Introduction
Javelin Mortgage Investment Corp is a publicly-traded real estate investment trust (REIT) that focuses on investing in mortgages and mortgage-backed securities. Founded in 2012, the company is headquartered in New York City and managed by ARMOUR Residential REIT, Inc., a leading player in the mortgage REIT space.
Javelin Mortgage Investment Corp aims to provide investors with attractive risk-adjusted returns by investing in a diversified portfolio of mortgage-related assets. The company primarily invests in non-agency mortgage-backed securities, which are not guaranteed by the US government and may carry higher credit risk than agency securities. The company also invests in residential and commercial mortgage loans.
In this article, we will provide you with a comprehensive guide on Javelin Mortgage Investment Corp, its history, business model, financial performance, and potential risks and rewards.
History of Javelin Mortgage Investment Corp
Javelin Mortgage Investment Corp was founded in 2012 by ARMOUR Residential REIT, Inc. as a subsidiary to focus on investing in mortgages and mortgage-backed securities. The company went public in October 2013, raising $130 million in its initial public offering.
Over the years, Javelin Mortgage Investment Corp has faced several challenges due to the volatile nature of the mortgage market. In 2016, the company announced that it would suspend its dividend payments due to declining profitability. In 2017, the company announced that it would wind down its portfolio and liquidate its assets.
However, in 2018, the company announced that it had entered into an agreement to merge with ARMOUR Residential REIT, Inc. The merger was completed in March 2019, with Javelin Mortgage Investment Corp becoming a wholly-owned subsidiary of ARMOUR Residential REIT, Inc.
Business Model of Javelin Mortgage Investment Corp
Javelin Mortgage Investment Corp’s business model is based on investing in a diversified portfolio of mortgage-related assets, including mortgage-backed securities and mortgage loans. The company’s investment strategy is designed to provide attractive risk-adjusted returns while minimizing credit risk and interest rate risk.
The company primarily invests in non-agency mortgage-backed securities, which are not guaranteed by the US government and may carry higher credit risk than agency securities. Javelin Mortgage Investment Corp also invests in residential and commercial mortgage loans.
Javelin Mortgage Investment Corp generates revenue from the interest and principal payments on its mortgage-related assets. The company aims to maintain a high level of portfolio diversification to reduce the risk of losses in any single asset or sector.
Financial Performance of Javelin Mortgage Investment Corp
Javelin Mortgage Investment Corp’s financial performance has been mixed over the years, reflecting the volatility of the mortgage market. The company reported a net loss of $23.4 million for the full year 2020, compared to a net loss of $15.6 million in 2019.
As of December 31, 2020, Javelin Mortgage Investment Corp’s portfolio consisted of $285.2 million of mortgage-backed securities and $50.9 million of mortgage loans. The company’s portfolio had a weighted average yield of 5.5%, a weighted average coupon of 5.1%, and a weighted average duration of 3.6 years.
Javelin Mortgage Investment Corp’s net interest margin (NIM) for the full year 2020
was 3.3%, compared to 3.6% in 2019. The company’s book value per common share was $5.20 as of December 31, 2020, compared to $5.65 as of December 31, 2019.
Despite the challenging market conditions, Javelin Mortgage Investment Corp has maintained a relatively stable performance in recent years. The company’s management team has emphasized the importance of maintaining a disciplined investment approach, focused on generating attractive risk-adjusted returns over the long term.
Potential Risks and Rewards of Investing in Javelin Mortgage Investment Corp
Like all investments, Javelin Mortgage Investment Corp carries potential risks and rewards. Here are some of the key factors to consider:
Risks
- Interest rate risk: Javelin Mortgage Investment Corp’s portfolio is sensitive to changes in interest rates, which can affect the value of its mortgage-related assets.
- Credit risk: The company’s investments in non-agency mortgage-backed securities and mortgage loans may carry higher credit risk than agency securities.
- Liquidity risk: The company’s ability to liquidate its assets may be limited during times of market stress or illiquidity.
- Regulatory risk: Javelin Mortgage Investment Corp is subject to various regulatory requirements and may be affected by changes in regulatory policies or requirements.
Rewards
- Attractive yields: Javelin Mortgage Investment Corp’s portfolio generates attractive yields compared to other fixed-income investments.
- Diversification: Investing in Javelin Mortgage Investment Corp can provide investors with exposure to the mortgage market and diversification across different asset classes.
- Professional management: The company’s management team has a track record of managing mortgage-related investments and navigating challenging market conditions.
Conclusion
Javelin Mortgage Investment Corp is a real estate investment trust that provides investors with exposure to the mortgage market and generates attractive yields through a diversified portfolio of mortgage-related assets. While the company’s performance can be volatile due to the nature of the market, Javelin Mortgage Investment Corp’s management team has a track record of maintaining a disciplined investment approach focused on generating attractive risk-adjusted returns over the long term.
Investors interested in Javelin Mortgage Investment Corp should carefully consider the potential risks and rewards of investing, and consult with their financial advisor to determine if the investment is appropriate for their individual needs and goals.
FAQs
Q: What is Javelin Mortgage Investment Corp?
A: Javelin Mortgage Investment Corp is a publicly-traded real estate investment trust that focuses on investing in mortgages and mortgage-backed securities.
Q: What is the business model of Javelin Mortgage Investment Corp?
A: Javelin Mortgage Investment Corp invests in a diversified portfolio of mortgage-related assets, including mortgage-backed securities and mortgage loans, with the aim of providing attractive risk-adjusted returns while minimizing credit risk and interest rate risk.
Q: What are the potential risks and rewards of investing in Javelin Mortgage Investment Corp?
A: Potential risks include interest rate risk, credit risk, liquidity risk, and regulatory risk, while potential rewards include attractive yields, diversification, and professional management.