I’m wondering if you have any experience in investing in companies like Armada Mortgage Corp? Can you offer and pros and cons comments?
Thank you
Dave
Armada is private, so that adds risks. But it has been around more than 20 years, and has returned 6.9%. Essentiallt it is a mortgage investment corp (MIC). MICs are diversified pools of predominantly residential mortgages, secured by real estate. Investors purchase shares in a MIC and receive a proportional interest in the fund’s portfolio and the income it generates. MICs are focused on providing a steady and consistent stream of income and portfolio diversification. Armada uses 1st, 2nd and 3rd mortgages. With any private investment such as this, it comes down entirely to how well the management company can price and manage risk. Often, mortgages are concentrated in areas they know. Many MICs will have liquidity restrictions. So for us it comes down to the risk of a private company and the possible lack of info and reduced liquidity. While there can be diversification benefits to such products, at 6.9% since inception, we are not sure the risk is worth it, considering public MICs such as FN yield the same currently.