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# American Capital Mortgage Investment Corp. Message Board

• oldschoolbuilder oldschoolbuilder May 3, 2013 12:29 PM Flag

## Some more simple math

Here is another stab at MTGE's BV calculation as of 3/31 and today:

Assume 62% of MTGE's BV (pre-SPO) declined 5% from \$25.74 to \$24.45 (equity related to agencies fell 8% and equity related to non agencies rose by 3%).

Assume 38% of MTGE's BV (SPO proceeds issued at \$25.65, assume \$25.50 net) rose 3% from \$25.50 to \$26.25 (equity related to agencies rose 2% and equity related to non agencies rose 1%).

62% x \$24.45 = \$15.16
plus
38% x \$26.25 = \$9.98
equals
\$25.14 as of 3/31

Today:

\$25.14 + 5% increase in equity driven by the rally in MBS so far in 2Q (equity related to agencies up 4% and equity related to non-agencies up 1%) = \$26.40

So current BV is well north of \$26 today if you agree with my assumptions.

That's simple back-of-the-envelope math...let's see if I'm close.

Don't forget the juicy 14.3% dividend, 1/4 of which is getting paid out in 6 weeks.

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• Directionally correct except for the new money contribution. Not sure what happened to the timing of the investments. Perhaps they warehoused their purchases at the higher prices or missed the low point. Surprised because if you look at 30 year pricing it dips at about the time of the offering and again around mid March.

• if hat was the case - you should buy the company out quickly

reality is as agnc does mtge shall do

agnc was about 4.5 worse now 3.5 and soon that gap will close

mtge will have a little better report but a less liquid level 2 adn when someone wants to hit it for the similar report - the pain comes

im selling all raliles as long as agnc is down here

if mtge gets below agnc then buy mtge

why buy the one that has or might have a bad number instead buy dx on dips they delivered adn when calm mind return - dx will be at .50 to .60 and should be up at .80 to .95 and there is your much safer adn easier profit.

• Oldschool wrote: "Assume 38% of MTGE's BV (SPO proceeds issued at \$25.65, assume \$25.50 net) rose 3% from \$25.50 to \$26.25 (equity related to agencies rose 2% and equity related to non agencies rose 1%)."

Not sure I'm buying that. TBA caused problems for AGNC and MTGE was doing the same thing and in a larger percentage. I know they are a hybrid but management made comments last quarter that they were not seeing value in non-agency but were in the TBA market. Kain confirmed that AGNC was using the TBA market in Feb. I can't see why they would have been doing things differently for MTGE.

During the call I went short MTGE and long AGNC and I'm looking for them to pull back together.

We'll see after the close today.

I guess you don't want to give much consideration to the fact that MTGE issued 60% additional equity and averaged in at the lows for agency MBS or the fact that it has a non-agency book that rallied as well.

TBA is not what caused the problems for AGNC...it was mostly higher priced specified pools that fell off of a cliff in the quarter. MTGE has lower priced/lower coupon specified pools plus a greater mix of 15 year paper.

Plus, MTGE trades at a 5% discount to current BV while AGNC trades at a slight premium.

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