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American Capital Agency Corp. Message Board

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  • olee2116 olee2116 Nov 25, 2012 10:48 AM Flag

    i am long puts

    You are correct that the market is pricing MREITs according to core income. The risk is calculating the probability of what will happen this quarter. A cut in dividend is guaranteed in the future, core income cannot support the dividend and comp income cannot be used all at once. It is against the interest of management to reduce the size of their portfolio.

    The risk is figuring out what management will do. Will they decide to maintain the dividend for one more quarter as a Christmas bonus? Will they cut this quarter and how much will they cut?

    Div maintained. Price 35
    Div cut to 1.10 Price 33
    Div cut to .90. Price 30
    Div cut to .70. Price 28

 
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20.67+0.13(+0.63%)May 28 4:00 PMEDT