RCC - 7% Yield Wrecked Bears 164% Upside So Far

• One of our strong buy ratings from 2020 needs an update. GPMT destroyed the bears.
• GPMT was priced for disaster. It never happened. Unless someone was shorting GPMT. That person would have a disaster.
• Spreads between assets and hedges in agency and non-agency mREITs (ignores commercial mortgage REITs) have tightened while price-to-book ratios increased.
• There is less opportunity in the space. Investors could always increase cash, but few investors want to think about that. It's been over a year since they got the excitement of plunging portfolio values.
• Inflation is running hot year-over-year, or just slightly above average if we estimate a 2-year rate instead of 1-year growth rates. See the chart.

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