Michael A.J. Farrell, who died last week at 61 after being diagnosed with cancer this year, is remembered for building Annaly Capital Management Inc. (NLY) into the world's largest mortgage real estate investment trust.
Mr. Farrell's death was confirmed last week in a statement by the company, which didn't provide additional details.
Mr. Farrell, who graduated from high school at 16 with plans to become a commercial artist, instead turned to Wall Street, beginning at E.F. Hutton & Co. in 1971. After stints at Morgan Stanley and Merrill Lynch & Co. Inc., he started Annaly in 1997 and turned it into one of the largest buyers of home loan debt backed by the United States. As of June 30, the firm had assets of about $128.3 billion.
Mr. Farrell branched out with separate companies that buy non-agency bonds and commercial real estate securities.
“Mike will be missed not only for his stature in the business but as one of the class guys in our industry,” said Shawn Matthews, chief executive of Cantor Fitzgerald & Co., the brokerage arm of Cantor Fitzgerald LP. “He hired me into this business, and I have always considered him a mentor, great leader and true gentleman.”
Mr. Farrell, Annaly's chairman and chief executive, was receiving chemotherapy for cancer that “was caught early” and was considered treatable, according to a company statement in January.
In May, the firm disclosed that the cancer was in remission, though this month, it said that Wellington Denahan-Norris, Annaly's co-founder, had been appointed joint chief executive to allow Mr. Farrell to focus on his “ongoing treatment.”
Annaly has returned more than 600% to shareholders since its 1997 initial public offering, outpacing the 94% gain for the S&P 500 over that period. Shareholders almost doubled their money in the past five years as Mr. Farrell and Ms. Denahan-Norris, 48, navigated the financial crisis and then forecast how Federal Reserve efforts to boost housing and the economy would affect bond markets.
The two executives each earned $35 million last year, making them among the world's highest-paid financial services executives.
“He was a fantastic leader and friend, and will be greatly missed,” Annaly said in the statement. “Our hearts go out to his family and all those who were fortunate enough to know him.”
BROOKLYN-BORN
Mr. Farrell was born April 10, 1951, in Brooklyn, N.Y.
He reportedly wanted to be a rock star after giving up on becoming an artist. Instead he ended up trading bonds, specializing in mortgages.
He and his wife, Mary Flynn, neither of whom completed college, committed $10 million to Wake Forest University in “the largest cash commitment by a living individual in the university's history.”
Their son, Michael Edward Farrell, studied finance and economics at Wake Forest, graduating in 2010.
Mr. Farrell is also survived by his wife and their children Caitlin, a 2008 graduate of College of the Holy Cross, and Taylor. In addition, he is survived by Kelly, a daughter from his first marriage, and two grandchildren.
In 1991, while head of fixed income at Wertheim Schroder & Co., where he also hired Mr. Matthews, he met Ms. Denahan-Norris, with whom he founded Annaly six years later.
Mr. Farrell had concluded that REITs and mortgage bonds were a “perfect marriage between asset class and vehicle structure,” in part because they can be buy-and-hold investors, Bloomberg reported in April.
Unlike with hedge funds or many mutual funds, REIT shareholders can't withdraw money from the firms. Instead they buy and sell shares in the companies.
Mr. Farrell stood out for his colorful conference calls and shareholder letters that discussed broader themes through historical allusions and literature.
Although Annaly has benefited as the Fed has held short-term interest rates near zero to bolster the economy, its shares had declined 6.1% year-to-date through Oct. 19 since the central bank said last month that it would purchase an additional $40 billion of mortgage securities a month.
That has pushed down bond yields, narrowed spreads and reduced homeowner borrowing costs, squeezing earnings and dividends for mortgage REITs.
Annaly said Oct. 16 that it may repurchase up to $1.5 billion of shares over a year.
The firm's name, Wake Forest Magazine reported, refers to Mr. Farrell's Irish ancestors, who were the reigning clan of Longford and ruled from Annaly Castle, which is incorporated in the crest of the REIT's logo.
