Annaly Capital Management heads into the last week of April with its sharpest one-month rally in recent memory, call-side options positioning, and a cluster of analyst target upgrades all pointing in the same direction.
The price move is the starting point. NLY closed at $22.83 on April 28, up roughly 10% over the past month — a strong run for a mREIT that spends most of its time range-trading. The one-week gain of just over 1% was more measured, and the stock dipped a fraction on Tuesday. But the broader direction is clearly higher, and the market is starting to price in a more constructive environment for agency MBS.
Options positioning reflects that shift more clearly than anything else. Traders are leaning more bullish than usual — the put/call ratio has dropped to 0.62, well below its 20-day average of 0.71, and nearly 1.2 standard deviations on the optimistic side of that mean. The move is notable in context: back in mid-March, the PCR was running above 1.0, meaning the market was then dominated by hedging demand. The reversal since then is sharp. The 52-week range stretches from 0.40 to 1.66, so the current reading sits comfortably in the lower half — call-side activity is elevated but not extreme. Borrow costs and lending availability reinforce the idea that there is no aggressive short campaign here. The cost to borrow is just 0.45%, barely above its one-month average, and borrow availability is loose. Short interest has actually declined from its March 31 peak of roughly 3.0% of the free float to 2.4% now — shorts have been quietly trimming as the stock rallied.
The Street got more constructive this week. JP Morgan's Richard Shane raised his target to $24 from $23 while keeping an Overweight rating — a follow-up to a cut he made on April 16 — and UBS lifted its target to $23 from $22.50 at Neutral. Both moves came within days of Annaly's Q1 earnings release on April 21, which landed with a muted one-day dip of less than 0.1% before a 0.8% recovery over the following five sessions. Jones Trading reiterated its Buy and $25 target unchanged. The mean analyst target across the Street is $24.32, implying modest upside from current levels. The bull case centres on Annaly's agency portfolio growing 6.4% to $92.9 billion, a Q4 book value per share of $20.21 that beat consensus, and $6.1 billion in cash providing strategic flexibility. Bears point to a slight compression in net investment spread to 145 basis points, a modestly lower net interest margin, and the lingering uncertainty around GSE reform and how that reshapes the agency MBS market.
The dividend score is one of the strongest rankings in the system at the 93rd percentile, which anchors the income-investor bid. The price-to-book multiple is running at 1.08x, up roughly 10% over the past month as the stock re-rated alongside improving MBS sentiment. EPS momentum over the past 30 days is in the middle of the range at the 56th percentile, though the 90-day reading is softer at the 34th percentile — a reminder that the recent lift in sentiment is somewhat newer than the underlying earnings trend.
Institutional ownership provides a stable base. BlackRock added over 3.7 million shares in Q1 to reach a 10.7% stake, and Vanguard added 3.0 million to hold 8.7%. State Street built a position by 2.1 million shares. The top holders are overwhelmingly passive or quasi-passive managers, which keeps a floor under the stock but also means there is no major active catalyst from that side of the ledger. Insider activity — a cluster of award-and-partial-sell transactions by the CEO, COO and CFO in late February — is routine equity compensation handling rather than a directional signal.
Close peers also enjoyed a constructive week. MITT gained 3.4% and MFA added 2.2%, while AGNC rose 1.6%. DX was the laggard, barely moving. The broad sector lift suggests the NLY move is more macro than idiosyncratic — mortgage-spread compression and rate expectations are doing the work, not company-specific news. The next focal point is therefore whether agency MBS spreads hold at current levels and whether the Fed's posture on its balance sheet remains legible — those two variables, more than anything else, will determine whether the options market's current tilt toward calls proves well-placed.
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