THAT SPREADS ARE WERE THEY WERE (VERUS HEDGES) AND BOOK WAS UNCHANGED QTD
Gary Kain - President and Chief Investment Officer
Well, actually, I’d say, spreads are largely a wash, maybe even a basis point or two wider like from the beginning of the quarter. They widened a fair amount a early in July, and then they’ve come back up until the last couple – last day or so. But – so they’ve kind of bounce around, but not a huge change there. We have had a little bit of a rally. But, again, going just back to what I said earlier about book value, which is it’s pretty much changes this quarter or this month are minimal and we’ll put the number out in a couple of days. I mean, I don’t know what’s going to happen over the next few days. But there has not been a big change in book value.
SO BOOK OF 24.0, 25, 25.50 MAYBE - BUT KAIN IS SAYING IT ISNT SO............????
Did you sell this stock short? Judging by your comments, you need to take a tutorial on how mortgage REITS function.
that's because it wasn't a brutal quarter
3 pt mbs decline and they lost just 6% (1/2 of that was divi)
mid 2013 on similar decline they lost 12 to 15% of book (40% of which was the divi)
the market seems to want a lower divi if its good enough but they have to be able to have a stable book
6% drop isn't stable but on a 3 pt mbs decline that's much better - they are progessng and there is p/b discount to play around with
spreads versus hedges narrowed, mbs has rallied qtd and interest spreds have widened - and prepays probably are coming down from last quarter
that's what they were lookin at for this rally
now if tlt and mbs roll over that's a different story.
They take away your gain with the ex-date tomorrow and then it falls thru the pay-date.
Forecast still low 18's
Continue to fall after that.
Have a great quarter, sp and div plummet. Report a miss and have a brutal quarter, sp pops. Go figure with this POS. Everything you ever learned about this stock, you may as well throw out and do the opposite.
You nailed it again, why sell in mid/hi $20s if BV is over $25? Why not set a higer target, like a 15% discount to book??
The $64,000 (actually more like $2,000,000) question is, of course, not where were prices were a year ago or 3 years ago vs today, but where they will be looking forward. More importantly, are levered US MBS a good asset at a 25% discount to their market value? Let's start with the asset, US MBS yield about 3%. What other government debt yields anything like that? (hint: Mexico and New Zealand, that's it, and those are 10yr bonds). So the recent bout of currency and rate vol got MBS to a point of cheapness almost unparalleled in global bonds. MBS still finance at around 25-30 bps, so leverage is cheap and plentiful and by buying a REIT you get those assets on a tax beneficial balance sheet at a 25% discount to their market value. As I said yesterday, 10% yield on BV (or a 12.5% yield on market price) is a relative lay up in today's environment. I was actually surprised that BV on AGNC wasn't below $24 so I'd estimate current BV is higher than I thought (probably $25.25 to $25.60). I still think Dec is the earliest that the Fed will act, and I still think it's going to be alot harder to "raise rates" than they think (they simply don't have the tools in a market with $2.5 Trillion in excess reserves sloshing around. I don't think the bear mkt in commodities/oil/gold is over, although a bounce from here makes sense) nor do I think the trouble in China or Greece is anywhere near over, and I think US stocks are at a near term top. Given all that, a 12.5% yield with the risk/reward squarely in your favor seems pretty cheap to me. I got my full position yesterday would look to sell mid/hi $20s.
This is not like a stock. You can buy low and sell high. Once NAV is lost, it is lost permanently.
You cant hit a home run every time at bat, a racehorse wont win every race, Such is life on the fast track, Try to deal with it as best as you can or cash out and buy you a big juicy cd.
Sentiment: Strong Buy
Its funny how a while back, after they had sold new shares (at over 32 a share) to raise money, and shortly later bought a lot of them back, they said they'd buy any time there was a nice discount to book value. Then, months later, when everyone expected them to buy more shares, they said they didn't want to do that anymore. And now we have them buying back shares again.
Every share bought back reduces dividend payments and helps lower the PE, and raise the book value.
Sadly, even with 4 million shares bought back, the book value still dropped. It would be below 24, had they not bought.
And maybe even more sadder is, they said they could leverage up , and quickly, any time they wanted to. This buyback kinda tells us they don't see an opportunity to use that buyback money, to lever up, any time soon.
or perhaps its just that mbs fell roughly 3 pts on the quarter and agnc like other mreits is levered mbs - results are expected.
When the market goes up, you can make mistakes and still grow.
When the market tops out and you still make mistakes, you justify and explain.
When the markets start to fall apart and you can't help yourself but make more mistakes,
it gets ugly real quick
This has been a growing house of cards.
1. A 'Other comprehensive loss of $846 million or $2.40 per common share', in one quarter.
2. A '$1.53 decrease in book value' or 6% decrease in one quarter.
Spreads that are going in the wrong direction, dollar roll funds going in the wrong direction, swaps that look good but aren't.
How soon before the dividends will be cut? by how much?
When you don't know how to invest to make a good return. You do one of three things. 1. Give the money back to the investors. 2. Stop or slow down the investments. or 3. Keep making mistakes, hoping for the best.
AGNC has done all three. Buying stocks back, reduce their leverage and you know the rest, lose lots of money.
When these postponed losses keep growing, when does it end????
Just like it did with the cards when I was 7 years old. It collapses quickly.
Sentiment: Strong Sell
I think so too but how much of the retracement is from the recent flight to quality and mbs going with it
if things stabilize and the markets rally a little do you see tlt letting off some air and mbs following it down.
cys certainly popped up from its depressed value with the recent mbs pop.
Im trying to get some agnc on dips and with monthly dividends it will have the money flow focused on it versus other mreits.
Clumps, Clumps, Clumps,
Ur definition of a 'bear mkt/crash' has varied so much__that if ran a correlation spreadsheet__wld only coincide with 'VIX' traders___and I not talking about that 'ETF'__but the the real 'VIX'.
Collegiate (have ever had an actual finance class?) determines a "BEAR" at threshold of -20%.
I have repeatedly posted on this board that 'sector performance vs historical sector performance' when placed within the current economic cycle__will tell the future.