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American Capital Agency Corp. Message Board

  • taymere_lane taymere_lane Apr 25, 2011 4:43 PM Flag

    Holee sheet! BV gain > divvy!

    BV $25.96, a $1.72 gain in BV vs 4q10!!!!!!!!!!!!!!!!!!!

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    • So why is the share price going into the tank? I bought a few hours ago at $29.04, and it is already down to $28.85!!

      • 1 Reply to bxboygene
      • I don't know, sometimes it does that between ER and divvy announcement, and sometimes the even divvy rally only goes to $29. It's been paying the same divvy and growing BV for a long time, yet it hit $24 twice in 2010. That's why I got to take a nice trip to Hawaii last winter, etc...

        Mr. Market will always be mysterious to me. Every time I get quite confident about what Mr. Market will do in the short term I end up losing money. I have sworn off trading SPY options for that reason, I have lost on them every time and I can find cheaper hobbies than wagering on Mr. Market's mood.

        What I can say is that I have preliminarily studied this Q's ER and I haven't found any hidden weaknesses. In fact I find strength in the 1Q 2011 $10M GAAP hedge m2m income that is expected to contribute to taxable EPS in 2q 2011. I am quite confident that the divvy will be $1.40.

        Although I can't tell you what Mr. Market will do I can tell you how I'll react if AGNC sells off. Now that I've seen the earnings a trip to $27 would warrant margining up a tad to buy more, and a trip to $26 would warrant using credit card cash advances to buy even more. But I'm crazy like that.

    • That's correct. The distribution is based on the taxable income and they have until they file their return to distribute those funds. That means they can distribute the 2011 earnings as late as September 2012.

      But they used a SPO in December 2010 to distribute some excess earnings (and raise capital, of course) rather than increase the dividend or pay a large excise tax.

      I posted a more detailed description of all the rules a few months ago. Anybody interested can dig that out of my message history.

    • They are not going to raise the dividend. If there's excess earnings, they will raise another offering right before ex-div...

    • Thanks for the explanations and sorry to make you repeat from last quarter. The 42 cents is a good padding, one which so far unneeded because their interest rate hedges are also very significant in managing the impact of rate changes on their spread.

      There appears to be a chance dividends will be raised. Certainly more chance of that than lowering. The combination of an increase in dividend with an increased BVPS should influence positive share price increases and set up well for a new issue at accretive levels in an increasing competitive new issue environment.

    • dderringer311@bellsouth.net dderringer311 Apr 26, 2011 1:54 AM Flag

      Correct, I forget the exact rules, someone has posted them before. From memory it's something like 1.5 years to pay out the 90%. What AGNC has done in the past is doing SPOs that increase the number of shares and the excess (undistributed cash) is used to pay the divi of the new shares. Currently there is .42/share or $55MM undistributed taxable income, this provides a nice safety net to maintain the $1.40 divi. I am very long in options and think that we're still safe.

    • But not necessarily all 90% has to be paid this quarter, just sometime over the course of the year correct? And they have some carry over already I believe.............I would be looking for the steady 1.40 again, with some saved for later in the year if needed.

    • Taymere,

      Kind of hard to get that smile off our faces, isn't it. Got to love it.

      GL2UA

      RIMBoomer

      • 1 Reply to rimboomer
      • I couldn't be happier with their performance, grinning from ear to ear. Good job holding through the April 12th bear scare, I think that's as low as we go between now and the divvy run up. I wonder if MTGE will IPO b4 ex-div. I suspect that there will not be another secondary until after the MTGE IPO. Do you think you'll buy MTGE at the IPO? I will probably wait 1-12 months or so until the excitement has died down and I've seen some results to buy in. The upcoming MTGE roadshow, featuring this Q's results and AGNC's "economic return" since inception as an example of what this management team can do, is going to fetch a high price for MTGE at the IPO. Until I've seen some results I won't know how to value it and I don't want to over pay.

    • that is a huge/great number

      up we go

 
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