Annaly Capital Management (NLY) one of the nation's largest real estate investment trusts, earned $1.2 billion, or $1.94 a share, during the fourth quarter, a 64% increase from the year before. The company reported a third-quarter loss of $14.1 million, but earned $1.3 billion for all of 2010, up from income of $2 billion a year earlier. During the fourth quarter, Annaly unloaded $3.1 billion in mortgage-backed securities for a gain of $33.8 million. For the entire year, Annaly sold $10.6 billion in MBS for a profit of $181.8 million. The company has also been on the move to buy more. Since the beginning of 2010, Annaly publicly sold 226 million shares for $3.9 billion in funds it plans to use to purchase more MBS. The latest offering occurred in early 2011 when the REIT sold 75 million shares for $1.3 billion. Annaly CEO Michael Farrell said the company's performance hinges on what the government's next move will be regarding the economy. "Regulation, public policy and the state of the economy continue to be a focus of the marketplace, as the evolution of these issues will affect not only return expectations for investors in different asset classes, but also how our country will conduct business in a wide range of industries," Farrell said. "As these issues continue to evolve there will be challenges and opportunities for all market participants." Write to Jon Prior. Follow him on Twitter: @JonAPrior