Update: Jefferies Raising Price Target On Hatteras Financial

Jefferies & Co. is out with a research report on Hatteras Financial Corp. HTS and is raising its price target to $28 from $27, and it has a Hold rating on shares. In a note to clients, Jefferies & Co. writes, "HTS grew their portfolio by roughly 26%, increasing the portfolio balance to $16.4BN in 2Q compared to $13BN in 1Q. The 7/1 portfolio (i.e. 61-84 month to reset range) now represents 30.1% of the portfolio compared to 26.2% in 1Q and is up 10% from 12/31/10. The majority of the Company's portfolio consists of 5/1 paper (37-60 month to reset range), yet we note the weighted average months to reset increased by 3 months Q/ Q to 56 months, which we believe was largely due to the increase in 7/1 paper. We believe HTS has been gradually increasing exposure to 7/1 paper as this product trades to slightly higher yields due to its longer duration and lower popularity compared to 5/1 ARMs." Shares of HTS closed at $27.84 yesterday.