The Mortgage REIT To Avoid

I will never understand how I keep seeing this company on occasion making the rounds on Reddit. From SmallStreetBets to even the big boy itself of WSB and all spaces in between, I can find this die and resurface over and over again. It probably has to do with people looking soley looking at the price, compairing it to pre and post covid numbers, and the dividend and completly forgetting the income statement and balance sheet of the company in question. Each month bringing in a new round of bagholders to this pathetic stock. I don't feel like I'm going to kill talk about this stock, especially from this new platform, but this stock, even from its highs of $16-18 a share were just bad. Over the previous five years the company has been profitable of and on again. The real weight on its share price though is the $1.7 billion loss from 2020. While the company has regained profitability since, it should be well noted that not long before that in 2018 it has lost -$115 million. Other than that steady profits in the other three years were around $300 million. Normally this would be fine. Sure a company with a few bad period, especially given Covid, would be worth taking a fly on, seeing as it seems to be recovering.  The issue however is that as a morgage REIT the company doesn't have a lot of cash on its books to absorb those kinds of losses. On top of this the companies balance sheet has shown that the company has always been highly leveraged. This puts the company in a precarious position should things move against them. While in 2020 they have shed a large portion of their short term debt, the fact remains that the company isn't likely able to be flexable any future economic issues. Given thoughts of inflation and possible rate hikes, this likely will not help the business of IVR. Lastly there are far better morgage REITs that are cheap with a better funamental situation. Companies like OXSQ, SACH, GEO, and RWT are all around or lower than $10 and far more valuable in the current market than IVR. Until it becomes more clear the company is doing better, especially with Q1 2021 showing a loss, it is best to stay away and go for much better options in the same sector and industry space. 

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sunnycorax

May 23, 2021

12.46%

Change % Since Posting

3.53

Price When Posted

0.44

Change Since Posting

IVR

Invesco Mortgage Capital Inc

3.09

0.01
0.33%
Current Price

The Mortgage REIT To Avoid

bearish

I will never understand how I keep seeing this company on occasion making the rounds on Reddit. From SmallStreetBets to even the big boy itself of WSB and all spaces in between, I can find this die and resurface over and over again. It probably has to do with people looking soley looking at the price, compairing it to pre and post covid numbers, and the dividend and completly forgetting the income statement and balance sheet of the company in question. Each month bringing in a new round of bagholders to this pathetic stock.

I don't feel like I'm going to kill talk about this stock, especially from this new platform, but this stock, even from its highs of $16-18 a share were just bad. Over the previous five years the company has been profitable of and on again. The real weight on its share price though is the $1.7 billion loss from 2020. While the company has regained profitability since, it should be well noted that not long before that in 2018 it has lost -$115 million. Other than that steady profits in the other three years were around $300 million. Normally this would be fine. Sure a company with a few bad period, especially given Covid, would be worth taking a fly on, seeing as it seems to be recovering. 

The issue however is that as a morgage REIT the company doesn't have a lot of cash on its books to absorb those kinds of losses. On top of this the companies balance sheet has shown that the company has always been highly leveraged. This puts the company in a precarious position should things move against them. While in 2020 they have shed a large portion of their short term debt, the fact remains that the company isn't likely able to be flexable any future economic issues. Given thoughts of inflation and possible rate hikes, this likely will not help the business of IVR.

Lastly there are far better morgage REITs that are cheap with a better funamental situation. Companies like OXSQ, SACH, GEO, and RWT are all around or lower than $10 and far more valuable in the current market than IVR. Until it becomes more clear the company is doing better, especially with Q1 2021 showing a loss, it is best to stay away and go for much better options in the same sector and industry space. 

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read-time
1 min

2.60

Target Price

8/ 10

Confidence

6-12 Months

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