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American Capital Agency Corp. Message Board

  • b1g_brothr b1g_brothr Jun 12, 2013 4:06 PM Flag

    Anybody listen to the Morgan Stanly Conference?

    I missed it.

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    • What I think I heard-

      BV North of 26 as of last Friday
      Improved hedging for higher volatility conditions
      Ability to comfortably use more leverage if sensible return available
      Plenty of dry powder to ride out near term negatives
      Re-balancing as needed

      My conclusion - AGNC continues to be a very well run mREIT for investors

      Sentiment: Strong Buy

    • jermhoop Jun 12, 2013 4:10 PM Flag

      I just listened to it. My feel is a slight cut to dividend, probably to $1.00.

      • 2 Replies to jermhoop
      • Some Highlights
        ♦ Pay-up risk going forward is expected to be significantly lower given the absolute price differential between prepay protected securities and TBA securities
        The weighted average pay-up of our TBA eligible fixed-rate pass through portfolio, inclusive of TBAs, as of May 31, 2013 was approximately $0.63
        ♦ Agency MBS spreads have widened quarter-to-date, causing a decline in our estimate
        of book value for the quarter similar to what we experienced in Q1 (3)
        ♦ Wider MBS spreads, although negative for current period book value, should provide
        more attractive investment opportunities going forward
        ♦Our leverage has remained within a reasonable band during the quarter despite declines in book value
        Current aggregate leverage (TBAs + on balance sheet assets) is not significantly different from our first quarter average of 8.2x and has not been significantly higher at any point during the quarter
        We believe we are well positioned to increase leverage in the future if we feel the risk/return tradeoffs become more compelling
        ♦We have also taken some actions to position our asset portfolio for the current environment such as reducing exposure to both lower coupon 30-year fixed-rate MBS and higher pay-up 4% coupon specified pools (1)
        We have increased the duration of our hedges consistently as interest rates have moved higher during the second quarter
        These actions will likely create some reduction in our earnings potential and our book value upside if rates fall and/or MBS spreads tighten materially; however, we believe they give us greater flexibility to respond to future market volatility

      • Yep .... that's what it sounded like to me as well. I was out of MREIT's completely, but wet my beak just a little today ... probably just a masochist.

18.58+0.15(+0.81%)May 5 4:00 PMEDT