Robinhood Investors Love MFA Financial. Should They?
The mortgage real estate investment trust (mREIT) sector has been a favorite of new investors this year given the extreme volatility we have seen in these stocks. For a time, the stocks appeared cheap, with oversized yields. However, a credit crunch soon became the dominant driver. The entire sector was thrown overboard in the spring as the coronavirus crisis triggered a massive sell-off in mortgage-backed securities.
Several mREITs like MFA Financial (NYSE: MFA) had what could only be called near-death experiences. Even the mREITs the invest in government-guaranteed mortgage backed securities, like AGNC Investment Corp. and Annaly Capital Management, saw the market inflict serious dents in their book value and were forced to cut dividends.
MFA Financial remains popular with day traders -- it's one of the 100 most-owned stocks on the beginner-friendly trading platform Robinhood. But while the Robinhood crowd found MFA's volatility conducive to day trading, the bigger question is whether the company is a suitable long-term investment.
Source Fool.com
