Mikhail Goberman: Just kind of a capital management question. How are you guys thinking about the trade-off of issuing a little more stock at the margin going forward as you see investment opportunities versus the use of share buybacks with the stock, I guess, sort of in the upper 80s of book value currently?
Larry Penn: I think we’re sort of consistent with what we’ve done before. I think once we get into the around 80%, hopefully, we won’t get there. But if we do, I think that’s where we have historically repurchased. And — so I think that’s a good expectation, barring anything unforeseen. And then in terms of issuance, I think we’re trying to keep our capital base pretty stable. Obviously, there’s issues in terms of G&A expenses as if we get below, let’s say, $100 million or something like that. So I think you’ll continue to see some moderate issuance just to sort of keep our capital base roughly the same. And yes, so I hope that’s helpful.
Mikhail Goberman: Yes. And what kind of opportunities are you seeing at the margin in the non-Agency portfolio? I know it’s very small, but you always mentioned you could always add a little bit at the margin. So just wondering what you’re seeing there.
Larry Penn: Mark?
Mark Tecotzky: Yes. So we’ve liked CRT. We mentioned that in prepared remarks. That’s a sector that we weren’t buying in 2019, in 2020, we didn’t really like it. What’s happened to that market is you’ve had a huge amount of home price appreciation. So you have extremely low LTVs. Like some of these deals are LTVs in the 50 now. And the other thing you’ve had is the deals that were in existence during 2020 and 2021 and the beginning of ’22, went through periods of time of fast prepayments. So that deleverages the structure. So it sort of builds up on a current basis, the amount of credit enhancement below these tranches. That’s important to us because we see sometimes the biggest risk in some of these sectors isn’t a home price decline and high defaults like what you saw in ’08, but it can be more weather-related events or sort of idiosyncratic, things like that.
So building up that cushion, credit enhancement sort of, for us, sort of raises the credit enhancement levels above sort of the noise you can get from some of the weather-related stress. So we’d like CRT. That sector has performed well in the second quarter, so spreads have come in. We’ve also historically liked some legacy in agency. That sector over time isn’t as liquid as it used to be as it’s paid down. So sort of our return threshold of that relative to CRT has changed a little bit as CRT remains very liquid. Those have been the two primary things, but you could also see us add some mortgage 2.0. Volumes in that sector are lower than what they’ve been, but you do get opportunities from time to time very wide spreads, and that would be mostly investment-grade securities.
Operator: And our next question comes from Crispin Love with Piper Sandler.
Crispin Love: Mark, your comments a little bit earlier in the Q&A may seem like on spreads made it seem like they will stay stable kind of wide as they are right now, just given the need for more demand. So I’m just curious how you’re thinking about the near term. And for EARN, if you would have a preference for tighter spreads or a preference for stability in spreads and just what those scenarios can mean for EARN?
