Baby Bond Target Updates and Coverage For NYMTI, NYMTG, MITN, and MITP
Following subscriber requests, we added 4 new baby bonds to our coverage universe.
From New York Mortgage Trust (NYMT):
- NYMTI (NYMTI)
- NYMTG (NYMTG)
From AG Mortgage Investment Trust (MITT):
- MITN (MITN)
- MITP (MITP)
Each share comes in with a risk rating of 2.5. These shares are fully programmed (including price targets) into our REIT Forum Google Sheets for subscribers now. We will also include a screenshot for our all of our baby ratings.
Many investors like baby bonds because they can get big yields with far less volatility than they would get from common shares. These 4 baby bonds each carry yields around 10%.
We're also going to cover:
- GAIN Baby Bonds
- RC Baby Bonds
- PMT Baby Bonds
- TWO Preferred Shares
Target Updates
We updated targets for the rest of the baby bonds. Most target updates were higher because we’re moving closer to maturity for the baby bonds and many of our targets involve a slight discount to face value. Consequently, as we get closer to maturity, the targets will typically edge a bit higher.
We’re also enhancing our system so it can update baby bond targets faster. I’m planning some enhancements to the process for preferred shares also.
GAIN Baby Bonds
The biggest increases were for GAINN (GAINN) and GAINZ (GAINZ), two of the baby bonds from Gladstone Investment (GAIN).
Despite the bump for GAINN, the best two baby bonds from GAIN are:
- GAINZ
- GAINI
They are the two with the longest time left to maturity, but they have a big enough edge in the yield to make it work. The baby bonds from GAIN are the lowest-risk baby bonds we include in our coverage. That doesn’t mean they are remotely close to Treasuries, but I don’t have any concerns about them.
RC Baby Bonds
We also raised targets for RCC (RCC) and RCB (RCB), though we reduced the targets for RCD (RCD).
All 3 baby bonds from Ready Capital (RC) at a discount to face value, but the quicker maturity for RCC and RCB means the discount has a more profound impact on their yield.
RCD performed better over the last 2 months. Not over the last day, but over the last month or two RCD clearly performed better. RCC and RCB both dipped modestly while RCD had a small rally. Liquidity can be pretty weak here and even a modest change in the price can materially move the yield to maturity because RCC matures in about 0.68 years and RCB matures in 1.13 years. Investors need to be patient rather than overpaying to acquire shares. Sometimes there's a seller. Sometimes there's not.
