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American Capital Mortgage Investment Corp. Message Board

  • xxavatarxx xxavatarxx Dec 5, 2013 12:45 PM Flag

    Goldman Sachs - Issues sell rating on reits

    This is from Seeking alpha.. in case any of you didn't see it.

    * Initiating coverage on the sector giants, Goldman sees both Annaly (NLY) and American Capital Agency (AGNC) as Sells.

    * "We expect book value to fall as rates rise and MBS spreads to widen post Fed tapering," says analyst Eric Beardsley, giving NLY a $9.50 price target. With management taking actions to protect said book value such as moving into short-duration assets and boosting hedges, expect more earnings headwinds and dividend cuts of about 40%. An expected dividend of $0.80 per share is an 8% yield based on the current stock price. Total return of 2% over the next year compares to 10% Beardsley expects for the overall mREIT sector (REM).

    * It's the same story for AGNC which gets an $18.50 price target. Beardsley expects book value to fall 15% to $21.39 by Q4 next year and the dividend to drop to $2 - a 10% yield based on the current stock price. He sees total return of 4% over the next year, again compared to 10% for the overall sector.
    Related ETFs: MORL, MORT

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    • Hey xxavatarxx, I'm still confused about what you meant when you said you'd 'go with the beat a dead horse party'. Are you seriously thinking that GS means anything in this space? Show me the muppet that would say 'Gee Mr Goldman Sachs man, advise me on mortgage backed securities, you're the experts'. That'd be a rare breed of muppet, as most of them were r4ped to death a few years back..

      I'm curious, as I have an interest in muppethropology, and an extinct subspecies of muppet (know as the mortgage muppet) would be a terrific find.

    • Strange they didnt wait for next year to start - both were sell initiatoins - why not wait - funny agnc and nly shook it off - hope they announce the same as last quarter for now and get a run

      but mbs needs to stabilize

      silly stocks.

    • Somehow I think GS just may have gone short before 'iniitiating coverage'.

    • GS: always a trustworthy, honorable source. I wonder if people actually believe that GS _initiated_ a sell rating on the sector because they were looking out for their clients.. as if the negatives weren't already known.. "Beat a dead horse to death, again".

    • Here is the full cut from the AGNC portion.
      They expect a 2014 total return of 4%.

      Goldman Sachs initiates coverage on American Capital Agency (NASDAQ: AGNC) with a Sell. PT $18.50.

      Analyst Eric Beardsley comments, "We are Sell rated on AGNC, as we expect book value to fall as rates rise and spreads widen post Fed tapering. As AGNC continues to take actions to protect book value by taking down leverage, rotating into shorter-duration assets, and increasing its hedge ratio, we estimate continued earnings headwinds and an increased risk to dividends. We expect book value to fall 15% from $25.27 in 3Q13 to $21.39 by 4Q14, and that the stock trades to 0.86x this level (vs. current levels of 0.78x) for our $18.50 price target for 6% price downside. We expect 2014 dividends of $2.00, implying a dividend yield of 10% on current price levels, bringing the total return for 2014 of 4%, which is relative underperformance vs. the 10% average total return for our Neutral-rated coverage universe."

      For an analyst ratings summary and ratings history on American Capital Agency click here. For more ratings news on American Capital Agency click here.

      Shares of American Capital Agency closed at $19.75 yesterday, with a 52 week range of $19.21-$33.31.

 
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