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American Capital Agency Corp. Message Board

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  • stockmeister3 stockmeister3 Dec 9, 2012 9:48 PM Flag

    Does this remind anyone of ACAS?

    Uhhh no .... back in 2008 ACAS owned non-public/ non-liquid corporations and mezzanine debt. AGNC owns gov't backed mbs that is highly liquid (in fact the Fed is a big buyer of this same debt) and is trading below the book value of that same gov't guaranteed mbs.

    Of course AGNC like any stock can trade up or down based on lots of factors --- including irrational fears, but AGNC has to be viewed as a relatively safe investment as long as it is trading below book value. Also realize that - as of today - that book value is augmented by CASH equal to the accumulated interest that has been earned this qtr on the aforementioned mbs and which will be payable (in the form of a cash dividend) to owners of the stock as of this month's ex-dividend date.

    I'm predicting that mgmt will announce another $1.25 quarterly dividend this week ...

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    • Why 1.25? I don't see net interest margins covering that distribution as of Q3. Do you think the sell off in MBS has improved NIM enough to cover the $1.25? I don't think the management would pay 1.25 again just because it needs to distribute excess gains. They don't like to pay out book value thus the cuts to a 1.25 dividend back in march from 1.40.

      • 4 Replies to instantwinbutton
      • Why not 1.25?

        Summary Financial Highlights
        (In Millions, Except Per Share Data)
        ............................................................Q3 2012....... Q2 2012.....................................
        Net Interest Income........................... $ 381 ...........$ 384 ...........................................
        Total Other Income, Net of Excise Tax $(250) ...........(612)...........................................
        Total Operating Expenses................... $ (40).......... $ (36)............................................
        Net Income (Loss) Available (Attributable)
        to Common Shareholders .....................$ 83.......... $ (264)...........................................
        Basic and Diluted Earnings per
        Common Share ...................................0.25........... $(0.88) ...........................................
        Comprehensive Income per
        Common Share.................................. $3.98........... $ 1.58...........................................
        Estimated Cumulative Undistributed
        REIT Taxable Income per Share........... $1.36 ..........$ 1.61 ...........................................

        Look especially at Q2 2012. Do you see Q3 doing worse? No, it was much better(wouldn't be hard), and yet Sept had a 1.25 dividend. So if Q3 was better than Q2, why these sour prognostications of .80 dividend.? Why the comparison to ACAS who, as pointed out, had nothing to do with the same business as AGNC?

        UTI means just that ..."Undistributed" taxable income.....IOW, where did they get the 1.25 dividend from for September??

        DocReits

        Sentiment: Strong Buy

      • I suspect that taxable income inclusive of interest income will equal/exceed $1.25 ... but we won't know that for sure until early Feb when they announce earnings. Per share income may also be up somewhat due to mgmt buying shares below book as mgmt authorized a $500M buyback last qtr. Also realize that agnc had $1.52/sh in undistributed taxable income as of Sept 30 .... .

      • instantwinbutton, we'll see. I'm banking on it getting cut in Q1.

        They have plenty of flexibility if management wants to use it in the form of undistributed gains, or the gains on their existing MBS.
        And keep in mind Core hasn't been covering the dividend.
        This isn't anything new.
        But they make income else where.

      • Because management said so (back in March).

        Sentiment: Buy

 
AGNC
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