The next meeting is coming up in May. Has anyone done any analyses on the Board of Directors' proposals to increase the total number of authorized shares of common stock from 300,000,000 to 600,000,000 and the total number of authorized preferred shares from 10,000,000 shares to 50,000,000 and what it could do to the share price and the dividend per share?
> PE is a very relevant measure of a company's value..
PE was invented to give brokers a switch to throw to make clients churn their accounts. PEG even moreso.
Here's a pop-quiz: When evaluating a "normal" PE, do you use the mean, the median, or the mode of PEs in the market? PE isn't a gaussian distribution, so they're different, and it makes a difference when deciding which direction force should pull the PE, if you're into that sort of hoodoo.
When evaluating a "high" PE, how high is too high? Is a 200+ PE in the Medical Laboratories & Research sector too high for that sector? for the medical industry? for publicly-traded companies? for companies with an "r" in their ticker?
All the PE tells you is what is the ratio of the price right now to the sum of the earnings line on the last 4 quarterly reports. It doesn't even have current data in both the numerator and the denominator.
"Most everyone agrees a fully valued mreit trades at 1.2 x book."
Now you're just trolling.
You would make a bad guest even on amateur hour.. PE is a very relevant measure of a company's value..
However, placing value on any mreit usually involves a multiple of bv.... Most everyone agrees a fully valued mreit trades at 1.2 x book.. But I am sure you know this seeing how self important you are...
> is there a concept that justifies a PE year after year of 100-200 with no dividend?
It's a Startup
It's a Likely Acquisition Target
Greater Fool Theory
Greatest Fools Already in the House
People see in the financials something that justifies expecting future income to pay off that present PE. In fact, it could be present income, since PE is a trailing measure, and may include completely obsolete data. But they'd have to have seen the income coming to keep the PE high for a number of years.
I'm no fan of PE as a measure of a company or its stock. It's a comparison of a commonly fluctuating number (earnings) with a commonly irrational number (market price), filtered through an unproven force (regression to the mean) as a decisionmaking criteria, further irrationalized by not recomputing the average since, oh, 1934 or so. The benchmark has been 15 my whole life, even when the average was obviously higher. The metric only has meaning in a room full of people who've self-identified as relying primarily on PE to value stocks. But in the general population there are so many other drivers of transactions that PE is just one of the sources of noise.
An industry like mREITs makes it perfectly clear that PE can be perfectly irrelevant, but it's perfectly unclear what industry it is in which PE is perfectly relevant.
And then there's this: "Past performance is no guarantee of future results."
But Ge has that respectable blue chip 3.5% dividend.
I was looking at ACAS today and the high earnings per share. I thought, "generally earnings move stock price and we invest in equities because we think the price will move up and our capital will move with it.
Why are the earnings in some sectors more valuable than the earnings in other sectors. For example AMZN vs CAT. I see a social connection in that more people resonate with retail than heavy manufacturing, but is there a concept that justifies a PE year after year of 100-200 with no dividend?
GE received a two billion dollar loan guarantee from the DOE to build a solar plant. Their CEO is Obama's "job czar". Obama loves GE which also gets subsidy money for windmills.
I just used GE as an example to explain AGNC's use of SPOs. Substitute "generic industrial manufacturing company" for GE.
Here's a two year comparison chart of GE vs AGNC...
Food for thought.
Increasing the authorization does nothing to the share price. It's not the same as issuing the shares authorized, which will occur roughly quarterly throughout the year.
Increasing the authorization by 300 million will allow the company to continue its current pattern of roughly doubling the shares out each year.
Continuing SPOs means contiuing the purchase of productive assets as interest rates rise, which will hopefully preserve share price and dividends.
They should just ask for a billion shares, but they got the stink-eye from someone with clout last year when they asked for too many. So they're requesting what seems like a reasonable number.
Dilution? The only thing being diluted is the executive's drinks from melting ice. EVERY AGNC SPO has been accretive to earnings and BV ... there is no financial dilution that matters to shareholders.
1 for 2 Stock Split Maybe? I believe that is a way that AGNC can avoid or prevent such dilution. In such a scenario, 1 share of AGNC that is right now selling for $30 would be split into 2 shares going for $15 each. What do you guys think? Think about it.
>>I sometimes wonder if this massive increase in shares will bring the AGNC price per share back to $28>>
Look to history...what did they do last May? They wanted to authorize a "massive" doubling of the outstanding shares from 150m to 300m. They did that. OK.
What was the PPS last May, right in the middle of the year of OT, HARP and SEC.? 29.20-30.37, from beginning of May to end of May.
What is the PPS now after this huge doubling of the shares? Exactly the same, and that after coming through the year of grief. So now they want to double it again. Great! That's the way they grow the business. It's worked so far, why would you think it would be different now?
I have this sneaking suspicion that at next May's mtg in 2013, they will ask that share count be raised to 1.2B shares from 600m, and folks will wonder , once again, about how the PPS will survive. You now know how to respond....history.