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American Capital Agency Corp. Message Board

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  • olee2116 olee2116 Dec 10, 2012 9:45 AM Flag

    Does this remind anyone of ACAS?

    My 2 cents.

    I think management will do 1 of 2 things.

    1. Maintain dividend for this quarter, cut to .70 next quarter.
    2. Cut this quarter to 1, and maintain that as long as possible.

    I'm hoping for 1 since I have a small number of calls, but I'm being realistic.

    Core income is about .70 per share, and if you taken into consideration hedging losses the past 2 quarters, it's far lower. Comp income is nice, but I don't think management is going to cannibalize the company. They'll sell just enough to ride them over tough patches.

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    • Why not eliminate the dividend altogether? That's easily maintainable; or do as some companies do whose core earnings are declining: only pay a dividend at year-end, after they have determined full-year earnings.

      Sentiment: Buy

      • 1 Reply to alw59saw
      • yourbestfriendintheworld yourbestfriendintheworld Dec 10, 2012 10:08 AM Flag

        They eliminated the SPO (temporarily). Which means whatever UTI they have is 10-20% more concentrated than if they'd done a proper SPO already. Take any div estimate you'd have thought proper in the past, and increase it by that much.

        Management has said that consistent dividends is a goal. They will coast through slack and bank when incomes are good to keep from taking big bounces that would only create churn in the stock.

        Changing to monthly dividends (see ARR) would be more stabilizing. Annual dividends would be a frenzy for a couple of months a year, then dead money the rest.

 
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