The entire mreit sector is in doubt.
Rates are starting to rise. The economy seems to have some green shoots. ( in the headlines anyway- I am not a believer) MBS are getting cheaper. BVs are getting hurt. I dumped several positions that I had a positive total return. I am a buyer down here but I will be more selective.
I just got back from a County Board Meeting and we examined the annual reports from each of our eighteen departments.
Every statistical line was compared with the three previous years' data. Every indication showed improving economics. Lower foreclosures, lower demand on charitable services, higher real estate transfers, more applications for permits for everything. It is a great job as one gets to look at so many aspects of the world through a county's microcosm.
I sold other profitable plays just to apprehend the potential in MTGE and Wmc this week.[I agree that AGNC is in doubt, especially short term dividend support]
I mean, we know the economy is not going in the tank. So these high dividend payers are oversold and it is a very low risk play down at these prices.
When the flock bolts for the doors, we just wait for the doorways to clear and waltz in.
We can be disgusted or delighted. It is a choice.
I am enjoying fickle human nature at this point.
Onion, looks like Capital move from Preferred today. AGNC looks to be on the move and I expect WMC and ARR to follow up like they followed down. The headline articles are turning positive and the board is packed with doom and gloom weasels. What could be better?
Sentiment: Strong Buy
I had a significant position (6-figures, significant to me at least) in ARR before I sold it in the 6.50 range and followed it daily.
A few thoughts:
1) Their recent SPO was over-reaching. It represented nearly 20% more shares than existed on the market at that time. Based on my numbers they were barely ahead of book value when they did this.
2) Their management is paid based on the size of the company, primarily. This means any SPO is going to be enormous and far more often than has been normal in the REIT space.
3) While you'd think growth via SPOs is just a part of the REIT model in this economic climate, ARR cut the dividend from twelve cents to eleven cents. Then they cut from eleven cents to ten cents. Then they cut from ten cents to nine cents. Then they cut from nine cents to eight cents. Then they cut from eight cents to seven cents and issued a share-crushing SPO. If that was painful to read, it was even more painful to experience.
The ARR management team officially broke the covenant with shareholders with the combination SPO and dividend cut at the same time. For a while their market cap went up about 18% but now it is approaching the exact same market cap it was before the SPO, resulting in a strong message to their management: make the business WORK first before you make it bigger.
AGNC recently voted on whether to enact another SPO and it was voted down. Based on AGNC's quarter, this is as it should be. Rather than worry about new money, let's worry about making sure the money we already have is properly managed. AGNC failed their shareholders and is working to fix certain things. ARR, on the other hand, views their shareholders with some sort of disdain, and is worried about getting new money and putting it to work rather than keeping a steady dividend.
If a company is broken, adding more money just makes the company bigger, but still broken.
This was my 2 cents as I dropped ARR and never looked back
As someone who owns ARR, I'd have to agree with your good observations. That's why I've started to diversify into other mREITs. ARR's management has lost the confidence of its shareholders and its not going to get it back unless it puts together a few solid quarters and no more dividend cuts. ARR's price is sending a clear signal to management. I almost think that they have to announce another buyback or have management buy a significant amount of shares at this point to instill some confidence. Any buyback will be accreditive to current shareholders but will eat into their management fees so we'll see who's best interest is represented there. Of course, if the MBS market recovers, it could bail them out.
By the way, the ARR message board has been taken over by a bunch of hack short sellers, so much so that you can't even post there anymore. What a waste!
ARR Message Board has been plauged by a score of professional Bashers for some time now. Their financial position is not bad but the feeling, rightly or wrongly, is that their Management is less than professional-grade.