By Porter Stansberry in the S&A Digest:
Last November, I predicted in my investment advisory, investors in Annaly (NLY) would make a killing on the banking crisis:
The government of the United States has decided saving the banking system is its paramount financial goal. Everything else will be sacrificed in pursuit of this goal. To save the banking system, the government must ensure interest rates are low for banks and that government-backed securities perform well. Annaly is uniquely positioned to profit from both these policies... Simply think of it like this: The lower the Fed moves interest rates, the larger Annaly's dividends will become. If the banking crisis lasts for several quarters (which seems very likely), Annaly will produce record profits and dividends for the next year or two at least.
- Porter Stansberry's Investment Advisory, November 2008
Yesterday, the benchmark spread between short-term interest rates (which determines what Annaly pays to borrow money) and the 10-year government bond yield (which determines what Annaly earns lending money) reached 2.63% - the widest the spread has been since it peaked in 2003. The record spread of 2.74% was set on August 13, 2003. My bet is a new record will be set this year. And investors in Annaly will make a killing.
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More from Porter Stansberry:
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