I think the most important detail to glean from the new policy is managements intent to support the stocks price when it drops below book value.. at that point it becomes accretive to book value to buy shares back and maximize shareholder returns.
"As prudent stewards of your capital, we will seek to acquire common shares only when it is meaningfully accretive to our net book value per common share thereby further enhancing shareholder value."
Also the return on average equity from comprehensive net income is off the charts at 50%, while most of the market is reading this company as a dividend play it is obvious it has used leverage in a virtual money free environment to grow the company. The policy to borrow at such low rates of interest and buy shares that are yielding a 50% return makes good sense. With all that good accounting valuation going on, the pebble in the shoe still remains that management has not hedged accurately in the second quarter 1.029 bln in losses and 460 mln in the third quarter. It seems intuitive now given the feds signal for a permanent QE3 till unemployment abates that managment would steer away from putting to much insurance money on any interest rate spikes up.
One thing is almost clear that the environment for more share dilutions would seem to be counter productive unless interest rates go up. So no market risks for share dilutions decreasing trend in losses from hedging, and favorable resale valuation on MBS in inventory all point to better fundamentals over the next six months. Plus the shrinking number of share holders leaves room for potential increases in dividend, and eps over the next 6 months.
I think the foundation is solid for a buy recommendation here.