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American Capital Agency Corp. Message Board

  • roym717 roym717 May 12, 2011 4:19 PM Flag

    $31 plus by Div Date ? New Highs

    Will new highs be made this quarter?

    Historically AGNC doesn't hit 29.80 till about 3 weeks before the dividend date. Here we are at least 6 weeks out from Div date and we're already heading towards 29.90 At this momentum rate the price should carry towards and break thru $31 by the Dividend date. Just IMHO. Any thoughts?

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    • Thanks Joey. Hope you're doing great

    • Broke $30 today!
      At this momentum it should carry past $31 on or before divvy date.

      I'm currently doing a study starting 2 months prior to the dividend date for the last 2 years.
      It seems like the faster previous stock prices have been reached the higher the stock goes that quarter.
      I'm calling this "Momentum to Price Correlation" 'cause I don't know what else to call it. Has anyone noticed the same effect?
      Are there studies related to this someone can point me to?

      This quarter we broke $30 at least 30 days out from divvy date - last quarter we broke it 10 days out from divvy date.
      Seems to me that the stock breaking $31 on divvy date is a good bet.

      I'm not done with the study and any guidance is greatly appreciated.
      This only seems to work with stable high yield stocks. If we could quantify this into a formula we may be able to use it in other industries.

      Thanks for your help/ input in advance.

      • 3 Replies to roym717
      • Hey Roy,

        Interesting perspective. You will be remiss (apologies if you have already done this) if you haven't included the effects of any SPOs circa your data timing. SPOs typically "reset" the price momentum. Take a look at the effects of the December 2010 SPO; from close on 11-30-10 (pps 29.31) to close on 12-28-10 (pp 29.57). The gain was $.26. I attribute this to the SPO announced AH on 12-8-10. Although share price recovered very quickly, the momentum was destroyed. Good luck with your research.


      • The only flaw of this $31+ by Ex prediction is there is the possibility of a SPO issued between now and ex. If it happens, depending on when spo occurs, the pps before ex could not reach $31. Any objection?

      • I have been thinking of the same type of thing. Between the automatic adjustment of the PPS on the open after ex-div, and the next ex-div, the dividend has to be rebuilt into the stock. In an interest rate of zero zone this would be done in the same increments each day, with catch-ups on Mondays for the weekend. Obviously this doesn't happen, as the rebuild apparently takes place late in the quarter.

        Is this the effect of interest rates and the time value of money? Is it because the dividend is only a know quantity after declaration date, which compresses the adjustment period?
        Are there other reasons?

        However; not sure you have to understand it to model it, as the evidence is in the past behaviour.

        Looking forward to your results.


    • Yes, because one person will give his/her oinion, the whole message board will listen and make their trade accordingly. Yes

    • Why would you ask "so am I allowed to speak?"
      I never told anyone in that post to shut up. I just asked if he can point to a reason why anyone should take him seriously.

      And the reason I asked is that he seemed more like another voice in the pump and dump chorus: looking to influence with his "predictions" rather than inform. I was giving him a chance to show I misread him. He can talk trash all he wants though. Anyone can.

    • dderringer311 May 12, 2011 9:53 PM Flag

      If you would like mine..

      Posted on 3/1/11 with a closing pps of $29.44
      "I'm thinking we'll be around 29.60 by divi announcement and then 1-1.50 raise before xd "

      div announcement closed at 29.62 on 3/7/11
      xd closed at 30.67 on 3/18/11

      Also, I said many times that there wouldn't be another SPO before xd

      So am I allowed to speak please? haha

    • I've made quite a few correct prediction. Check my past messages.

      Now relax and stop acting like you know what you're talking about.

    • Also no.

      AGNC has channelled between 28 and 30 for about 6 months with only one occasion where is was over 30 for any amount of time and that was only for about 10 days.

      As long as the SPOs keep coming (and they will) I don't see the stock price straying outside the 28 to 30 range.

    • No, AGNC will be stuck in a trading range through the summer months due to several fear factors.

      Factor 1: "Get out in May and Stay away".
      Factor 2: Jitters over the pending end of QE2 and strengthening dollar.
      Factor 3: Uneasiness over food & fuel prices.
      Factor 4: Dread of interest rate hikes.
      Factor 5: Retched distrust of secondary offerings.

      • 2 Replies to porkusbella
      • Factor 1: No reason to get out now. I'll get out when the reason comes along but don't see any reason at this point.

        Factor 2: No Jitters about ending QE2 -- it can't go on ... and a strong dollar is not a bad thing. We'll go down hill with a toough climb up, but that is better the going off the cliff.

        Factor 3: lets just say uneasyness over the economy as there is far more going on then just food and fuel prices. It's already bad and can't get too much worst -- if it gets worse, we'll need the money we're making off this stock even more :)

        Factor 4: You're be able to predict short term interest rates hikes long befor they happen cuz they short term ... and they aint rising anytime soon so no jitters here. It the long term rates are tougher because alot can happen in the future and it is such a long ways off! But long term rates going up means more delta and profits.

        Factor 5: Anyone who doesn't understand MREITs has a retched distrust of secondaries, but then if they don't understand MREITs they have no bussiness being in them-- your right they should leave and not come back. But I happen to love them! In fact, my fear would be no secondaries, cuz that indicates some serious problems and not just with MREITs -- it probably means I'll have to sit on cash ... again.

      • And tsunamis. Don't forget the tsunamis and earthquakes. :)
        Oh, and you never know when the aliens will show up.

        All this fear mongering is good for the day-trading pump and dump. But since this company has a pretty controlled revenue stream (from fully guaranteed fixed incomes) and a pretty hedged costs stream, the management can control the general direction of the stock within a fairly narrow band.

        The general direction has been a steady rise up. They don't over-leverage. Given how quantitatively-drive this stock is, the psychological effects on it are mostly marginal.

        Factor 1 only means increased price for this stock. Since "sell in May" really means park your money in bonds in May. And AGNC is a juiced up bond.

        Factor 2 simply has no effect on it.

        ditto for Factor 3

        Factor 4 is more and more evident to be a none-issue. You and I both knew it was a none-issue because of the political environment long ago. But this is becoming a mainstream understanding now.

        Factor 5 is the wild card. It will all depend on how they act after May 31st. Clearly, they won't do an SPO before May 31st so as not to poison good will which might result in a "no" vote. But what are they going to do after May 31? If they don't start dilution, and continue with acreation, it will eventually come to be seen as a middle ground between open-ended and close-ended fund. If they do sell off, the stock price will become very volatile and will take years to stabilize again.

19.11+0.25(+1.33%)Oct 2 4:00 PMEDT