UPDATE: Compass Point Upgrades Capstead Mortgage to Buy on Discount to Book

Compass Point raised its rating on Capstead Mortgage

from Neutral to Buy with a reiterated $14 price target. Compass Point said, "At current valuations, … we believe investors will refocus attention on discounted mortgage REITs that have the potential to increase shareholder value through capital structure opportunities - namely share repurchases. Share repurchases are particularly attractive for mortgage REITs that trade at a significant discount to book value, face reinvestment ROEs below legacy portfolio ROEs and have not been frequent capital raisers. CMO meets all of these parameters and the company is one of only a handful to have executed a share repurchase program historically (and successfully to boot). Furthermore, as an internally managed REIT, the company does not face the direct conflict of interest between reducing potential fee income by reducing common equity outstanding and preserving shareholder value." Capstead Mortgage closed at $12.48 on Wednesday.