Chimera Investment Corp (NYSE: CIM-PB)

Chimera Investment Corp is a publicly traded REIT that invests in a diversified portfolio of mortgage assets for its own account and for unrelated third parties through its third party investment management and advisory services. The company acquires residential mortgage loans, non agency RMBS, agency RMBS, business purpose loans including residential transition loans and investor loans, mortgage servicing rights, agency CMBS, junior liens, home equity lines of credit, equity appreciation rights and reverse mortgages. It holds these investments through its subsidiaries and finances them using securitization, warehouse facilities and repurchase agreements. In addition to its investment activities Chimera Investment Corp provides discretionary and non discretionary investment management and advisory services to institutional clients.

The company generates revenue primarily from net interest income on its mortgage portfolio which equals the interest earned on its assets less the interest expense on its borrowings. It also earns fees from providing third party investment management and advisory services including both discretionary and non discretionary mandates. In the future the company expects to receive incentive based income from the discretionary funds it manages.

The company operates through the following segments: Mortgage Investment Segment and Investment Management and Advisory Services Segment.

• Mortgage Investment Segment: this segment focuses on acquiring and managing residential mortgage loans, non agency RMBS, agency RMBS, business purpose loans, mortgage servicing rights, agency CMBS, junior liens, home equity lines of credit, equity appreciation rights and reverse mortgages; it uses securitization programs to finance assets and typically retains the most subordinate classes of securities which act as first loss positions; it leverages its portfolio through secured financing agreements and manages interest rate risk with derivatives.

• Investment Management and Advisory Services Segment: this segment provides discretionary and non discretionary investment management and advisory services through TPG and PAS; TPG is registered with the SEC as an investment adviser under the Advisers Act and PAS acts as a relying adviser; the segment earns management fees from institutional clients such as insurance companies credit funds and other institutional investors and may earn incentive based income from the discretionary funds it manages.

Chimera Investment Corp competes with other mortgage REITs, investment management firms, specialty finance companies, banks, mortgage bankers, insurance companies, exchange traded funds, mutual funds, institutional investors, investment banking firms, private equity funds, hedge funds and governmental bodies. Its competitive advantages stem from a disciplined credit analysis and risk management approach, the ability to retain first loss securities in securitizations which aligns its interests with asset performance, a diversified revenue base that combines net interest income with fee income and the flexibility to shift allocations across asset classes as market conditions change.

For its Mortgage Investment Segment the company holds assets for its own account and does not have external customers in the traditional sense. Its Investment Management and Advisory Services Segment serves insurance companies, credit funds, institutional investors and other third party clients that seek external management of mortgage related assets. No specific customer names are disclosed in the filing.