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Subject:  Re: 10 year treasuries Date:  1/6/2014  10:43 PM
Author:  joelcorley Number:  35157 of 37016


You wrote, Care to give me an elevator pitch on PMT?

PennyMac (PMT) is a REIT founded by a handful of ex-Countrywide Loan execs. Its essentially a play on junk mortgages. This REIT was originally founded with the idea of buying distressed mortgages from banks that are desperate to get them off their books, preferably at a deep discount and either rehabbing them or repossessing the properties securing them.

These days they also originate some new loans and buy some correspondent lending loans, though some banks are still divesting. Correspondent lending is basically wholesale lending through mortgage brokers. Banks quit dealing in correspondent lending after the credit crisis, so PMT has made a business of going places banks now fear.

With that said, I think PMT will start seeing some difficulty maintaining its margins. Right now it pays a yield of about 10%. But I could see that going down in a few years and that will likely result in a contraction its share price. But right now I think its still a cash cow, even if you might have missed some of its best years.

Also, Never heard of CTSH, thanks for the heads up...

CTSH is an old spin-off of Dun and Bradstreet. It's an outsourcing firm that supplies talent, largely from India. As the saying goes, If you can't beat them...

And, Good luck on your retirement goal. If you are still adding some funds, I think doubling in 6 years is possible...

Still adding and at a significant clip. I could be retired in 5. Worse-case is 8, I think. Doubling should happen in no more than 10 years even if I didn't add a dime; but I'm still contributing quite a bit.

Finally, If we don't see you around these parts much anymore I'll assume it's because you are making what you need on your road to retirement... we don't all need to try to beat the market.

I'll still be around. But I'm not going to be doing much in fixed income unless we have another crisis and I think there are good opportunities here worth my time... Else I've retired and I've got nothing better to do...

- Joel
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