Core Insights - The preferred stock of Chimera (NYSE: CIM.PR.D) was recommended for its 10.0% dividend yield and a significant margin of safety in the dividend [1] Group 1 - The preferred stock has provided outstanding returns since the initial recommendation [1] - The author has a background in chemical engineering and economics, indicating a strong analytical foundation for investment decisions [1] - The author emphasizes the importance of fundamental and technical analysis in investment strategies, particularly using options for both investing and trading [1]

Core Viewpoint - Chimera Investment (CIM) has experienced significant selling pressure, declining 7.7% over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, with analysts predicting better earnings than previously expected [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - CIM's current RSI reading is 28.62, suggesting that the heavy selling may be exhausting, indicating a potential bounce back towards equilibrium in supply and demand [5]. Group 2: Fundamental Analysis - There is strong consensus among sell-side analysts to raise earnings estimates for CIM, with a 0.6% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [7]. - CIM holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [8].

Core Viewpoint - Chimera Investment Corporation (NYSE: CIM) is rated as a Hold for income-focused investors interested in mortgage real estate investment trusts (mREIT) due to its appealing dividend yield of 10.65%, despite a history of poor long-term performance [1]. Group 1 - The dividend yield of Chimera Investment Corporation is 10.65%, which is attractive for income-focused investors [1]. - The company has a history of poor performance over the long term, which may concern potential investors [1]. - The analysis is provided by David A. Johnson, who has over 30 years of investment experience and holds advanced degrees in finance and business administration [1].

Investment Portfolio - As of December 31, 2024, the investment portfolio consisted of approximately 88% residential mortgage loans, 8% Non-Agency RMBS, and 4% Agency MBS, compared to 91%, 8%, and 1% respectively in 2023[45] - The residential mortgage loan portfolio primarily includes reperforming loans that have been outstanding for over 120 months and have a history of delinquent payments[46] - The company has invested in residential mortgage loans to securitize them or retain them in the investment portfolio, financing through warehouse facilities and repurchase agreements[49] - The investment strategy includes acquiring Non-Agency RMBS, which are typically certificates created by the securitization of pools of mortgage loans[54] - The investment guidelines restrict any single industry from representing more than 20% of the portfolio's aggregate risk exposure[63] Financial Strategy - The debt-to-equity ratio was 4.0:1 as of December 31, 2024, indicating a leveraged financing strategy[63] - The company may evaluate revolving securitization structures for financing its RTLs in the future[47] - The company intends to maintain compliance with REIT regulations by distributing at least 90% of its annual taxable income to stockholders[67] Workforce and Diversity - As of December 31, 2024, the company had 77 full-time employees, with 36 added through the Palisades Acquisition, indicating a significant increase in workforce[78] - 61% of the workforce is either gender or racially diverse, reflecting the company's commitment to diversity and inclusion[78] - The company focuses on attracting and retaining employees through competitive financial benefits and internal training programs[76] - The company provides competitive compensation and benefits, including a 401(k) retirement plan with a company match and comprehensive healthcare benefits[77] Compliance and Regulation - The company holds all required licenses or exempt status through two wholly owned subsidiaries in 21 states as of December 31, 2024, ensuring compliance with regulatory requirements[74] - The company is registered with the SEC as an investment adviser under the Advisers Act, which imposes fiduciary duties and disclosure obligations[73] - The company engages third parties for independent reviews of mortgage files to assess credit underwriting and compliance[51] Cybersecurity - The Audit Committee and Risk Committee oversee management of cybersecurity risk, receiving regular reports on the company's cybersecurity program[246] - The Chief Information Security Officer (CISO) has over 25 years of experience in information technology, ensuring strong leadership in cybersecurity matters[247] - The Incident Response Team coordinates responses to cybersecurity incidents, involving both internal and external resources as necessary[248] Competition - The company competes with various entities including mortgage REITs and investment management firms, many of which are significantly larger and have greater access to capital[79]

Financial Data and Key Metrics Changes - GAAP net loss for Q4 2024 was $168.3 million, or $2.07 per share, while GAAP net income for the full year was $90.3 million, or $1.10 per share [28] - GAAP book value at the end of Q4 was $19.72 per share, with an economic return on GAAP book value of negative 10.1% for the quarter and positive 4.4% for the full year [29] - Economic net interest income for Q4 was $69.2 million, with a yield on average interest-earning assets of 6% and an average cost of funds of 4.5% [30][31] Business Line Data and Key Metrics Changes - The company managed a portfolio of $12.3 billion, consisting of $10.7 billion in residential loans, $1.1 billion in non-agency RMBS, and $519 million in agency MBS [44] - The residential loan book includes $9.6 billion of seasoned legacy re-performing loans, with serious delinquencies flat quarter-over-quarter at 9.1% [45][46] - The company purchased $129 million of short-duration residential transition loans and was a net seller of $452 million in agency CMOs during the quarter [44] Market Data and Key Metrics Changes - The average 30-year fixed mortgage rate started the year at 6.6%, peaked at 7.2% in May, and ended the year at 6.9% [11] - Home sales declined for the third consecutive year to the lowest level since 1995, while home prices rose 4.3% year-over-year according to the FHFA housing price index [12][14] - Credit spreads for asset-backed securities tightened significantly in 2024, with non-agency RMBS gross issuance nearly doubling from 2023 levels [15] Company Strategy and Development Direction - The company plans to diversify its portfolio, increase liquidity, and grow fee-based income revenue streams in 2025 [20][21] - The acquisition of the Palisades Group is expected to enhance returns through diversification of revenue and provide third-party investment management services [19][22] - The company aims to invest in technology to enhance asset management capabilities and drive operational efficiencies [24] Management's Comments on Operating Environment and Future Outlook - The management noted that the operating environment remains uncertain, with expectations to continue diversifying the portfolio and growing the agency RMBS portfolio [20][21] - The company is optimistic about credit performance and housing finance fundamentals, despite challenges in the housing market [15][56] - Management expressed confidence in finding new opportunities and increasing the quarterly dividend by 12% [27] Other Important Information - The company ended the year with $610 million in total cash and unencumbered assets, and total leverage for Q4 was 4 to 1 [31] - The company executed a new financing facility with a greater than 400 basis point reduction in rate, allowing for approximately $62 million to be deployed in new investments [26] Q&A Session Summary Question: Can you talk about incremental ROEs and what you see as the normalized ROE? - Management indicated that the target return on invested assets is in the mid-teens area, with a focus on reallocating capital to higher yielding assets [66][68] Question: Can you discuss the book value roll forward this quarter? - Management explained that the book value change was driven by the steepening of the yield curve and the correlation between loan values and securitized debt [70][72] Question: Can you elaborate on the potential to add MSR and other hedges? - Management stated that the strategy focuses on buying residential loans and securitizing them, with MSRs seen as a way to stabilize book value without diluting earnings [78][80] Question: Did you receive a margin call during the quarter? - Management confirmed that they received some margin calls, but they were immaterial and not significant [88] Question: Can you discuss the flow of capital in response to changing expectations for the Fed to cut interest rates? - Management noted that credit spreads have been tightening and there is strong demand throughout the capital structure, which is favorable for redeploying capital [91][92] Question: What kind of MSRs are you looking at? - Management indicated that they are focused on purposeful allocations within the portfolio, considering both current and lower coupon MSRs based on relative value [96][98]

P R O P R I E T A R Y & CO N F I D E N T I A L I n v e s t o r P r e s e n t a t i o n Q 4 | 2 0 2 4 Disclaimer This presentation includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as "goal" "expect," "target," ...

Core Viewpoint - Chimera Investment (CIM) reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, but down from $0.39 per share a year ago, indicating a 2.78% earnings surprise [1][2] Financial Performance - The company posted revenues of $65.82 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.92%, compared to $64.65 million in the same quarter last year [2] - Over the last four quarters, Chimera has surpassed consensus EPS estimates three times, but has only topped consensus revenue estimates once [2] Stock Performance - Chimera shares have increased approximately 7.8% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $69.8 million, and for the current fiscal year, it is $1.57 on revenues of $281.4 million [7] - The trend of estimate revisions for Chimera is mixed, which could change following the recent earnings report [6] Industry Context - The REIT and Equity Trust industry, to which Chimera belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, suggesting potential challenges ahead [8]

PRESS RELEASE NYSE: CIM CHIMERA INVESTMENT CORPORATION 630 Fifth Ave, Suite 2400 New York, New York 10111 Investor Relations 888-895-6557 www.chimerareit.com FOR IMMEDIATE RELEASE CHIMERA INVESTMENT CORPORATION REPORTS 4TH QUARTER 2024 EARNINGS NEW YORK - (BUSINESS WIRE) - Chimera Investment Corporation (NYSE:CIM) today announced its financial results for the fourth quarter and full year ended December 31, 2024. Financial Highlights : (1) "In 2024, we made progress on our initiative towards building a more ...

Strategic Acquisition: BTQ Technologies Corp. has acquired advanced computing-in-memory (CIM) intellectual property from Cimtech Technology Co., a leader in memory technology and CIM solutions, to enhance its post-quantum cryptography and quantum-secure communication capabilities. Cutting-Edge Technology: Cimtech's state-of-the-art CIM IP, developed using TSMC's 28nm HPC process, includes critical assets like Verilog models and timing libraries, enabling high-speed, low-power computation ideal for next-gen ...

About one and a half years ago, I recommended buying the preferred stock of Chimera Investment Corporation (NYSE: CIM.PR.D ) for its attractive dividend yield of 10.0% back then and the wide margin of safety of the dividend. Since myI am a chemical engineer with a MS in Food Technology and Economics, and a MENSA member. I am the author of the book "Investing in Stocks and Bonds: The Early Retirement Project" (2024):I am also the author of the book "Mental Math: How to perform math calculations in your mind" ...