% | $
Quotes you view appear here for quick access.

American Capital Agency Corp. Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • alw59saw alw59saw Dec 7, 2012 4:42 PM Flag

    special div

    The fallacy in your logic is that AGNC no longer has ~$1.50 in undistributed income. They have already announced (and commenced to buy) a stock buy-back valued at $500M --- almost all of the undistributed income. That stock buy-back becomes an expense against earnings at the end of the year, so that the remaining undistributed income will be near zero (and no income taxes will be owed).

    Management decided that it would be in the shareholders best interests to spend this undistributed income to buy back AGNC stock (increasing book value) rather than issuing a special dividend (which reduces book value).

    Sentiment: Buy

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • alw59saw , that's completely wrong.
      As a reit they have to distribute 90% of their taxable income and cannot spend it on a buy back.

      They will use cash on the balance sheet.
      They ended the quarter with over two billion in cash on hand.
      That will easily cover any buy back.

      The buy back will increase the undistributed taxable income just by reducing the number of shares outstanding.

    • The buyback has no effect on earnings. It reduces cash, capital and shares outstanding. It does have the effect of increasing the per share amount of undistributed income due to fewer shares outstanding.


19.44-0.04(-0.21%)Oct 8 4:00 PMEDT