Mortgage-based real estate investment trust (REIT) Annaly
Capital Management, Inc. (
) on Wednesday announced a massive $1.5 billion stock repurchase
The move is a rare one for REITs, and exceptionally so for
mortgage REITs, which almost never buy back their own shares. In
contrast, REITs normally
additional shares in order to fund and expand their operations.
The timing of the buyback is also strange, considering NLY just
filed to sell 125 million additional shares back on March 19.
Seemingly, the funds generated from that sale will now be used to
buy back some of the shares the company just recently released.
Annaly noted the planned buybacks will occur over a twelve-month
period, with purchases made on the open market or in privately
Annaly Capital shares rose 26 cents, or +1.6%, in morning
The Bottom Line
Here at Dividend.com, it's no secret that we dislike share
buybacks. We feel they offer little to no value to shareholders
whatsoever. Generally, repurchases like the one NLY just announced
are used to help bolster a stock's share price, pad its EPS results
(less outstanding shares means high earnings per share), and in
come cases, allow insiders to exercise selling options. We much
prefer companies distribute excess capital to shareholders through
dividends, or use the cash to expand their businesses.
Annaly Capital Management, Inc. (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.3 out of 5 stars.
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