Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance and corporate middle market lending. The company invests in agency mortgage-backed securities, mortgage servicing rights, Agency commercial mortgage-backed securities, non-Agency residential mortgage assets, residential mortgage loans, credit risk transfer securities, corporate debts, and other commercial real estate investments. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was founded in 1996 and is based in New York, New York.
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1. A mutual fund, but exclusively for mortgage-backed securities.
2. A specialized bank that profits by investing in existing mortgage debt rather than making new loans or taking customer deposits.
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Agency Residential Mortgage-Backed Securities (MBS): Annaly primarily invests in debt instruments representing interests in pools of residential mortgages, guaranteed by U.S. government-sponsored enterprises.
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Residential Credit Investments: This category includes investments in residential mortgage-backed securities and whole loans not guaranteed by government agencies, along with mortgage servicing rights.
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Commercial Real Estate Investments: Annaly also holds investments in commercial mortgage-backed securities, commercial real estate loans, and other related debt assets.
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Annaly Capital Management (NLY) - Major Customers
Annaly Capital Management (NLY) is a mortgage Real Estate Investment Trust (mREIT). Unlike traditional companies that sell products or services directly to customers, Annaly's business model involves investing in mortgage-backed securities (MBS) and other mortgage-related assets. It generates income primarily from the net interest spread between the income earned on its assets and its funding costs.
Therefore, **Annaly Capital Management does not have "customers" in the conventional sense** that directly purchase goods or services from it.
Its operations are focused on:
* **Investing in financial instruments:** Acquiring agency MBS (securities guaranteed by government-sponsored enterprises like Fannie Mae and Freddie Mac) and other residential and commercial mortgage assets.
* **Securing financing:** Utilizing repurchase agreements and other debt instruments, typically with major financial institutions, to leverage its investments.
While it interacts extensively with financial institutions as counterparties for its investments and financing activities, these entities are more accurately described as financial partners or intermediaries rather than "customers" that buy a product or service from Annaly.
The primary beneficiaries of Annaly's operations are its **shareholders**, who invest in the company and receive dividends from its earnings.
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- JPMorgan Chase & Co. (JPM)
- Bank of America Corporation (BAC)
- Citigroup Inc. (C)
- Goldman Sachs Group, Inc. (GS)
- Morgan Stanley (MS)
- Wells Fargo & Company (WFC)
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David L. Finkelstein Chief Executive Officer, Co-Chief Investment Officer
Mr. Finkelstein has over 25 years of experience in fixed income investments. He joined Annaly in 2013 and was appointed CEO in March 2020. Prior to joining Annaly, he served for four years as an Officer in the Markets Group of the Federal Reserve Bank of New York, where he was the primary strategist and policy advisor for the Mortgage-Backed Securities Purchase Program (MBSPP). Before his tenure at the Federal Reserve, Mr. Finkelstein held senior Agency MBS trading positions at Salomon Smith Barney, Citigroup Inc., and Barclays PLC.
Serena Wolfe Chief Financial Officer
Ms. Wolfe joined Annaly as Chief Financial Officer in December 2019. She brings over 25 years of experience in accounting, with 13 years focused specifically in real estate practice. Prior to Annaly, Ms. Wolfe was a Partner at Ernst & Young LLP ("E&Y") since 2011, and most recently served as EY's Central Region Real Estate Hospitality & Construction leader. Her career at E&Y began in 1998, and her skillset includes expertise in private equity and venture capital. Ms. Wolfe currently serves on the board of Lennar Corporation, Berkshire Grey, and Doma (formerly States Title).
Steven F. Campbell President and Chief Operating Officer
Mr. Campbell is President and Chief Operating Officer of Annaly and has over 25 years of experience in financial services. He joined Annaly in April 2015 and previously served as Head of Business Operations. Prior to joining Annaly, Mr. Campbell held various roles over six years at Fortress Investment Group LLC, including serving as a Managing Director in the Credit Funds business. He also worked at General Electric Capital Corporation and D.B. Zwirn & Co., L.P., focusing on credit and debt restructuring.
Anthony C. Green Chief Corporate Officer, Chief Legal Officer
Mr. Green has served as Annaly's Chief Corporate Officer since January 2019 and Chief Legal Officer since March 2017. He possesses over 25 years of experience in corporate and securities law. Mr. Green was Deputy General Counsel of Annaly from 2009 until March 2017. Before joining Annaly in 2009, he was a partner in the Corporate, Securities, Mergers & Acquisitions Group at K&L Gates LLP.
Michael Fania Co-Chief Investment Officer, Head of Residential Credit
Mr. Fania is Co-Chief Investment Officer and Head of Residential Credit at Annaly, with over 15 years of experience in mortgage trading and portfolio management. He joined Annaly in 2015. Previously, Mr. Fania was an Associate Director at MetLife Investments, where he was responsible for residential credit trading and strategy.
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The key risks to Annaly Capital Management (NLY) are:
- Interest Rate Risk and Yield Curve Volatility: Annaly Capital Management's business model, which involves borrowing short-term to invest in longer-duration mortgage-backed securities, exposes it significantly to fluctuations in interest rates and the yield curve. Rapidly rising interest rates can severely compress net interest margins, decrease the market value of its interest-earning assets, and may result in margin calls, negatively affecting the company's book value and profitability.
- Credit Risk: While Annaly primarily invests in agency mortgage-backed securities, which are generally considered low-risk due to government guarantees, it also holds non-agency mortgage-backed securities, residential whole loans, and mortgage servicing rights (MSR) that carry greater credit risk. Furthermore, there is a developing concern regarding potential credit risk for agency-backed mortgage securities if government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac were to be privatized without explicit government guarantees, especially in a market with falling home prices that could lead to increased borrower delinquencies.
- Prepayment Risk: Annaly is subject to reinvestment risk due to changes in interest rates. Specifically, declines in interest rates typically lead to an increase in prepayments of mortgage loans. This can result in the premature payoff of related mortgage-backed securities, forcing Annaly to reinvest the proceeds into new assets that may offer lower yields, thereby adversely affecting its earnings power.
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Annaly Capital Management (NLY) primarily engages in the mortgage finance business, investing in a diversified portfolio of residential and commercial assets. The addressable markets for its main products and services are exclusively within the United States.
U.S. Addressable Markets for Annaly Capital Management's Main Products and Services:
- Agency Mortgage-Backed Securities (MBS): The U.S. Agency MBS market, which consists of mortgage-backed securities guaranteed by government-sponsored enterprises, had an outstanding balance of approximately $7.67 trillion as of June 2024. This is derived from the Federal Reserve's holdings of approximately $2.3 trillion of agency MBS, representing almost 30% of the outstanding market at that time. Other estimates place the agency MBS market at approximately $5.5 trillion.
- Residential Credit: The U.S. private residential credit market, which includes non-agency residential mortgage assets, was estimated to be at least $3.5 trillion in total debt as of October 2023. Within this, the non-agency Residential Mortgage-Backed Securities (RMBS) market had over $1.7 trillion in outstanding securities as of December 31, 2024.
- Mortgage Servicing Rights (MSRs): The U.S. MSR market saw trading volumes approaching $1 trillion in 2024, a trend that is anticipated to continue into 2025. While a precise total market valuation for outstanding MSRs is not readily available, this figure indicates significant market activity.
- Commercial Real Estate (CRE) Debt: The total outstanding commercial and multifamily mortgage debt in the U.S. increased to $4.79 trillion in the fourth quarter of 2024. For context, CRE debt outstanding was $5.9 trillion as of the fourth quarter of 2023.
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Annaly Capital Management (NLY) is expected to drive future revenue growth over the next 2-3 years through several key strategies and market dynamics:
- Portfolio Diversification and Strategic Positioning: Annaly is diversifying its investment portfolio beyond traditional Agency Mortgage-Backed Securities (MBS) into higher-yielding segments such as residential credit and mortgage servicing rights (MSRs). The company is also strategically positioning its Agency MBS portfolio in higher coupon segments (4.5% to 6.0% coupon range) to capture more attractive spreads and support sustained margin gains. This strategy aims to reduce overall portfolio volatility, mitigate interest rate sensitivity, and achieve attractive risk-adjusted returns.
- Growth in Residential Credit Business: The Residential Credit Group is a significant focus for Annaly's growth strategy and has demonstrated substantial expansion. The company has reported record securitization activity, including $3.6 billion across seven securitizations in the second quarter of 2025 and $3.9 billion in the third quarter of 2025, alongside enhanced financing capabilities for this segment.
- Expansion of Mortgage Servicing Rights (MSRs): Annaly is actively increasing its focus on MSRs. These assets tend to appreciate in value when interest rates rise, providing a natural hedge against potential declines in other asset classes and contributing an additional income stream. The company has added substantial capacity to its MSR business.
- Improved Financing Terms and Expanded Capital Base: Annaly has successfully improved its financing terms and raised significant equity, including $400 million and an additional $1.1 billion through equity initiatives in Q3 2025. This expanded capital base provides Annaly with greater resources to pursue new investment opportunities, acquire diverse asset types, and support stronger revenue growth and earnings distribution.
- Favorable Interest Rate Environment: Analysts anticipate a multi-year rate-cutting cycle by the Federal Reserve in the coming years. For mortgage REITs like Annaly, falling interest rates typically lead to lower borrowing costs and an expansion of net interest margins, which can significantly enhance profitability and, consequently, revenue.
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Share Repurchases
- Annaly Capital Management authorized a new common share repurchase program of up to $1.5 billion through December 31, 2029.
- The company also authorized a new preferred share repurchase program through December 31, 2029, allowing for the repurchase of up to 63,500,000 shares across its Series F, G, and I preferred stock.
- A $1.5 billion share repurchase program was authorized through December 31, 2021, replacing a previously expiring program of the same amount.
Share Issuance
- Annaly raised $1.1 billion through equity initiatives in the third quarter of 2025.
- The company raised $761 million through common equity issuance in the second quarter of 2025.
Outbound Investments
- Annaly's total investment portfolio reached $97.8 billion as of Q3 2025.
- The portfolio is diversified across three main strategies: Agency (64%), Residential Credit (17%), and Mortgage Servicing Rights (19%) as of Q3 2025.
- The Agency portfolio, which is Annaly's largest segment, increased by 10% to $87.3 billion during the third quarter of 2025, with newly raised capital primarily deployed into Agency Mortgage-Backed Securities (MBS).
Capital Expenditures
- As a mortgage real estate investment trust (REIT), Annaly Capital Management's primary business involves investing in real estate-related assets rather than traditional capital expenditures on physical property, plant, and equipment.
- Traditional capital expenditures for a mortgage REIT are typically minimal, focusing on operational infrastructure.
- A reported quarterly capital expenditure figure of $164.6 billion for June 2025 is likely representative of total assets or investment portfolio size rather than conventional capital expenditures.
