CIM

Chimera is a leveraged mortgage REIT whose appeal is valuation and income, not quality. At $13.69 the stock carries a P/E of just 8.0 on FY2025 diluted EPS of $1.72, and the 10-K notes the Board declared dividends of $1.48 per share — a ~10.8% yield that EPS comfortably covers (~86% payout). Total stockholders' equity is $2.57B against 83.4M shares, implying ~$30.8 of book per share; even after discounting for the preferred stock implied by the gap between $230M net income and ~$143M of common earnings (EPS x shares), the common still appears to trade at a meaningful discount to book. Net income has risen three straight years ($126M → $176M → $230M, +30.9% in FY2025), and cash ballooned 231% to $279M. That is the bull case: a below-book REIT with a well-covered double-digit dividend and improving headline earnings.

The quality caveats are real and keep this from being a clean buy. The reported 56.4% EPS jump is flattered by a 65.4% drop in shares outstanding with $0 of buybacks — i.e. a reverse split, so per-share growth is partly mechanical, not organic value creation. Operating cash flow was -$249M and deteriorated 221% YoY; some of this is structural now that the HomeXpress origination unit (closed Oct 1, 2025; loans held for sale are ~6% of interest-earning assets) funds originations through operating activities and warehouse lines, but negative and worsening OCF still demands scrutiny. Leverage is 5.14x liabilities/equity and long-term debt rose 86.8%, while ROE is a modest 9.0%. The MD&A reorg into Investment Portfolio + Residential Origination segments, and the portfolio reshuffle from 88% residential loans to 65% loans / 23% Agency MBS, signal a business in transition.