Two Harbors (TWO) remains at a healthy discount to our latest projected book value per share. Despite projections for weakening book value in early June, the discount remains significant, and spread-widening is a significant factor. Faced with lower book value and wider spreads to reinvest capital, management is prudently reducing the dividend.
That doesn't concern us. We initiated our position in TWO after Annaly (NLY) and AGNC (AGNC) had telegraphed their dividend cuts. We've forecast these cuts coming for years. The reason to own shares of TWO currently is due to