Chimera Sells Its Agency Portfolio. What's Next for Investors?
The last couple of months have been a crucible for mortgage real estate investment trusts (mREITs). The COVID-19 crisis has caused extreme volatility in the bond markets, and mortgage-backed securities generally abhor volatility. Every mREIT has a different investment strategy, and pretty much every one has reacted in its own way.
Chimera Investment Corp. (NYSE: CIM) is an mREIT that invests in agency and non-agency mortgages. In other words, some of its portfolio is guaranteed by the U.S. government and some is not. Chimera went into the first quarter with about 24% of its portfolio in residential mortgages guaranteed by the government. It exited the quarter with almost nothing left. It used the proceeds of the sale to pay down short-term borrowings (repurchase agreements). What does this mean for Chimera's investment risk going forward?
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Source Fool.com
