I see no factual basis for the claim that these stocks have "upside appreciation potential from here of 35-40%"
Usually when an asset is yielding 10-13% when safe fixed income assets are less than 5%, it is Mr. Market telling you that there is some risk in the high yielding asset. Although the inference is that since these shares hold US government backed mortgage certificates there is little or no risk, perusal of the financial statements usually reveals a very high degree of leverage, essential to raise the return higher than the yields on the certificates.
Usually, this means the company is lending long and borrowing short, a dangerous business model in the past. That is what Mr. Market is warning you about. Caution advised!