Schutz's portfolio these days is eclectic, ranging from well-known names, like insurance giant Travelers (TRV) and investment bank-turned-"regular"-bank Morgan Stanley (MS), to lesser-knowns, like Invesco Mortgage Capital (IVR) and Chimera Investment (CIM). The last two are specialty finance companies established to invest in distressed real-estate assets, mortgage loans and mortgage-backed securities. "These kinds of new entities will benefit as book values grow; meanwhile, they will be paying out significant yields," Schutz says.

From a recent Mad Money show:"This has made many mistakes since it's come public. I will go for it as a spec only, not as a trade."

Avenir Corp. doesn't believe Chimera should proceed with its 250-million-share follow-on offering, arguing that it would be "highly dilutive to existing stockholders." Another activist investor, ValueAct Capital Management, also opposes the offering, which it contends "exhibits disregard for current Chimera shareholders." Avenir holds 3,037,059 shares (7.8% of the total outstanding).

ValueAct Capital Management asked Chimera's board to rethink the timing and magnitude of a proposed offering of 250 million common shares. ValueAct said the proposal, which it called "massively dilutive" and "misguided," shows "complete disregard for current Chimera shareholders." ValueAct believes that Chimera should raise capital through "a much smaller offering." ValueAct holds 4,532,628 shares (11.6%).

ValueAct Capital Management hiked its stake to about 4.24 million shares (11.2%), from the 3.74 million (9.9%) reported on June 9.

ValueAct Capital Management reported ownership of 2,511,552 shares (6.7%) after buying those shares from March 11 to April 23 at $11.56 to $12.99 each.

Long-term Growth

GE: There are $100B of financial assets that are in the "sweet spot" from distressed holders.

That is what CIM was formed to do, take advantage of weak hands in the market.

betting on unbundling of bad mtgs

growth potential

HO-HUM