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Western Asset Mortgage Capital Corporation  (WMC)
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Western Asset Mortgage Capital Corporation

Business Description


Western Asset Mortgage Capital Corporation (WMC) is a real estate investment trust (REIT) that primarily invests in, finances, and manages a portfolio of residential mortgage-backed securities (RMBS) and other real estate-related investments. The company focuses on leveraging its expertise in fixed-income and mortgage-backed securities to generate attractive risk-adjusted returns for its shareholders.

WMC was founded in 2009 and is headquartered in Pasadena, California. It is a subsidiary of Western Asset Management Company, an investment management firm with over $460 billion in assets under management.

The primary business of WMC involves investing in a variety of mortgage-related assets. This includes residential mortgage-backed securities, which are pools of residential mortgage loans that are securitized and sold to investors. WMC also invests in commercial mortgage-backed securities (CMBS), which are similar to RMBS but are backed by commercial properties, such as office buildings, hotels, and shopping centers.

In addition to mortgage-backed securities, WMC also invests in residential whole-loan mortgages, which are loans that are secured by residential properties. These whole-loan mortgages can be either fixed-rate or adjustable-rate, and WMC may choose to hold them in its portfolio or securitize them and sell them to other investors.

WMC seeks to generate income and capital appreciation through its investments in mortgage-related assets. The company earns income from the interest and principal payments on the mortgage-backed securities and whole-loan mortgages in its portfolio. It also earns income from any fees associated with managing and servicing these assets.

To manage the risk associated with its portfolio, WMC utilizes a disciplined investment process. This includes conducting thorough due diligence on the mortgage-backed securities and whole-loan mortgages it invests in, as well as actively monitoring and managing its positions. The company also employs risk management techniques, such as hedging strategies, to mitigate interest rate and market risk.

WMC operates as a REIT, which means it must distribute at least 90% of its taxable income to shareholders in the form of dividends. This structure allows the company to avoid corporate-level taxation and provides tax advantages for investors.

In summary, Western Asset Mortgage Capital Corporation is a REIT that specializes in investing in residential mortgage-backed securities, commercial mortgage-backed securities, and residential whole-loan mortgages. The company aims to generate income and capital appreciation through its mortgage-related investments while managing risk through rigorous due diligence and risk management strategies.



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