Thornburg Mortgage-down again today
I have made several recent posts on Thornburg Mortgage TMA as it gets hammered in the mortgage meltdown. I have been listening to Thornburg’s quarterly earnings calls for several years and this is what I take away from their business model:
- They originate and buy very high quality mortgages for their portfolio. The portfolio is almost 100% adjustable rate mortgages. They do not repackage mortgages for sale, but retain all originated mortgages in their portfolio.
- To fund their purchases of mortgages the company accesses collateralized mortgage debt and reverse repurchase agreements.
- They closely match durations of both mortgages and borrowings to avoid problems with a changing yield curve.
It appears the market believes that Thornburg will not be able to access the market for funds to finance their mortgage purchases and may have to sell some mortgages at a loss to meet margin calls.
I am not sure of the validity of this fear. The management at Thornburg has been extremely conservative throughout the life of this security. They have stayed away from the fads of the mortgage lending market, so I have trouble believing they would leave themselves exposed on the borrowing side of their business equation.
I look forward to hearing what Thornburg management has to say about their current business conditions.
Final item: Garrett Thornburg has a significant amount of money invested in TMA as do the major officers of the company. Mr. Thornburg purchased an additional 200,000 shares last week at around $23.
Final, final item: I scraped together some cash and purchased a few more shares myself this morning.
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Thornburg is being hammered by the market. Moody’s and S&P downgrade their preferred and debt. (maybe it was just Mopoody’s).
Item 1. Thornburg’s family has a ton of money invested in TMA.
Item 2. TMA will pay the.68 dividend. If so, the stock will comew back.
Item 3. IF they maintain the dividend, then the stock price doesn’t matter unless you are selling or buying. I wish I had a few thou hanging round, cause I’d buy more. I really believe that Goldstone (COO) know more about what’s going on than Moody’s. IT’s a SCREAMING BUY NOW! IMHO[