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American Capital Agency Corp. Message Board

  • sbrown101750 sbrown101750 Oct 29, 2012 1:59 PM Flag

    AGNC Results

    Looks like a big part of earnings came from mark-to-market valuation of their mortgage portfolio, ala QE3. BV increase is a result of this, too. It will be interesting to see how the market will interpret the results. It looks like you can thank Ben Bernanke for most of the positive aspects of the AGNC results.

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    • Don't thank Ben. Thank management for positioning themselves perfectly to gain from Ben's QE3, as they positioned the AGNC portfolio through every twist and turn in the mortgage markets since before the financial crisis of 2008. They can't be this good forever, so enjoy it while it lasts.

    • Where is it written that *all* mREIT income must come from mortgage interest payments?

      If they lost money on their portfolio while their income stream was being QE'd by "Helicopter Ben", would that make you happy?

      Sentiment: Buy

    • I am seeing taxable income of 1.36 vs 1.86.

    • Jonk comprehensive is GAAP + OCI.
      OCI was 3.73. GAAP was .25.

      They have a pretty clear statement in their earnings to that should clear it up for you (put it below).

      "Estimated taxable income for the third quarter was $1.36 per common share, or $1.11 higher than GAAP net income per common share"

      • 1 Reply to xxavatarxx
      • ---------------------
        comprehensive is GAAP + OCI.
        OCI was 3.73. GAAP was .25.
        -------------------------

        I believe you actually GAAP is one number, it is several.

        here is what they filed with the SEC... which is what is the closest we can come to reality.

        This is their total GAAP Comprehensive income, the kind that they included false "unrealized gains and losses" which if used, they would lead to double counting gains and losses, or counting phantom gains and losses. depending on what happens the next quarter... because they are unrealized.
        -----------------------------------
        Comprehensive income per common share - basic and diluted $3.98 which compares to $1.58 and $2.44, and .99 and 1.39 for quarters in the past.
        -----------------------------------

        taking those false gains and losses out, gives:
        -----------------------------------
        Net income (loss) per common share - basic and diluted $0.25,
        -----------------------------------

    • 1.50% net interest rate spread as of September 30, 2012 , 7.0x leverage as of September 30, 2012


      Book Value way up on Mark to market Capital Gains of MBS. BV=$32.49
      But spread Income 1.5%* 7 times (leverage) = 10.5% interest income.

      Not sure how they can support Div above 10.5% going forward from here. But they do have $1.52 undistributed taxable income per common share to play with.

      Article says to buy at $31.50 - $32.00/share here. So I will buy some below or at $32/share.
      Probably a bumpy ride and they may reduce the div going forward to $.85/share per quarter which is about 10.5%.

      M-

    • ------------Looks like a big part of earnings came from mark-to-market---------------

      that's the understatement of the year.... 25 cents actual net income.... hmmmm...... they are showing large losses in selling their swaps like last quarter...

      and 79 cent spread income before losses is... well not going to look good in a few quarters.....

      and it appears that some of this spread is coming from decreasing expenses by selling off those swaps (but at real losses) so you can't even actually use the 79 cents as a precursor for future quarters... because this number was helped by selling off swaps at huge losses...

      spread decreased to 1.42% down .23. that has since deteriorated though this month quite a bit, judging from the prices of MBS and the new CPR rate. (again some of it is being supported by decreasing expenses by selling off swaps)

      this quarter report looks much worse than last quarter by a fair margin, but book value should put a floor in somewhere soon until next quarters really bad report..... we'll have to see when they actually show their assets at 10Q....

      • 5 Replies to jonkai3
      • -------------
        25 cents actual net income
        ------------

        This includes a one time charge of loss on derivative instruments. If they were removed Net Income per common share would have been $1.61 with comprehensive income of $5.36. There is no reason to believe this same charge will be on the income statement in future quarters.

        ---------------
        spread decreased to 1.42%
        ---------------

        The 1.42% is "annualized" net interest rate spread for the quarter. The net interest spread as of 9-30-2012 was 1.53%

        -------------
        new CPR rate
        --------------

        The actual CPR for the Company's portfolio during the third quarter was 9%, a decrease from 10% for the second quarter. The most recent CPR published in October 2012 for the Company's portfolio held as of September 30, 2012 was 9%.

        NLY enjoys a CPR rate of 19%.

        ---------------
        much worse than last quarter by a fair margin
        ---------------

        What I see is "59% annualized economic return on common shares" what does that say and compare to NLY 2Q of -8% ?

      • Just be realistic, where can you get 15.6 % interest on your money based on book value $32.49, Nowhere!!!

        Sentiment: Strong Buy

      • 50.38% ROI .. $1.36/sh in taxable income .. $3.08/sh increase in BV (up to $32.49) ... undistributed taxable income increased to $1.52/sh (providing long term support to dividend while QE3 plays out) .. share buyback announced to support share price ... need I go on?

        every other mreit is cutting their dividend ... agnc is the shining star in this sector ... mgmt should be applauded imo.

      • great analogy

      • oh also their normal "cheating" is going on with the spread income too... they don't report the swaption expenses in their spread income.. which is 11% of swap expenses in total,

    • The only number that matters is $1.36 taxable income, and mark-to-market has nothing to do with that. AGNC PPS will explode when the market re-opens.

 
AGNC
23.04-0.44(-1.87%)2:30 PMEDT

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