ACR - Mortgage REITs Running Hot

• The mortgage REIT sector has been on fire lately. It gave us some huge gains in late 2020 and more huge gains in early 2021.
• As investors shift into "value" stocks, we've seen a dramatic increase in price with price-to-book ratios increasing substantially in the sector.
• With these huge rallies, we have a few ratings we need to update.
• We avoided updating (downgrading) the rating on CMO in a recent article because share prices had dipped just prior to preparing the piece.
• With the recent rally, we can highlight CHMI and CMO as two mortgage REITs that are now trading within a reasonable range and thus deserve neutral/hold ratings.

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