Annaly Capital Management announces public offering of 75 million shares, plans to use proceeds to buy mortgage-backed securities

Cindy Allen

NEW YORK , January 4, 2011 (Associated Press) – Shares of Annaly Capital Management Inc. slumped 3 percent in premarket trading Tuesday after the company made a public offering of 75 million shares.

Still, Wunderlich Securities analyst Merrill Ross maintained a "Buy" rating on the New York real estate investment trust, along with its price target of $18. Ross also raised this year's earnings estimate to $2.54 per share from $2.50 per share.

Ross believes the company will use half of the money it raises to boost its portfolio and earnings momentum. The other portion of funds raised is a defensive move against Annaly's interest rate swaps at the end of last year, the analyst said.

Annaly, which focuses on investment securities, announced the offering late Monday and said it would use the money to buy mortgage-backed securities and for general corporate purposes, including debt repayment.

Underwriters have the option to buy 11.3 million more shares.

Its shares fell 50 cents to $17.37 in premarket trading.

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