Hatteras Financial Corp. (NYSE:HTS) 3Q Not As Bad As Share Sell Off Indicates


Dallas, Texas 11/08/2013 (Financialstrend) – Hatteras Financial Corp. (NYSE:HTS) is an $1.74 billion market capped real estate investment trust which is focused on leveraging returns from the residential real estate sector. Last week the firm announced mixed results from its third quarter operation results. Its earnings per share for the quarter came in at $0.44 per share which was $0.1 less than the market expectation. While its book value which came in at $21.31 per share in the third quarter was down 3.9% in comparison to second quarter performance.

Analysts tracking the stock have opined that the resultant sell off in the stock post the result announcement was an overreaction. Trade guru’s have indicated that the 3.9% dip in the book making reported by Hatteras was well within the expected range and was comparable to decline staged by competition.  Commenting about the 3Q results, Hatteras management have indicated that they are seeing a general improvement in the operating environment and the interest rate trends. They have gone on to explain that even if the Fed bites the bullet and does bring in tapper measures to some extent, the end results of interest appreciation would end up benefiting the operations of the firm.

The firm believes that Fed will have little elbow room to manuver in the prevailing economic uncertainty and will have no option but to “leave short rates lower for a longer period”. This potential approach by Fed, the company explains will in turn add credence to the “laddered ARM book” building approach that the firm has been executing over the past few months. The firm believes that this expected favourable fiscal environment, coupled with declining rate of prepayments will build up momentum and help it post stronger results from in operations in 4Q in comparison to its 3Q outcome.

The REIT stock is trading at $17.69 per share as of close of business on November 6.