Annaly Capital Management heads into its June 10 earnings print with a split personality: short sellers are walking away, yet options traders are quietly building downside protection.
The options signal is the freshest development. The put/call ratio has climbed to 0.89, about 1.4 standard deviations above its 20-day average of 0.82. That is not an extreme reading — the 52-week high is 1.66 — but the direction of travel matters. The PCR has risen steadily over the past two weeks, moving from the low-to-mid 0.70s in late April to its current level. Investors are paying incrementally more for puts relative to calls as the event approaches.
Short interest continues the retreat flagged earlier this week. Positions have fallen nearly 20% over the past month to 2.1% of the free float — a low absolute level that has moved even lower since the previous note. Short covering has slowed but not reversed: the week-on-week decline is now around 9%, down from the sharper pace seen in mid-May. The borrow market remains extraordinarily loose. Availability runs at over 3,200% of current short interest, meaning shares to borrow are effectively unlimited. Cost to borrow has eased further to 0.28% — down 16% on the week. There is no mechanical pressure on existing short positions, and no barrier to new ones.
The analyst community is broadly constructive but has been growing more selective on price targets. RBC Capital reiterated its Outperform and $25 target this week, while JPMorgan lifted its target to $24 after the last quarterly print. The mean target of $24.32 implies roughly 15% upside from the current $21.22. The bull case centres on Annaly's portfolio diversification — Residential Credit now represents 23% of dedicated capital after growing 30% quarter-on-quarter — and on the potential tailwind from bank capital deregulation, which bulls argue will improve Agency MBS technicals and boost MSR demand. Bears point in the opposite direction: net interest margin compression, heavy reliance on leverage at 7.3x, and the sensitivity of that leverage to rate moves and regulatory shifts. The stock is down 5% over the past month, underperforming close peers AGNC (down 2.3% on the week) and ARR (down just 0.2%).
The print on June 10 is therefore less about whether Annaly's portfolio is growing and more about whether net interest income can hold up at current leverage levels — and whether the Residential Credit pivot is generating returns that justify the shift in capital allocation.
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