There are a few different factors at play:
1. Leverage ratio.
2. Risk Management. Interest rate risk hedges reduce yeild.
3. Portfolio composition. The ratio of ARM paper to fixed term mortgage paper. Also, depending on the specific portfolio, your pre payment risk is different.
Lastly, it matters what point paper was purchased. This last bit is managed by doing SPO's to raise capital when management thinks it makes sense to grow the book. Mind you. management does have a veted interest in growing the book as a bigger book means bigger commission, however, if they do it stupidly - they loose investor confidence and will no longer be able to do SPO's. It takes years for a reputation to be made.
A key differentiator between AGNC and NLY is the above. AGNC is a relatively new entrant to the feild, and has been more aggressive about doing SPO's than the rest. How this pans out - and how well they navigate the future - only time will tell.
Having said that - a related point is that no single company should be a place to put all your funds. Make a decision as to what part of your funds you wish to put into mREITs and then allocate that over a few good names. Choosing between players like NLY as well as aggressive upstarts like AGNC is sort of pointless. Have both and more.
I personally hold AGNC exclusively for my mREIT portfolio - but thats because I am comfortable with the risk, and currently my overall portfolio is positioned for growth.
No doubt that the "average" investor will take a hit from adverse news when it happens. Many, however, hang on with the hope that the news isn't as bad as it appears to be or that the correction that follows won't be too bad or that after such correction the stock will recover quickly --- those are the investors that get stung badly.
It takes discipline to get out immediately upon the news and take the initial hit. You can always buy back later, after the blood-letting has stopped. That's not wishful thinking; that's DISCIPLINE of investing. Some investors just can't bring themselves to take a loss, and hang on forever; that type of investor shouldn't be in the stock market (they cannot tolerate ANY risk and the stock market is a risky place to be).
"Genius" heh? What a character you are.
Also keep in mind this was in 2003. I was in Las Vegas when the news hit, this was before smartphones. If this had happened now, I could have gotten out at 7.
Instead of whining about AGNC, just use your head. Don't have more than 25% of any one stock and sell immediately on fundamental changes (cooking the books) and take your 10-15% loss.
Any company can cook it's books, a small cap company or a large "blue chip" company.
That's why you don't put 100% of your money in 1 stock. COMMON SENSE.
And you can get out of a stock if you're quick. I found out Nortel Networks was cooking it's books. I bought at 3. It was at 8 when the news hit. Then it dropped to 5. I sold at 5 and didn't look back.
Guess what it's trading at now?
Am I missing something? Looking at last quarters report for both companies, AGNC reports $28.2B in their securities asset base having an average yield of 3.39%, with a cost of funds of 0.81% for a net yield of 2.58%. NLY reports $74.75B in their securities asset base having an average yield of 3.65%, cost of funds of 1.80% for a net yield of 1.85%. What accounts for the difference in net yield is cost of funds. AGNC’s cost of funds if 1% less than NLY--HUGE difference. The real question is why is NLY’s cost of funds so much higher than AGNC?
You are one of the few posters who is thinking somewhat clearly. What you say about "cooking" the books is exactly my worry because 1)they are the outlier amongst all the more established peers like NLY and ANH etc. with a humongous 35% greater yield. 2)For this kind of business their spread, earnings and divs have held unusually steady for a remarkably long time, just like Bernie M. 3) Its a young company with only about a 2-3 year history with a very low 17% institutional ownership. 4)Isn't our greed preventing us from paying attention to all these canaries and isn't a sucker born every day?
As for getting out when the "AGNC market suddenly turns sour" you know you are indulging in wishful thinking. When the bad news hit its always too late since everyone and their sainted aunts all run for the exits and you and I are left holding the baby.