Annaly's mortgage portfolio cushions risks but leverage impacts book value and returns are volatile.

Annaly Capital Management operates with a business model likened to an "ice-cube" due to its volatile returns and challenges in fully recovering lost book value per share. Its portfolio, mainly consisting of agency mortgage-backed securities (MBS), helps reduce risk exposure. The company's use of leverage turns modest mortgage spreads into dividends but also amplifies damage to its book value. While one-year returns can be unstable, investors who hold their shares patiently have historically seen rewards over time.