Core Insights - Annaly (NLY) is expanding its portfolio of mortgage-backed securities and performed well in the fourth fiscal quarter, beating consensus earnings estimates by $0.01 per share but missing the top line expectations from Wall Street [1] Financial Performance - In the fourth fiscal quarter, Annaly reported earnings that exceeded consensus estimates by $0.01 per share [1] - However, the company did not meet Wall Street's revenue expectations [1] Portfolio Expansion - Annaly is rapidly increasing its holdings in mortgage-backed securities, indicating a strategic focus on this asset class [1]

Many investors like the idea of high yields in the mortgage REIT space but don’t like all the risk. We have a great option for them - preferred shares. Preferred shares in the mREIT sector have relatively high dividend yields but do not carry the same risk as the common stock. Annaly Capital (NLY) Preferred Share NLY-G (NLY.PR.G) is an interesting preferred share because it has a lower floating rate than any of the other preferred shares we cover. The REIT Forum This allows it to trade at a lower price, a ...

Core Viewpoint - Annaly Capital Management, Inc. (NYSE:NLY) is identified as one of the most undervalued REIT stocks currently available for investment, with a recent upgrade from Neutral to Buy by BTIG, which has set a price target of $25 for the shares [1]. Group 1: Investment Potential - The firm anticipates that Annaly Capital Management, Inc. (NYSE:NLY) could see additional upside if mortgage-backed securities spreads compared to Treasuries, currently at approximately 115 basis points, narrow further [2]. - A more stable stock valuation for NLY is expected if spreads expand again amid rising interest rate volatility [2]. Group 2: Market Conditions - BTIG has noted a decline in long-term interest rates, which may increase prepayment vulnerability in NLY's mortgage servicing rights (MSR) and non-qualified mortgage (non-QM) portfolios [3]. - The firm's assessment includes an expectation that the Trump presidency may attempt to engineer lower mortgage rates, potentially benefiting NLY [3]. Group 3: Company Overview - Annaly Capital Management, Inc. (NYSE:NLY) operates as a diversified capital manager in the mortgage finance sector, with a portfolio that includes securities, loans, and equity in the mortgage finance market [3].

Core Viewpoint - Annaly Capital Management, Inc. is showing positive financial performance and growth potential, supported by recent earnings and analyst price target adjustments [1][6]. Financial Performance - In Q4 2025, Annaly reported earnings available for distribution (EAD) per average share of 74 cents, exceeding the Zacks Consensus Estimate of 72 cents, indicating a positive trend in earnings growth [2][6]. - For the full year of 2025, Annaly's EAD per share was $2.92, surpassing the Zacks Consensus Estimate of $2.90 and showing growth from the previous year's $2.70 [4]. Asset Management - The company's book value per share increased to $20.21 from $19.15 year-over-year, reflecting effective management of assets and liabilities [3][6]. - The average yield on interest-earning assets improved to 5.44% during the quarter, enhancing profitability [3]. Market Activity - Annaly's current trading price is $23.85, with a market capitalization of approximately $16.29 billion and a trading volume of 5,836,568 shares [5]. - The stock has fluctuated between a low of $23.72 and a high of $24.28 today, with a yearly high of $24.52 and a low of $16.60 [5]. Analyst Outlook - Wells Fargo analyst Donald Fandetti set a new price target for NLY at $25, reflecting confidence in the company's financial health and future prospects [1][6].

Core Viewpoint - Annaly Capital Management is a significant entity in the REIT sector, focusing on mortgage-backed securities, with recent financial performance showing strong earnings but challenges in revenue expectations [1][2][3]. Financial Performance - Annaly reported quarterly earnings of $0.74 per share, exceeding the Zacks Consensus Estimate of $0.72, marking a +3.25% earnings surprise and an improvement from $0.72 per share in the same quarter last year [2]. - The company reported revenues of $366.58 million for the quarter ending December 2025, which fell short of the Zacks Consensus Estimate by 21.84%, although this represents a significant increase from $187.29 million in revenues from the same period last year [3]. Stock Performance - Currently, NLY's stock is priced at $23.84, reflecting a decrease of 1.69% or $0.41, with a trading range between a low of $23.72 and a high of $24.25 during the day [4]. - Over the past year, NLY has reached a high of $24.52 and a low of $16.60, with a market capitalization of approximately $16.28 billion and a trading volume of 4,775,668 shares on the NYSE [4]. Analyst Ratings - On January 29, 2026, Wells Fargo maintained an "Overweight" rating for NLY, with a "hold" action, and raised its price target from $23 to $25 [1].

Key Takeaways Annaly reported Q4 2025 EAD of 74 cents per share, surpassing the Zacks Consensus Estimate of 72 cents.Book value per share increased to $20.21 from $19.15 in the prior year.Average yield on interest-earning assets rose to 5.44% in the quarter.Annaly Capital Management, Inc. (NLY) reported fourth-quarter 2025 earnings available for distribution (EAD) per average share of 74 cents, which beat the Zacks Consensus Estimate of 72 cents. The figure increased from 72 cents in the year-ago quarter.NL ...

Financial Data and Key Metrics Changes - The company's book value per share increased by 5% from $19.25 in the prior quarter to $20.21 as of December 31, 2025 [23] - Earnings Available for Distribution (EAD) rose by $0.01 to $0.74, exceeding the dividend for the quarter [24] - Economic return for Q4 was 8.6%, bringing the full-year economic return to 20.2% [23][24] - Economic leverage decreased to 5.6 turns, down from the previous quarter [8][25] Business Line Data and Key Metrics Changes - The agency portfolio ended 2025 at $93 billion, an increase of nearly $6 billion quarter-over-quarter and $22 billion year-over-year, representing 62% of the firm's capital [9] - The residential credit portfolio reached $8 billion, up $1.1 billion quarter-over-quarter, representing approximately 19% of the firm's capital [13] - The mortgage servicing rights (MSR) portfolio ended at $3.8 billion, a $280 million increase quarter-over-quarter and a 15% increase year-over-year [17] Market Data and Key Metrics Changes - Fixed income markets showed strong performance, with the U.S. aggregate bond index registering the highest total return since 2020 [7] - The yield curve steepened during the quarter as short-term yields fell while long-term yields rose modestly [7] - The agency market experienced significant spread tightening following GSE's MBS purchase announcements [20] Company Strategy and Development Direction - The company aims to increase capital allocation to residential credit and MSR, targeting a long-term equity allocation of 50% Agency MBS, 30% RESI, and 20% MSR [78][79] - The diversified housing finance model is expected to continue performing well for shareholders, with a focus on maintaining market leadership across various strategies [21][22] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains solid, with the labor market showing signs of softness but limited layoffs [5][6] - Management expressed confidence in the durability of the swaps market as a hedge and the overall stability of the agency market [31][32] - The company anticipates continued growth in the non-agency market and is well-positioned to benefit from increased liquidity in the non-QM market [20][21] Other Important Information - The company raised $560 million of common equity in Q4, bringing total equity raised in 2025 to $2.9 billion [9] - The efficiency ratio improved to 1.31% for Q4, with a full-year ratio of 1.42% [27] Q&A Session Summary Question: Update on mark-to-market book values - Management reported a 4% increase in book value, inclusive of dividend accrual [30] Question: Portfolio returns and comfort level with dividend in 2026 - Management expressed confidence in achieving mid-teens returns and stated the dividend is safe [31][32] Question: Insights on MSR portfolio and current coupon MSR - Management discussed the infrastructure set up for active participation in the MSR market and the potential for increased origination [36][40] Question: Impact of G-fee cuts on prepayment environment - Management indicated that a G-fee cut on purchase loans could be beneficial, but broad cuts might negatively impact the MBS market [46] Question: Risks that could change the low-risk environment - Management identified global fiscal risks and asset market euphoria as potential concerns [60][61] Question: Attractiveness of buying lower-coupon MBS - Management noted that valuations on low-coupon MBS are tight, and better ways to manage risk exist [68] Question: Likelihood of GSE portfolio caps being increased - Management stated uncertainty regarding the increase of caps but noted the GSEs have significant capacity [84]

Financial Data and Key Metrics Changes - The company's book value per share increased by 5% from $19.25 in the prior quarter to $20.21 as of December 31, 2025 [23] - Economic return for Q4 was 8.6%, bringing the full-year economic return to 20.2% [23][24] - Earnings Available for Distribution (EAD) per share rose by $0.01 to $0.74, exceeding the dividend for the quarter [24] - Economic leverage ratio decreased to 5.6x, down from the previous quarter [25] Business Line Data and Key Metrics Changes - Agency portfolio ended 2025 at $93 billion, increasing by nearly $6 billion quarter-over-quarter and $22 billion year-over-year [9] - Residential credit portfolio reached $8 billion, up $1.1 billion quarter-over-quarter [13] - Mortgage Servicing Rights (MSR) portfolio increased to $3.8 billion, a $280 million increase quarter-over-quarter [17] Market Data and Key Metrics Changes - Fixed income markets showed strong performance, with the U.S. aggregate bond index registering the highest total return since 2020 [7] - The yield curve steepened as short-term yields fell while long-term yields rose modestly [7] - Swap spreads widened due to a shift from Quantitative Tightening to balance sheet expansion by the Fed [8] Company Strategy and Development Direction - The company aims to increase capital allocation to residential credit and MSR while maintaining agency as the anchor of the portfolio [21][77] - The non-QM market is expected to grow, providing competitive advantages in loan selection and execution [20] - The company plans to remain patient and opportunistic in capital allocation, focusing on diversified housing finance strategies [22] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains solid, with the labor market showing signs of softness but limited layoffs [5][6] - Management expressed confidence in the durability of the swaps market as a hedge and the overall strength of the diversified housing finance model [32][21] - Risks include global fiscal issues and potential complacency in asset markets, which could lead to increased volatility [60][61] Other Important Information - The company raised $560 million of common equity in Q4, totaling $2.9 billion for the year [9] - The efficiency ratio improved to 1.31% for Q4, with a full-year ratio of 1.42% [27] Q&A Session Summary Question: Update on mark-to-market book values - The book value was up 4%, inclusive of dividend accrual, with a slight increase noted after the call [30] Question: Portfolio returns and comfort level with dividends - The company expects mid-teens returns and feels confident about the dividend's safety for 2026 [31][32] Question: MSR portfolio insulation from lower interest rates - The company is set up to be active in the current coupon MSR market and expects origination to pick up [36][40] Question: Impact of G-fee cuts on prepayment environment - A G-fee cut on purchase loans is seen as appropriate, but broad cuts could damage the MBS market [46] Question: Attractiveness of raising capital in different spread environments - Wider spreads are more attractive for raising capital, but current stability provides confidence [51][52] Question: Risks that could change the low-risk environment - Global fiscal issues and asset market euphoria are noted as significant risks [60][61] Question: Opportunities in low-coupon MBS - The valuation on low-coupon MBS is tight, and better ways to manage risk are available [67] Question: Likelihood of GSE portfolio caps being increased - Uncertainty remains regarding the increase of portfolio caps, with no clear answer available [82]

Financial Data and Key Metrics Changes - The company's book value per share increased by 5% from $19.25 in the prior quarter to $20.21 as of December 31, 2025 [19] - Earnings Available for Distribution (EAD) rose marginally to $0.74, exceeding the dividend for the quarter [7][20] - Economic return for Q4 was 8.6%, bringing the full-year economic return to 20.2% [19][20] Business Line Data and Key Metrics Changes - The agency portfolio ended 2025 at $93 billion in market value, an increase of nearly $6 billion quarter-over-quarter and $22 billion year-over-year [8] - The residential credit portfolio reached $8 billion in market value, up $1.1 billion quarter-over-quarter, representing approximately 19% of the firm's capital [10] - The mortgage servicing rights (MSR) portfolio ended the fourth quarter at $3.8 billion in market value, a nearly $280 million increase quarter-over-quarter and a 15% increase year-over-year [13] Market Data and Key Metrics Changes - Fixed income markets exhibited strong performance, contributing to the highest total return in the U.S. aggregate bond index since 2020 [5] - The yield curve steepened during the quarter as short-term yields fell while long-term yields rose modestly [5] - Swap spreads continued to widen, supported by a shift from Quantitative Tightening to balance sheet expansion by the Fed [6] Company Strategy and Development Direction - The company aims to increase its allocation to residential credit and MSR, targeting a long-term weighting of 50% agency, 30% residential credit, and 20% MSR [46][47] - The diversified housing finance model is expected to continue performing well for shareholders, with a focus on opportunistic investments in the current coupon MSR market [18] - The company remains well-positioned to benefit from growth in the non-QM market and the broader non-agency market [13][17] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains solid, with the labor market showing signs of softness but limited layoffs [4] - The company anticipates continued strong results from its investment strategies in 2026, supported by favorable market conditions [16][18] - Risks include global fiscal challenges and potential changes in housing policy that could impact the agency markets [39][40] Other Important Information - The company raised $560 million of common equity through its ATM in Q4, bringing total equity raised in 2025 to $2.9 billion [8] - The economic leverage ratio remained low at 5.6x, down from the previous quarter [22] - Total assets available for financing reached approximately $9.4 billion, providing significant liquidity and flexibility [23] Q&A Session Summary Question: Update on mark-to-market book values - The book value was up 4%, inclusive of the dividend accrual, with a slight increase noted [25] Question: Portfolio returns and comfort level with the dividend in 2026 - The company expects mid-teens returns and feels confident about the durability of the swaps market as a hedge [26] Question: Insights on the MSR portfolio and current coupon MSR - The company is now active in the MSR exchange platforms and is well-positioned to manage recapture effectively [27][29] Question: Impact of potential G-fee cuts on prepayment environment - A G-fee cut on purchase loans is seen as appropriate, but broad cuts could negatively impact the MBS market [31] Question: Factors that could change the current low-risk environment - Risks include global fiscal issues and asset market euphoria, which could lead to corrections [39] Question: Attractiveness of buying lower-coupon MBS - The valuation on low-coupon MBS is tight, and better ways to manage risk are available [41] Question: Likelihood of GSE portfolio caps being increased - The current capacity is far from hitting caps, and future increases remain uncertain [48]

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