Dallas, Texas 12/06/2013 (Financialstrend) –Chimera Investment Corporation (NYSE:CIM) continues to be a well-received real estate investment fund, given its hybrid quality of investments. Spread in its investments, Chimera typically treads steadily, with minor rises and falls over the first week of December 2013.
An excellent spike, saw the price reach $3.00, which is a tinge lesser than the 52 week high of $3.34, in the last two days, but at the end of closing on Dec 5, 2013, prices have stabilised at $2.98. The average volume in shares traded remained fixed at 5.06 million. Its market capitalization remained at 3.02 billion.
Mortgage real-estate funds important
Traditionally, in the U.S. markets, the highest used financial instruments for fixed income have been mortgage-based real estate investments. Investors who look for yield have been long time investors in this sector. Here the risk factors are on credit and interest rates and the most are happy to invest in ARMOUR Residential REIT Inc, as well as American Capital Mortgage Investment Corp. (MTGE). Recently, Tow Harbors Investment Corp (TWO) too has seen some good money flowing-in.
However, the risk that most of these companies have had to manage is the case of MBS. Playing the housing market by the non-MBS sector has definitely led to volatility.
Chimera Investment Corporation (NYSE:CIM) has had its share of controversies as well. The noticeable allegations have been the categorization of accounts. Recently, Securities and Exchange Commission has released the mis-accounting issues between November2007 to September of 2011.
As a result of these, Chimera has seen an overall drop in interest in income. Instead of clocking $1.8 billion, the income $1.5billion, while other financial factors indicate that things have been turned around to reflect high performance. Intentional or otherwise, misrepresentation of numbers, despite neutral balance sheet does indicate of murkier operations. Overstatement of income and expenditure does look attractive and investment does flow. Chimera reported statements again, showing revised drop in net income to $367 million. It’s initial net income was posted at $1.06 billion. The increase in net gains, against the RMBS interest of $42.1million for loss at $34.8 m resulting in gains of $7.3 million was also misrepresented.
Perhaps, Chimera Investment Corporation (NYSE:CIM) legacy of financial representation persists, even after so many years. Way back in 1994, a founder, with links with Annaly Captial Management had been fined and suspended by NASDAQ besides revoking his license. At the core of the punishment was financial misrepresentation, during the filing of reports for auditing purposes. Moreover, there were persistent instances of keeping bad books and records.
The bane of real estate investments have been the integrity of managements of companies that operate in this sector. While most are a case of bad investment or wrong asset acquisition examples. Besides, lack of experience or exposure of directors as well as nepotism between the management of related businesses and executives, as in the case of Chimera, could well spell bad practices. A point in case here, was the CEO was related to a Annaly board member, while the Chief Financial Officer, in-charge of funds handled by the company, perhaps lacked the financial expertise, besides competency in handling the filing of accounts.
Chimera Investment Corporation (NYSE:CIM) has proved to be successful before the bubble burst. Does the management have the integrity to take investors into confidence and move forward is a question many an interested investor wants answers.
