UPDATE: Citigroup Initiates Javelin Mortgage Investment at Buy on Attractive Yield

Citigroup initiated coverage on Javelin Mortgage Investment JMI with a Buy rating and a $21 price target. Citigroup commented, "We assume JMI invests their IPO capital within one to two quarters and generates a 12%+ ROE and 11%+ dividend yield, assuming blended leverage of ~7x. We peg pro forma TBV of $20, putting the stock at 0.97x P/B versus peers trading at 1.03x on average. JMI shareholders were not diluted at the IPO as the external manager paid the underwriting fees and all other costs associated with the offering. … JMI's agency portfolio is likely to benefit in the low rate environment, which we expect to continue through at least mid-2015. Longer term, we are positive on the non-agency residential / credit assets, particularly given the recent signs of a housing recovery and higher relative yield." Javelin Mortgage Investment closed at $19.57 on Friday.