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American Capital Agency Corp. Message Board

  • wandalynn1231 wandalynn1231 Jul 17, 2008 11:34 AM Flag

    Interview with Anton Schutz

    Let's chat about some of your top picks. You like real estate investment trusts. Why?

    Well, yes. They have that REIT title. But the ones I like own agency-backed paper. They are simple structures. They lever from six to eight times. They buy this agency-backed paper, which has the implicit guarantee of the U.S. government. With interest rate spreads where they are today, they are generating yields of anywhere from the upper-teens to upper-20s on a dividend basis.

    In that space, you particularly like the look of American Capital Agency (nasdaq: AGNC - news - people ). How come?

    They are trading well below book value. Book value is about $18.50. They declared a dividend of $0.31, covering the period from May 20 through the end of the second quarter. That's 27 days. Annualize that and you get a dividend that is up over $4, which isn't too shabby. That yield takes you into the upper-20s, from where the stock trades today.

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