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American Capital Agency Corp. Message Board

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  • yourbestfriendintheworld yourbestfriendintheworld Dec 5, 2012 3:54 PM Flag

    Basically buying it sub-$30 currently after adjusting for the dividend


    1. No dividend has been announced. No dividend need be announced.

    2. You are buying it cum-dividend until the ex-dividend date. If you wait to sell until the ex-dividend date you will get the dividend in the mail a few weeks later. You are not buying it without the dividend. That's what "cum-dividend" means. You won't buy it without the dividend until the ex-dividend date. That's what "ex-dividend" means.

    I see this fallacy dominating the prices for Put options right now. People demanding those prices are making multiple assumptions. And I'm not paying those prices until the assumptions are nullified.

    Calls, on the other hand...

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    • ... are the money-makers.

      Sentiment: Buy

    • You make no sense yourbestfriend.

      The pattern for MREITs and AGNC specifically is: dividend is announced, stock runs up by the amount of the dividend, then sells down by the amount of the dividend, then comes back to its original price within 1-2 months (or sooner).

      But aside from the stock trading pattern, let me make this silly but relevant analogy:

      AGNC is currently pregnant with a $1.25 baby and is giving birth within 2-3 weeks. Buy it today you get to keep both the baby and the mommy (who produces more babies every quarter). The market values the mommy's "reproductive" (earnings) power, and you don't have to wait long for the baby this time around. This is different than buying in January, for instance, when the mommy just barely got knocked up.

      At $30, AGNC looks interesting--and that's essentially what you are paying today after adjusting for the dividend to come in just 2-3 weeks.

      Sentiment: Strong Buy

17.24-0.31(-1.77%)Feb 11 4:00 PMEST