Seeking Alpha·2026-03-16 21:50Core Viewpoint - Annaly Capital Management's preferred shares, particularly NLY-I, present a bullish investment opportunity due to recent price weakness, allowing for a favorable entry point with a potential yield to call of approximately 4.7% and a stripped yield of about 8.94% if held longer [3][22]. Company Overview - Annaly Capital Management is a mortgage REIT primarily invested in agency mortgage-backed securities, which are backed by Fannie Mae and Freddie Mac, providing a low-risk profile for its preferred shares [17]. Investment Opportunity - NLY-I shares are currently trading at $25.01, with a yield to call of 4.7%. If shares are not called immediately, investors could benefit from a stripped yield of approximately 8.94% [3][22]. - The shares became callable on June 30, 2024, and despite being callable for over 21 months, they have not yet been called, indicating potential for continued yield collection [4][22]. Relative Value - NLY-I is considered more attractive than NLY-F due to its lower price of $25.01 compared to NLY-F's $25.37, along with a better yield [5][8]. - The dividend policy for NLY-I results in slightly larger dividends compared to NLY-F, despite NLY-F having a higher floating spread [7][8]. Price Targets and Performance - Current targets for NLY-I suggest a slight positive yield to call, with expectations of a modest price increase of 0.5% to 1.5% in the near future [13][22]. - Historical performance indicates that NLY-I has rarely traded below $25, suggesting strong support at this price level [15][22]. Conclusion - The investment in NLY-I is characterized by a high yield and low downside risk, with expectations for modest upside in share price beyond dividend accrual [22][23].