#7: Two Harbors
Q3 Return: -5%
YTD Return: Flat
Investor: Steve Freehill
Next up, we have Two Harbors (TWO) — the mortgage REIT chosen by InvestorPlace reader Steve Freehill. The stock raced out to an early lead in this contest … yet has slowly and surely sunk toward the bottom.
Freehill chose Two Harbors for what he said was one big reason: its eye-popping yield, which currently sits at 11.5%. Rising rates and increased fear of tapering, though, sent investors fleeing mREITs and other income-yielding investments in late spring.
That downward trend continued in the third quarter, with Two Harbors stock losing another 5%. Now, TWO is less than 9% off its 52-week low and has a flat total return despite its oversized payout.
Still, JPMorgan is bullish on this laggard, too, recently initiating coverage on the mREIT with an “overweight” rating. But with only three months to go and tapering still on the horizon, the odds of comeback from TWO seem slim.