Here's why. Long time between now and next div. Want to see next ER before I buy; things are changing in this sector. Lots can happen between now and then; there will be more, and better, buying opportunities. There will surely be another SO in the next 2 months. There will probably be increasing long rates and talk of increasing short rates during that time. But, all said; I like AGNC; it is a well managed Mreit with a stellar yield, for now; don't know how long that will continue. If short rates go up because of economy it could seriously hurt yield. Ideally we want long rates to go up slowly for a while before short rates start to move. May get that. I like CYS for now; untill they go XDIV; they will perhaps do an SO also.
>Lots can happen between now and then;
The SPO is done. Maybe there'll be another in April or May, but the way the price is picking up it'll pay for itself.
And by the time the next div rolls around, you could be a couple of bucks ahead and trying to decide whether to sell at the end of the runup or take the div.
This thing is returning a combined 30% to people who just go long and sit on it. Major world economic disasters don't phase it. The only risk is from the FRB, whose actions are hardly unpredictable at the granularities that will hurt AGNC. They'll hold fast or waggle the rates by a quarter point or so at a time. AGNC is hedged against multi-point changes. And it actually gets paid by the rate swaps when the spread does shrink, so that's hedged.
Unless someone can point to a real risk, I can't see any reason not to continue accumulating this stuff.
Hey JR -
I like AGNC and I also like CYS........
CYS is holding their divvy @ 60 cents & the PPS is climbing sure but steady since the last offering.
On the other hand -
1) The mREIT space (IMO) is overcrowded
2) NLY & CIM both cut their divvys
3) TWO has "flat-lined" since their last offering
4) Even IVR is gaining traction
I didn't buy this offering, either. Not because I'm worried about earnings or fear another SPO before June, though I will pay attention to the Fed QE2/QE3 talk. But simply because I went in another direction this time. Other investments were calling.
I've made great money playing the AGNC cycle, and I have no doubt those that bought in this time will do well again. I may take a look at playing the options when volatility contracts near the earnings release, and maybe again when we start to move towards ex-div.
Best of luck to you guys.
Short rates are never gonna go up as long as Uncle Ben is running the show, IMHO. We could get $2000 gold and $300 oil, and short rates will remain at zero, IMHO.
(The fact that those on fixed income are getting squeezed not only on that end, but on higher food and energy prices doesn't matter (remember, food and energy don't exist in Uncle Ben's world), but that is beside the point I guess.
While I respect your opinion, I think a bigger risk is Fred and Fran reform. But, as long as a the taxpayer is willing to assume the credit risk while us mREIT investors soak down the profits of this business model, let the gravy grain roll.