Annaly Capital Management Inc (NYSE: NLY-PF)

Annaly Capital Management, Inc. is a leading diversified capital manager focused on residential mortgage finance. The company operates as an internally managed Maryland corporation and has elected to be taxed as a real estate investment trust. Annaly generates income by investing in real estate-related assets using a combination of its own capital and borrowed funds, aiming to earn the spread between asset yields and financing costs. Its shares are traded on the New York Stock Exchange under the symbol NLY.

Annaly generates revenue primarily through net interest income derived from its investment portfolio. The company earns the spread between the yield on its assets—such as mortgage-backed securities, residential whole loans, and mortgage servicing rights—and the cost of its borrowings and hedging activities. Revenue is also supported by fee income from certain investment strategies and gains or losses on asset sales. The company serves institutional investors, financial intermediaries, and other counterparties in the mortgage and fixed income markets through its trading and investment activities.

The company operates through the following segments: Annaly Agency Group, Annaly Residential Credit Group, and Annaly Mortgage Servicing Rights Group.

• Annaly Agency Group invests in Agency mortgage-backed securities collateralized by residential mortgages and guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. It also holds complementary investments within the Agency market, including Agency commercial MBS, Agency pass-through certificates, collateralized mortgage obligations, interest-only securities, inverse floaters, and to-be-announced forward contracts for Agency pass-through certificates.

• Annaly Residential Credit Group invests primarily in non-Agency residential whole loans and securitized products within residential and commercial markets. This includes residential mortgage loans not guaranteed by Agencies, residential mortgage-backed securities collateralized by non-Agency loans, and Agency or private label credit risk transfer securities issued by Freddie Mac, Fannie Mae, or third parties to synthetically transfer mortgage credit risk.

• Annaly Mortgage Servicing Rights Group invests in mortgage servicing rights, which provide the right to service residential mortgage loans in exchange for a portion of the interest payments made on those loans. The group focuses on acquiring and managing MSR portfolios to generate returns from servicing activities.

Annaly holds a strong position within the mortgage real estate investment trust sector due to its scale, diversified investment strategy, and conservative financial posture. The company competes with other mortgage REITs, financial institutions, institutional investors, and government entities in sourcing investments. Its competitive advantages include extensive employee experience, comprehensive risk management, access to diverse financing sources, operational efficiencies, and strategic partnerships that enhance origination flow and cost efficiency.

Annaly serves a range of customers including mortgage loan originators, aggregators, broker-dealers, commercial banks, and other lenders through its repurchase agreement and securitization activities. The company also works with sub-servicing and recapture partners to manage its mortgage servicing rights portfolio. Additionally, Annaly has established strategic capital partnerships with entities such as GIC Private Limited and Fifth Wall Ventures to expand investment capabilities and access innovative technologies.