(going back to top of thread because Yahoo cuts off replies at 5 re's...jerks)
Okay. So DB was fronting shares for an "institutional seller".
But the rumor of a SPO set off hard selling at a discount. Which is illogical, because a secondary-market seller like this institution has no reason to offer a discount, unlike the issuer, who almost always offers a discount.
So whoever was selling last night was undercutting themselves and giving up the dividend in the process. That's going to leave a mark. But it wasn' t the institution; nobody with 11 mil to dump would go near the AH book without a torch and a machete'.
Volume today could have included this institution's shares.
What I worry about is that the resulting price action may have forced the company and its underwriters back to the negotiating table to recalibrate the SPO price. That could cause a delay and that could mean next week is more likely than this week, and that means the inevitable flood of antsy buyers will bid the price up and my protective Puts could turn out to be useless if the SPO goes at 34.00 or above. Bummer.
Meanwhile, DB ought to be out for blood looking for the leaker, because the overnight action took almost a dollar out of the nominal value the institution could have received if the sale had gone on peacefully.
First off, you will get the dividend.
Secondly an SPO is a Secondary Public Offering. It is how this sector usually raises capital to grow. It introduces new shares to the market, but at the same time adds to the balance sheet. If you're a long term investor it won't matter to you. If you're trying to play the market, good luck.
There is no SPO. I will be watching tonight for an announcement though. They have to do one in preparation for the spread tightening. They need to get in earlier so they can see the appreciation on the MBSs as the FED buys them, this will give them more NAV to leverage against, and I would suspect that they move into straight 30+y bond buying here soon.
Just my opinion.
No. Pointless. The turmoil of underwriters trying to move shares in the middle of the night at ex-div is silly. Their clients can't do anything until morning, and wouldn't understand why they're buying shares from the underwriters at 1.25 above the market price. They wouldn't know whether to buy at previous close or close-minus-dividend, and it'd be a customer-service nightmare. The SPO price paid to the company would be 1.25 higher and would result in far fewer shares moved, and the expense of turning around and returning the div to the traders in a month would be wasted effort. Nightmare with a chance of lawsuit.
Now, announcing tonight that it would be issued in the morning, that's possible. Also significant turmoil, as the SPO and the ex-div hit on the same opening tick, and the world goes insane with blood-lust.
Best scenario: announce the SPO tomorrow night. Separate the action by a day, give everyone a chance to change hats, avoid anyone who doesn't get the drill getting litigious over it.
And if they wouldn't mind sending me an email telling me I'm right, I'd appreciate it.
And no announcement (PR release) on AGNC's website either... Maybe someone should contact AGNC's management and let them know that they are officially SPO'ing tonight? Gary Kain is usually the last to find out these sorts of things and would be very appreciative of a heads-up ;)
Seriously, I'm thinking that this is just some sort of Jeopardy! type of post by dt37b, where he simply didn't properly phrase his SPO guess as an opinion...