Sy Says Buy Hatteras

Newly public Hatteras Financial (HTS) is popping higher today after some kind words from Sy Jacobs, who is founder and managing member of the Jacobs Asset Management hedge funds. In an interview with Barron's over the weekend, Jacobs said his fund is long HTS --

[Hatteras shares are] trading at just over one times book value... We [Jacobs' fund managers] estimate that they will earn $4.50 to $4.75 a share from mid-year '08 to mid-year '09, once the IPO proceeds are invested. As a REIT, they will pay out all -- or nearly all -- of their earnings in dividends. So at 25 recently, the stock was sporting an expected yield of around 19%. We think the stock gets to 30 at least. Between the appreciation and the yield, it's a great total return.

Shares of Hatteras Financial were up about 5% at last check to $26.25. That's just 5% above the IPO price of $25/share, but certainly a much better performance than American Capital Agency (AGNC), which was flat on the day. AGNC is still stuck near $19, below its IPO price of $20/share.

Say Hello to Hatteras Financial

Mortgage REIT Journal will be adding coverage of a new agency mREIT beginning today.

Hatteras Financial (HTS) is an externally-managed mortgage REIT formed in 2007 to invest in adjustable-rate and hybrid adjustable-rate single-family residential mortgage pass-through securities. HTS is externally managed and advised by Atlantic Capital Advisors LLC.

At March 31, 2008, the portfolio consisted of $3 billion in hybrid ARMs financed almost entirely through short-term repo agreements. As of March 31, 2008, the weighted average haircut under HTS' eleven repurchase facilities was approximately 4.52%, leverage was approximately 8.3:1 and the Company's liquidity was approximately 5.81% of its total assets.

Hatteras Financial Corp. completed an initial public offering of 10,000,000 shares of its common stock at a price of $24.00 per share last week. Shares traded up on Friday, opening at $24.14/share and closing at $24.65/share. Shares were up another 2% on Monday, indicating a bright outlook for HTS.