Tag Archives: AGNC

An Economic Shocker Is In The Cards This Week

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mkaminisBy Markos Kaminis (Wall St. Greek):

The Federal Reserve will update its economic forecasts this week. It’s something it does quarterly, and it is time once again for it. Three key data points are projected, including GDP, PCE price inflation and employment expectations. It is no news to followers of my column that I find issue with the Fed’s forecast for Real GDP. Well, I believe that it will have to come clean Wednesday, in that it will finally adjust its growth outlook lower. Many other major institutions see slower growth for the U.S. than the Federal Reserve sees, and the Fed has even contradicted itself in this regard. So an economic shocker is in the cards if the Fed cuts its growth outlook significantly this coming week, though readers of this column would not be surprised.

The Fed has pretty much been forecasting the same level of growth for 2013 for far too long now.


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Corrective Actions By The 20% Yielding American Capital Agency

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ByEquity Whisper:

I previously rated American Capital Agency (AGNC) as among the worst performing mREITs around the unwinding of the third round of easing. My opinions were formed after looking at the structure of the company’s investment portfolio at that time. However, the management at American Capital Agency took some actions that were disclosed as they presented at the Morgan Stanley Financial Conference yesterday. Lets how these actions would help American Capital Agency.

The corrective actions

Previously American Capital’s investment portfolio was constructed to benefit from lower interest rates. However, the rates did not decrease further as expected by the company’s management. As a result, during the first quarter, we saw a 9% decline in the book value, an 11 bps contraction in the spread and profits that were 72% behind prior quarter’s profits.

Looking at the situation, the company has attempted to rebalance its investment portfolio to better suit the


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American Capital Agency’s Management Presents at Morgan Stanley Financials Conference (Transcript)

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American Capital Agency Corp. (AGNC)

Morgan Stanley Financials Conference Call

June 12, 2013 3:35 pm ET

Executives

Gary Kain – President and Chief Investment Officer

Analysts

Cheryl Pate – Morgan Stanley & Co. LLC

Presentation

Cheryl Pate – Morgan Stanley & Co. LLC

Good afternoon. For our final presentation today, I’m pleased to welcome American Capital Agency, an agency mortgage REIT that has had one of the most sophisticated strategies in terms of asset selection and perseveration of book value. Here to present for American Capital Agency today is Gary Kain, President and Chief Investment Officer.

Prior to joining American Capital, Mr. Kain served in several investment management roles at Freddie Mac from 2001 through 2009, including Senior Vice President of Investments and Capital Market, Senior Vice President of Mortgage Investments and Structuring of Freddie Mac during which he was responsible for managing all of Freddie Mac’s mortgage investment activities

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American Capital Agency: What’s In Store For Q2 Dividend, And Where Does Book Value Stand?

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By Matt Cote:

The MBS market has seen a great deal of movement in the past two months and it has had a huge impact on mREIT investors. Since May 1st the Market Vectors Mortgage REIT Income ETF (MORT) has taken an 11% hit, and industry leaders Annaly Capital Management (NLY) and American Capital Agency (AGNC) have endured 14.8% and 22.6% drops respectively.

MBS premiums have dropped dramatically across the board since that time, with lower coupons taking a beating (30-year 3s were off more than 3% in Q2 at recent lows). AGNC’s approach seems to have in many ways exposed it to the worst of this drop, as they operate at a reasonably high leverage for the mREIT sector and have generally held lower coupon securities when compared to their peers in order to mitigate CPR risk. Their well documented approach to leverage TBA positions during QE3 also doesn’t make a positive


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Annaly Capital Management And The Spread: One Widening Reason Not To Sell

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ByChristopher F. Davis:

The selloff in mortgage real estate investment trusts (mREITs) that began in May has continued into June. One of my long-time favorite mREITs, American Capital Agency (AGNC) has suffered double-digit losses in just a few short weeks, and is currently trading under $25.00 at $24.83, after being over $30.00 to start May. However, on a day where most of the mREITs were deep in the red, my second largest mREIT holding, Annaly Capital Management (NLY) was in the green, up half a percent to $13.55. What has caused this huge decline in mREITs?

It is primarily the belief that the Federal Reserve will be slowing its bond buying program. It’s kind of funny if it weren’t so sad, because when the purchasing was announced, these stocks got crushed. Not that the buying may end, and they get crushed. In fact, has the pain has been so great that these dividend


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American Capital Agency Among The Worst mREITs

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ByEquity Whisper:

I believe American Capital Agency (AGNC) and ARMOUR Residential (ARR) will be among the worst performing mREITs around the unwinding of the QE. The remainder of the investment thesis will look at the reasons why both these mREITs are expected to underperform their peers.

mREITs skydive

The Fed’s intentions of tapering the stimulus efforts have increased interest rate volatility, causing the mREITs sector to skydive. In particular, ARMOUR and American Capital Agency are down 22.5% and 17.25%, respectively, over the past one month. Over the same time period, Annaly Capital Management (NLY) is down 12%. Annaly happens to be the largest mREIT.

What went wrong with American Capital Agency?

Given the situation, I believe American Capital Agency is not prepared for the QE tapering. Therefore, it remains one of my least favorite mREITs. The direction of the book value and the coming quarter’s core earnings are considered material for the


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Near 20% Dividend Payer American Capital Agency Is Set Up For A Huge Q2 2013 Loss

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By David White:

American Capital Agency Corp. (AGNC) is a mortgage REIT that invests primarily in Agency RMBS. Its goal is to preserve net asset value, while generating attractive risk-adjusted returns for distribution to its stockholders via regular quarterly dividends. It does this through a combination of net interest income and net realized gains and losses on its investments and hedging activities. It funds itself primarily through repurchase agreements (with a base of capital from shareholders) and lately partially through the dollar roll market. AGNC is externally managed and advised by American Capital AGNC Management LLC, which is a wholly owned subsidiary of American Capital (ACAS) — a publicly traded private equity firm and global asset manager.

AGNC took a huge comprehensive income loss of $1.57 per common share in Q1 2013 as mortgage rates rose slightly. The book value fell from $31.64 per common share on Dec. 31, 2012, to


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American Capital Agency Corp.’s Dividend Range Scenarios For Q2 2013

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By Scott Kennedy:

Focus of Article:

The focus of this article is to provide a detailed analysis with supporting documentation (via tables) on the best and worst case scenario of American Capital Agency Corporation’s (AGNC) second quarter of 2013 dividend per share amount. This will include a discussion of AGNC’s third quarter of 2013 dividend per share amount at times. This analysis will occur after several brief introductory discussions. The following three introductory topics will be discussed: a) general overview of AGNC; b) AGNC’s REIT classification; and c) the cause of the recent market turmoil in regards to the mortgage real estate investment trust (mREIT) sector as a whole.

I am writing this particular article due to the recent high demand that such an analysis be performed in light of the recent turmoil in the mREIT sector. Understanding the minimum dividend payout characteristics of this company will provide investors with an overall


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