CYS Investments (CYS)
CYS Investments (CYS) is a bit more diversified in the mortgage securities market than WMC. It’s aiming to reduce its NAV volatility by reducing exposure to longer-term securities. CYS management doesn’t seem concerned about the fact that the Fed won’t buying up as many of their instruments as the QE taper continues. The yield curve is steep, financing has actually gotten cheaper, and although hedging costs are high, the spread remains attractive. CYS also feels the Fed taper has been priced into the market, so risk has declined.
CYS seems to be approaching the business carefully and is on top of things. That makes me feel a little bit more secure about its 15% dividend yield.