American Capital Agency Corp. Message Board

  • r42442 r42442 Oct 27, 2009 10:27 AM Flag

    Lets get real

    Lets get real. co not going into inslovency,not dilutive to nav. Now the truth,offering will add $1.29 to nav,great deals with money on new bonds.

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    • You guys should get into CMO instead of this company.

      For 1 thing you can look at only 1 years worth of earnings!

      Go with CMO, they are veterans at what they do.

      Thank me in 2 years.

    • "Sorry i am so slow, but i just seem to be missing this. Can you please point this out for me. Just give me a page number from the financials please. "

      _____________

      First, I was in error and got it a bit backwards on the income from cap gains and from interest spread. In the longer run, it really makes not much difference.

      Look at this part of the 10-Q - Management discussion from Edgar
      http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6850001-103156-177065&type=sect&TabIndex=2&companyid=770217&ppu=%252fdefault.aspx%253fcik%253d1423689

      Break out the cap gain which is about 0.80 and you end up with $1.00 for spread income. That is larger that the 0.80 I wrote before, in error. But the basic point is that this company cannot maintain anything like a $1.40 dividend. The $1.00 or so was earned in about as positive environment as could possibly occur. I'm in at about $20 and hope for 3.00 a year for a while. That is darned good. The numbers reported for the income were not "cheater" results. that is how it turned out. But it cannot be repeated. The people writing about dividends of 1.50 continuing in the future and getting diluted out of them are smoking bad weed.

      When this thing was at BV X 1.4 or so it was over priced. As a small investor, I cannot replicate what they do with the financing costs and will pay something of a premium for that. NLY is at 1.1 X BV. That is in the range of fair and has better speculative position should long rates increase. If industry trends change, the most overpriced wil have the greatest declines.

    • It was your playpal sid who suggested the $1.50 and who made the post to which I replied.

      However when you write:
      "There is a reason why the stock is not trading at or above the $26.60 offering level and a reason wny it did so poorly on Thursday" you should recognize that the reason for the decline is that it is already too expensive relative to the others in the industry and relative to the regular earnings of last quarter. It had a two week or so reaction to the large reported earnings. They will not be able to repeat that.

    • Sounds like a perfect Ponzi scheme:
      Getting money from new folks to pay dividends to the old one

      • 3 Replies to pavel_kazan
      • It's actually the opposite situation from the Ponzi scheme that you describe. In a Ponzi scheme money flows from new investors to old investors. However money is flowing from "old ones" to "new folks" in AGNC's case. The fact that us "old ones" now have 90 cents of undistributed dividends to share with the newbies is evidence that AGNC knew how to profitable invest the equity that we injected. It is because of those profits that we can add "new ones" without decreasing our dividend per share. This equity raise is about 25% dilutive, meaning a group of three "old ones" is inviting a 4th person (new one) to join them. Us old one's already have assets that earn us $1.50/quarter. If us three "old ones" also have 90 cents extra in cash, and each of us gives 50 cents of that to the "new one" then the new one gets 3($.50)=$1.50. That means that the "new one's" 4Q 2009 dividend is completely covered at inception. Even the dividend after that one (1Q 2010) is already mostly covered by that remaining 40 cents 3($.40)=$1.20. All AGNC has to do is have the new one's money generating $1.50 within the next 6 months and we are all golden. Most people don't understand how REITS and MLP's operate. There are good equity raises and bad ones. This one is good. I actually hope it really sells off on the synergy of an equity raise during a (hopefully continued) broad market pullback. I like to buy safe dividenders on the cheap so bearish markets make me happy.

      • You don't understand as you said .
        I'll try another way.
        Most other co's issue shares to raise money for ( lets say a buyout of another co).
        So that dilutes earnings per share in the short term.
        Over time if the purchase of the other co becomes accretive to earnings the pps would rise.

        In the case of co's like agnc the offering is immediatly put to work earning money at real high earnings. So why should the pps fall when there is no hit to the coming div.

        Hope that helps.

      • "Sounds like a perfect Ponzi scheme:"

        You always have Hold sentiments on Ponzi schemes?

    • r42442, right on and they still have the undistributed earnings they have been holding...I'm guessing they will pay out these funds in the Dec. divi to maintain the 1.40.

    • despeaete to shore up balance sheet. Issuing shares as last ditch effort to avoid the inevitable for a while.

 
AGNC
19.49+0.20(+1.04%)Jun 24 4:00 PMEDT