Annaly Capital one of the best risk/return plays in the financial sector.!

Annaly Capital has performed remarkably well through the entire financial crisis of the last several years and has consistently paid quarterly dividends yielding above 15% per annum!

During last week U.S debt crisis I added to my holdings in NLY!

Annaly (NYSE: NLY) manages real estate related investment securities:

• mortgage pass-through certificates
• collateralized mortgage obligations
• agency callable debentures
• other interest earning securities backed by mortgage loans

NLY Principal business objective is todistribute income to stockholders from earnings on real estate securities. NLY is taxed as a real estate investment trust (REIT), so has no federal income tax on taxable income that is distributed to stockholders.

NLY should continue to perform well in a low interest rate, low inflation environment.

My Conclusion

•Very low probability of the Fed raising short-term rates
•The gov’t will do everything in their power to prevent another meltdown of MBS market-> good for NLY’s portfolio
•Very high dividends with low interest rate risk

NLY remains one of our favorite risk/return stories for 2011 - particularly given recent macroeconomic
weakness. Shares are attractively valued at 1.05x current book value, relative to the forward dividend yield of roughly 16% we expect in the year ahead.