Some interesting posts by a few pretty happy posters over at the MTGE board.
"(MTGE) today reported net income for the three months ended September 30, 2012 of $146.2 million, or $4.03 per share, and net book value of $25.21 per share.
THIRD QUARTER 2012 FINANCIAL HIGHLIGHTS
$4.03 per share of net income
Includes all unrealized gains and losses on investment and hedging portfolios
$0.71 per share of net spread income
Excludes $3.32 per share of other investment related net gains
$1.33 per share of estimated taxable income
$0.90 per share dividend declared on September 11, 2012
$0.54 per share undistributed estimated taxable income as of September 30, 2012
Increased $0.43 per share from $0.11 per share as of June 30, 2012
$25.21 per share net book value as of September 30, 2012
Increased $3.13 per share from $22.08 per share as of June 30, 2012
72% annualized economic return
Comprised of $0.90 per share dividend and $3.13 per share increase in net book value
OTHER THIRD QUARTER 2012 HIGHLIGHTS
$6.9 billion investment portfolio value as of September 30, 2012
$6,337 million agency investments
$553 million non-agency investments
6.6x leverage as of September 30, 2012
6.9x average leverage for the quarter
6.7% agency portfolio actual constant prepayment rate ("CPR") for the quarter
6.9% agency portfolio actual CPR for the month of September 2012
12.7% average projected life CPR for agency securities as of September 30, 2012
1.80% annualized quarterly net interest rate spread
1.88% net interest rate spread as of September 30, 2012
"We are pleased to announce our strongest quarter, in terms of shareholder value creation, since our inception," commented Gary Kain, President and Chief Investment Officer. "This quarter, MTGE generated an annualized economic (or mark-to-market) return of 72% through net book value growth of $3.13 per share, in addition to $0.90 per share in dividends."
"American Capital Mortgage Investment Corp. Announces $50 Million Share Buyback Program"
Apollo (AMTG) and New York (NYMT) may also (all three are hybrid MREITs) soon be reporting excellent results. Linn, with it's super five year hedge program is an inherently more secure income source, but its effective strategy and execution have brought its current yield to less than half of what these "risky" MREITs now offer.
What the retail market crowd appears not to understand, is that the Fed's near zero short term interest rate policy, projected into 2015 for sound reasons, offers a stable base for the leveraged arbitrage strategy of buying higher paying mortgages; and, unlike the pure agency mortgage buying MREITS (NLY, AGNC, ARR, CYS...), the hybrids can opportunistically buy risk adjusted higher yielding commercial mortgages.
By the way, the pop in MTGE's Book Value was a direct result of the Fed's QE3 program lowering mortgage rates which made the existing mortgage portfolios more valuable, and the higher book value provides additional equity for playing the interest rate arbitrage strategy to add income until these portfolios mature and roll off.