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American Capital Agency Corp. Message Board

  • derrillp derrillp Feb 15, 2011 1:52 PM Flag

    I'm Confused

    So,every time one of these MREIT's does an offering ALL the MREITs have to drop in price? Since when? When AGNC did their last mega offering I don't recall NLY or HTS dropping big time also. What's going on here? Is something fundamentally changingin the MREIT arena?

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    • You have 2 things working in this market right now: 1)Fear of short term rate increases based on inflation, and 2) Share supply glut based on the 75 million offering and the possibility that other REITS will follow suit. NLY beat AGNC to the punch on this one...They gobbled up a bunch of capital while it was available...I am sure that they hoped to block AGNC from another offering right now. However, the management of AGNC are outstanding and I am sure that their strategy is flexible enough to deal with this. AGNC is best of breed in this market.

    • You will note that HTS is not taking this hit today. If the market drops AGNCs price in anticipation of another offering coming, what does it do when the offering actually is announced? I haven't been riding this horse too long,so I'll ask some of the older hands. Has AGNC ever dropped before in anticipation of the offering, or did Mr. Market wait until the actual announcement?

    • No, its just that NLY is considered to be the best of the best in the MREIT sector. Long track record, stable dividends,etc.

      A lot of people would rather be in NLY than the others when the market tightens up. Just look at the volume NLY has today.

      Give it a week, the sentiment will be favorable again.

    • jackhiller Feb 15, 2011 2:23 PM Flag

      Classical, Pavlovian Conditioning, wherein animals rely not on intelligent thought, but past associations to mechanically drive behaviors such as salivation (selling).

      If your in AGNC, you are mainly in it to collect a high yield; price drops make the yield even better. Yawn.

    • It is an awful lot of shares across the industry, combined with a difficult day and likely some, whether justified or not, concerns about interest rates. This type of situation just plays on everyones concerns. Will AGNC pop tomorrow? Maybe. I am waiting for the end of the day to see the potential price. I don't see it under $29, but you ought to be thinking about buying at a good price.

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