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American Capital Agency Corp. Message Board

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  • onion1273 onion1273 Apr 6, 2012 8:39 AM Flag

    The preferred AGNC-A

    being a broker/ portfolio manager its all about asset allocation/ diversification/ risk-reward. I own both the common and the preferred now. What happens if the common's divi gets crushed because of bizzare happening in the Agency MBS market.(think CIM) And yes that is possible- remember I sell MBS for a living. The PPS would go down a lot more than in your scenario. After getting left holding the bag on CIM I have a little more comfort holding the preferred.
    Think about yield at cost on CIM is now 11.5% not bad...but I originally bought in at a yield at cost of 16%
    and my position is now 27% underwater. |
    If they would have offered a preferred at 8% I would have been in a better place total return wise, liquidity wise and have a few less gray hairs
    FYI NLY has a preferred out there 7.875 coupon and that trades at a premium to $25 - small premium because it can be called in May.

    I sleep better at night getting 8%
    less risk/ less reward.
    And at 8% I yield more than 90% of the fixed income market.

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