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American Capital Agency Corp. Message Board

  • jsparkx jsparkx Sep 18, 2012 11:00 PM Flag

    Question from a Novice

    Been following and intrigued by AGNC for 9 months, but dont understand the ins and outs. For example:

    I have "held it during that time with purchase prices averaging 29. Did not sell today, planning on letting it take the drop, then buying again. As of today have about a $13000 capital gain, and recognize that will go down tomorrow. Questions I have are:

    (1) Does the 30 day "wash" rule apply?
    (2) What is the SPO referred to here on the message board and how is that apt to affect prices of shares?

    Not interested in getting into the complications of options etc. Just straightforward buying and selling.

    Any suggestions from the audience? Thank you.

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    • Thank you all. This is my first time to post, and I learned what an SPO is and also the shortcomings of my question about a WASH. That only applies with losses.
      My original intent was to buy and maybe sell right before ex dividend, and then maybe buy back atfer the drop. It grew wnough though that I decided to hold and get the dividend and hope for the best.

      That is behind us now. Still thinking of my original strategy, would you suggest:
      (1) Selling tomorrow, watching for drop and buying thereafter to get ready for the next rounds of dividends?
      (2) And from what you say, maybe wait until after SPO as that might be when the drops occur?

      Ideas if it were you?

      Thank you.....for being patient with a learning investor.

    • some of this stuff is right, but just to (hopefully) add clarity...SPO = "secondary public offering". They will sell a certain number of shares at a price they choose. Some smarter people can explain "acretive" (I think that's the word), but I can't...but it basically means that the SPO helps because, unlike "dilutive" in normal stocks, when new offerings are made, these are done at a price, and for the purpose of adding more investments for the company, that increases the value of the existing stock as well as the newly issued stock.
      Somebody slap me if this is nonsense, but that's how I understand it. :)

    • Not sure what wash you would have if you haven't sold your stock. Remember that distributions from a REIT are considered ordinary income.

      Regarding the SPO, this stands for a secondary public offering (stock). Basically, because REITS need to distribute 95% of their income, the way they raise money for additional growth is by offering a new stock for cash (the SPO). As more new shares exist, they dilute the immediate value of the stock, and it will go down. This is typically short lived, and then it goes back up. Thus, most of the option traders are waiting for after an SPO to buy again for the next dividend cycle.

    • 1) if you sell at a loss and buy it back within 30 days YES

      2) Secondary offerings. minimal effect if any at all

    • If you mean the 30 day wash rule on a loss from trading and then a gain from day trading, yes.
      I'm just slightly confused since your up and don't have a loss... why are your asking. ; )

      The SPO is a secondary stock offering.
      As a hypothetical example, if the stock was at 36 (don't incldue the ex date tomorrow), they could sell 50 million shares at 35.50 through brokers.
      This will drive the share price down a bit. It might even fall below 35.50 (their discounted broker price)

      So usually if your looking for a lower price entry point for trading, an SPO heps.

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