Annaly Capital Management, Inc. (NYSE: NLY) has set the price for its public offering of 51,000,000 shares of common stock at $19.25 per share.  All of the shares are being offered by Annaly rather than by shareholders and it intends to use the proceeds to purchase mortgage-backed securities and for general corporate purposes.

It has a rather large underwriting group.  Merrill Lynch and Morgan Stanley are the joint book-running managers; and UBS, Wachovia, Credit Suisse, Keefe Bruyette & Woods, and then RBC Capital Markets are listed as co-managers.  Underwriters have a 30-day option to purchase up to an additional 7,650,000 shares of common stock to cover over-allotments.

This secondary will generate estimated gross proceeds of approximately $981.8 million before fees, and the estimated net proceeds to the Company from this offering after expenses are expected to be approximately $939.8 million, which the Company  The Company expects to close the transaction on or about January 29, 2008, subject to the satisfaction of customary closing conditions.

• Annaly has been almost entirely an immune business model during this entire mortgage, CDO, CLO, and now the counterparty risk meltdown that has been present since late summer.  As the management team at Annaly has been bulletproof we have been favorable on its recently launched investment vehicle called Chimera Investment (NYSE: CIM).  We have been in praise of this from the filing date of the IPO and referred to it as the safer vulture investing vehicle that the public can use to profit off of the malaise that has been present, is present now, and that will be present in the coming months (hopefully just months).  Even Jim Cramer came out touting this one fairly recently.

Annaly’s market cap as of the close was $7.9 Billion, and its 52-week trading range is $12.14 to $20.22.  This secondary out of Annaly will probably be getting plenty of attention from the media on Thursday and Friday as the company isn’t having to pander to or cater to any stringent demands as others have in the current state of the financial sector.

Jon C. Ogg
January 23, 2008

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