Guru Donald Smith (Trades, Portfolio) began his investment career well over three decades ago as an analyst with Capital Research. Smith was promoted to becoming the director, vice president, and then portfolio manager of Capital Guardian Trust Co. In 1980, Smith became the CEO of Home Insurance Company, and president of Home Portfolio Advisors Inc. He then purchased the company in 1983 and changed the name to Donald Smith (Trades, Portfolio) & Co. Inc.
In the fourth quarter of 2015, Smith increased his holdings in MFA Financial Inc. (MFA, Financial) by 527%.
MFA Financial is a self advised REIT that primarily focuses on investing on a leveraged basis, in residential mortgage-backed securities.Â
MFA Financial has a market cap of $2.36 billion, an enterprise value of $2.8 billion, a P/E ratio of 7.82 and a dividend yield of 12.58%.
The company has two severe warning signs according to GuruFocus. The per share revenue has been in decline for the past five years. The operating margin has also been in decline over the past five years, which is also a negative sign for investors.
MFA Financial also has a few good signs according to GuruFocus. The company's price is close to a five-year low. The dividend yield is close to a one-year high at 12.58, ranking them higher than 91% of the 822 companies in the Global Diversified industry.
Below is a Peter Lynch chart for MFA Financial.
The Peter Lynch chart shows that the earnings are above the price of the company, which is a very good sign.
Donald Smith (Trades, Portfolio) has over 35 years of experience in the investment industry, devoting himself to all aspects of the investment business for his clients' portfolios. MFA Financial has been declining in price and share revenues over the previous five years; however, the company’s price is at a five-year low and they pay a healthy dividend yield. I agree with Donald Smith (Trades, Portfolio) that MFA Financial is a profitable investment.
Cheers to your investment success.
