Is the Recent Dip in CYS Investments Inc (CYS) a Buying Opportunity?

Prepayments

CYS Investments recorded $949.6 million in both scheduled and unscheduled prepayments and principal repayments during the most recent quarter. This is equal to a constant prepayment rate of 17.6%, up from 17.3% in the third quarter.

In comparison, American Capital Agency reported 10% CPR for its investment portfolio, while the CPR for Annaly Capital at the end of the most recent quarter was 19%. American Capital’s CPR increased from 9%, while Annaly Capital’s CPR decreased from 20% in the linked quarter.

Book Value

During the most recent quarter, the company’s book value decreased 8% or $1.15 to $13.31 per share. The decline is believed to be the result of lower asset prices. In comparison, American Capital Agency’s book value decreased 2.6%, while Annaly Capital Management reported a 4.5% decline in its book value at the end of the fourth quarter.

Conclusion

CYS Investments yields 13.13% while analysts have a consensus mean price target of $13.73 for a stock that is currently changing hands at $12.19 per share. This is an upside of 12.6%. Therefore, I believe the recent dip in CYS presents a buying opportunity. Credit Suisse has a price target of $13.5 for CYS.

The article Is the Recent Dip in CYS a Buying Opportunity? originally appeared on Fool.com and is written by Adnan Khan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.