.

And some calculations are more useful for certain types of investments than others. Bond investors, for example, are use to analyzing “Yield-To-Call” or “Yield-To-Maturity” values while those investing in bank Certificates of Deposit look at “Annual Percent Return” or “Annual Percent Yield.”

While all of these values can be meaningful and interesting, they all have strengths and weaknesses when applied to a preferred stock investment. Yield-To-Call produces an annual return value that assumes that your shares are

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By Neal Razi:

At then end of March, I wrote an article detailing an opportunity in Annaly Capital Management (NLY), the well respected Mortgage REIT. Concerns over Annaly’s relatively low leverage levels and health of its CEO had driven the price of NLY’s stock down to some of its lowest levels of the last two years. Since that article, Annaly has outperformed the rest of the market with Annaly up 5% and the S&P down 5%. That’s not a bad swing.

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I want to reaffirm my buy on this stock for a few reasons.

First, it is important to understand how Annaly and the other Mortgage Real Estate Investment Trusts like Agency (AGNC), Capstone (CMO), Hatteras (HTS), and Chimera (CIM) make money. As I detailed before, it is on the interest rate difference (the

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By Sammy Pollack:

Shares of the largest mortgage insurers, MGIC Corp (MTG), Radian Group (RDN), and Genworth Financial (GNW) have all lost about half their value over the past three months.

Reasons For The Decline

• Over the past three months, the S&P 500 (SPY) is down nearly 5%. While there has not been a major sell-off, the negative move in the averages has played a role in the sell-off of the mortgage insurers.
• The financial sector as a whole has been under more pressure for a variety of reasons. Some important issues weighing on financials have been the trading loss at JP Morgan (JPM), and the government sale of American International Group (AIG) stock. The problems with the European financial system have also led to increased selling in financial shares. While none of these issues have a direct impact on the mortgage insurers, these issues have tempered the enthusiasm for investing in financial

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By Tom Armistead:

JPMorgan’s (JPM) troubled trade in its London-based CIO unit is well known. What is not properly understood, and particularly by regulators, is the source of the problem. JPMorgan is selling insurance and gambling contracts in an unregulated market.

CDS Are Insurance

Credit default swaps are insurance, and should be regulated as such, with a requirement of insurable interest for the buyer and adequate capital for the seller.

Briefly, insurance may be defined as the transfer of risk for a consideration, or premium. The insurance business has been in existence for centuries, and its underlying principles are clearly understood. It is a business affected with the public interest, and effective methods of regulation have been developed and are in place globally, with certain exceptions.

The exception with which we are concerned is CDS. Congress, aided and abetted by the machinations of Larry Summers, made them exempt from regulation by means of

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By Todd Johnson:

Annaly Capital Management (NLY) remains a vibrant agency mortgage real estate investment trust (mREIT) with a current 13.60% annual dividend yield. A 13.60% yield simply crushes the 2.80% yield of a 30 Year Treasury Bond security as of May 18th.

Treasury Yield Decline Impacts

Government Sponsored Entity (GSE) mortgage backed securities (MBS) closely track the Treasury Bond market. Agency mREITs, however, do not own Treasury securities. GSE MBS are instruments issued by the respective agency (e.g., Sallie Mae). Per the above table, investors can note the decrease in Treasury yields since May 1st, 2012.

Brief Overview

Annaly was formed in February 1997 as a Real Estate Investment Trust (REIT). The company invests in agency such as collateralized mortgage obligations and agency backed mortgage backed securities. As a qualified REIT, Annaly is not taxed on certain exempt portions of its income that it distributes as dividends to shareholders.

Annaly has numerous

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