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American Capital Agency Corp. Message Board

  • sendtodrew sendtodrew Jun 23, 2013 7:51 PM Flag

    $28.93 Net Book Value Per Common Share - Current BV estimate ~ $25.45

    Latest reported BV for the qtr by management. MBS is down by about 3% since then. At 8x leverage that is a loss of 24% to BV. Hedges should at least reduce that loss by half. So my calculation is an 8% loss to BV since last qtr.

    That is how I get $25.45. Anybody got a better calculation - please let us know. Thx!

    PS - So buying it now with the div you are getting AGNC for about 90% of BV...not bad imo.

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    • First off, AGNC is holding mostly lower yield MBS, which is down around 4.5% this quarter as of today.

      At 8x leverage that is a 36% loss in book value.

      Second, due to the convexity of the portfolio as outlined in the lastest presentation from management, the hedging has a reduced effect the more that the volatility and price of MBS changes. I would be surprised if hedging reduces the loss by more than 30%.

      So therefore, the loss in book value should be around 25%, which is around $22.

      I wouldn't buy this for $22 given the possibility for much bigger losses in the future.

    • Do you really think that the serious money is thinking about today's BV value when they have so much money in the stock that it would take them months to sell it all? They are thinking about the BV value in the future and if getting out now makes more sense than waiting until later. Evidently they have not chosen to wait until later. But they are hoping that you do chose to wait, at least until they can sell theirs. You can let the rich have your money but I choose not to.

      • 1 Reply to raybans2
      • I am planning on averaging in a position this qtr. Going to pick up more about every $1 buying a bit more today.

        In 2008 I was able to average in under book at $ only mistake was selling too soon around 27...could have gotten yrs of divs and slod higher if I had waited. My bet is that we are many years away from inverted yield curve, and that rates stabilize about here...would be nice if mngmnt could add to porfolio here with the improved spreads.

    • Scott Kennedy over at SA just published an analysis of the book value

      SA user Richbar commented this in his article:
      Using your cumulative loss this quarter of $2.13 billion to date (neglecting hedges), I calculated the current BV/share at $23.57. If in the best case hedges reduced the loss by half, the BV/share would be $26.25.
      I'm going to go with the average of around $25 share. The current price of $22.50 is a 10% discount to this.

    • Look at the last management release on BV.
      Loss whould be about the same as Q1.

19.26+0.04(+0.21%)Jul 31 4:00 PMEDT