MFA Financial enters June with short sellers rebuilding positions at a meaningful pace — even as the borrow market offers no resistance to further pressure.
Short interest has climbed 24.8% over the past month, reaching 3.2% of the free float. The weekly build is sharper still: a 13.8% rise over the past five trading days. That acceleration is the real story. Through most of April, shorts held steady around 2.6–2.9 million shares. Then, in the final week of May, the count broke decisively higher. At 3.2% of float the absolute level is not extreme for a mortgage REIT, but the rate of change deserves attention. The borrow market is offering no friction to this build — availability is exceptionally loose at roughly 1,590% of short interest, meaning there are far more shares available to lend than are currently borrowed. Cost to borrow is a negligible 0.46%, barely changed on the week. Short sellers face zero squeeze pressure from the lending market.
Options positioning has shifted mildly more defensive in tandem. The put/call ratio moved to 0.79, about one standard deviation above its 20-day average of 0.71. That is a modest drift rather than an alarm — the 52-week high on the ratio is 1.68, so there is substantial room before options positioning looks genuinely cautious. Still, the direction of travel in both SI and PCR points the same way: the market is incrementally less optimistic than it was a month ago.
The analyst community has been heading the same direction. Two firms trimmed their price targets this week: RBC Capital lowered from $11 to $10 while keeping a Sector Perform rating. That follows a parallel cut by Keefe, Bruyette & Woods in early May, also from $11 to $10 at Market Perform. Both firms have now converged on a $10 target — essentially flat to the current $9.47 close — effectively telling clients the stock is fairly valued at best. The mean analyst target remains $14.80, but that figure is pulled up by stale inputs and stands well above where active coverage sits today; the $10 cluster from the two most recently active firms is the more credible read. Citizens is the lone voice carrying a constructive target at $11.50, having nudged it higher in early May.
The bull case rests on MFA's pivot toward agency assets, which should reduce credit volatility and support book value. The bear case is more prosaic: unrealized losses have eroded GAAP book value in past quarters, operating leverage is elevated relative to the asset base, and execution risk on the strategic pivot is real. The price-to-book multiple has drifted lower over 30 days, now at 0.73x — cheap in isolation, but less compelling if book value continues to erode. The stock's earnings yield of roughly 14.5% provides an income argument, though the dividend data available is too old to rely on for current yield calculations.
Peer performance this week was mixed. NLY fell 1.4% and AGNC dropped 2.2%, making MFA's 0.9% weekly decline look relatively contained. CIM and PMT both edged higher on the week. MFA's next scheduled earnings event is August 6. The most recent print in early May produced a 3.8% single-day decline and a 5.8% five-day loss — the pattern to watch as that date approaches.
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