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American Capital Agency Corp. Message Board

  • jrfillion jrfillion Mar 9, 2011 7:56 AM Flag

    You guys need to quit obsessing over

    these share offerings. Yes; often they allow you to buy cheaper; so I might save some cash for that but if you stay out and instead of an offering they announce a div increase which is just as likely, you will be left at the station. When AGNC does an offering it is because it makes financial sense to do it and it improves their BV and earnings/share, in the long run. There may come a day when the "market" finally get's it that they are good and the SP won't fall when one is announced.

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    • responses; it gave me some perspective and some ideas. Perhaps a good strategy is buy the bulk of you shares on a 1st. secondary but buy a few puts as a hedge, then switch the puts to calls if they do another SO before XDIV??

    • yourbestfriendintheworld yourbestfriendintheworld Mar 9, 2011 10:11 AM Flag

      I highly doubt the dividend can be raised. They pay out 90% of profits, as dictated by the law that allows them to be in the mREIT business. They're making max profit on every dollar of capital, since Fed rates can't go negative and nobody knows when mortgage rates will rise. If mortgage rates do rise, the Fed rates will follow. Leverage is a multiplier, but they're maxed-out on that (and if they aren't, why not?). So there's very little room for a dividend rise, other than fluctuations due to mis-estimating the profitt (i.e., they may have to give a few extra nickels in the last Q of the year to meet the 90% annual quota).

      SPOs will continue for as long as the company exists. The 90% payout means they have to get growth capital somewhere other than reinvestment of profits. Even if the spreads drop by half this will still be a high-yield stock, and with an aging population those are always increasing in demand.

      I say it's fine then to be focussed on the divs and SPOs, and to play them as they come. They're there to make the company and its investors money, and that money comes form people who don't pay attention to them.

    • JR, people think about these stuff because of options, they don't want to get caught buying calls, and then boom an offering happens and they lost their money. That is why the obsession

    • What are you talking about?

      I love secondaries, they are like a big clearance sale.

      I trade the stock, I don't hold and pray. And yes, I make a lot more than the dividend.

      I missed out on a $1/share profit last quarter because people said AGNC wouldn't issue another secondary the same quarter. What happened?

      Now I still made money. I bought at the first offering at 26.18 and sold, I bought some more shares when it dipped to 28.50, and I bought still more with the second offering at 28.30. Yet I could have made more money if I didn't listen to the people that said don't worry about another offering.

    • the strategy of simply investing for the dividend as opposed to trading it might be a better approach as well.

 
AGNC
21.88-0.23(-1.04%)Apr 17 4:00 PMEDT

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