Question · Q4 2025
Douglas M. Harter asked about Two Harbors' approach to leverage, given the current MBS market conditions, the company's interest in adding assets at prevailing spreads, and its overall view on risk-reward.
Answer
Nick Letica, CIO, explained that the company has adopted a more defensive stance due to the administration's efforts to tighten spreads, acknowledging the symmetric to asymmetric risks. He noted a reduction in leverage and mortgage risk this quarter, emphasizing the paired portfolio construction's focus on extracting combined asset spread rather than spread direction.
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