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I see compelling value in floating-rate preferred shares and baby bonds, especially as credit spreads widen and many now trade at discounts to call value. Recent market volatility and higher interest rates have created attractive entry points in select REITs, BDCs, preferred shares, and baby bonds. I've allocated a significant portion of my portfolio to preferred shares and baby bonds in March 2026.

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Annaly Capital Management presents a pair trade opportunity between its floating-rate preferreds, exploiting current mispricing amid heightened market volatility. Rising benchmark yields and falling equity markets increase the likelihood of credit spread widening. NLY-G is overvalued relative to NLY-I, with the tightest credit spread and lower yield, making it a compelling short leg versus a long in NLY-I.

Historically, Annaly Capital Management, Inc. has outperformed during economic downturns (2001, 2008) due to its focus on high-quality Agency MBS. As the Fed ends its hiking cycle, NLY is positioned to profit from the “steepening” yield curve. Counter-Cyclical Anchor: While growth stocks struggle with uncertainty, NLY acts as a portfolio bedrock that thrives on a "flight to safety."

Annaly Capital Management (NLY) concluded the recent trading session at $21.23, signifying a +2.12% move from its prior day's close.

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