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American Capital Agency Corp. Message Board

  • wsj1342 wsj1342 Jul 6, 2013 12:51 PM Flag

    What to do?

    Sell AGNC at a 35% loss?

    Or hold for 1 to 2 years, reinvest dividends via dollar cost averaging, hope for breakeven by 2015?

    Value of dividends will have an effect on DCA strategy - how far do you think they will decline over the next 24 months?

    Sentiment: Hold

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • There is no loss if you bought today. Each day you should look at an investment and ask is it undervalued at the CURRENT price??

      Sentiment: Strong Buy

    • You should sell it when the Fed announced their intention to raise the interest rate. It is too late now, but if you still own this stock, I think just getting it out because it may drop more, probably around $15 as its support level before it will stabilize. The drop can be caused by panic selling, dividend cut, earning decreasing and of course less public demanding since this stock becomes less attractive in high interest rate environment.
      So the choice is yours, use the money for other investments that may help you to recover the lost or leave money there and hope it will come back at your entry point. In my opinion, it will take a while to see AGNC back to its $28 - $30 level.

    • In the carry trade, if you bet wrong with leverage on where short term rates are headed, you end up like Bimini Capital, a Mortgage REIT from 10 years ago, you never recover, you end up #$%$10 stock, that is 5 and 10 cent M-REIT. Check out what happened to them, BMNM is the symbol. ARR is another one that you can short along with AGNC. Lots of money to be made while these drop as QE ends.

      If you hold this, you are throwing away $20, you may not even get $19 or 18 by Mondays end, sell early.

      • 1 Reply to dr_klumps
      • In the carry trade, if you bet wrong with leverage on where short term rates are headed, you end up like Bimini Capital, a Mortgage REIT from 10 years ago, you never recover, you end up #$%$10 stock, that is 5 and 10 cent M-REIT. Check out what happened to them, BMNM is the symbol. ARR is another one that you can short along with AGNC. Lots of money to be made while these drop as QE ends.

        If you hold this, you are throwing away $20, you may not even get $19 or 18 by Mondays end, sell early.

        Sentiment: Strong Sell

    • The answer to this is unbelievably simple. If you had never owned AGNC before would you be compelled to buy it today? I don't know that many that would. The answer is to make back the loss on another stock that is more likely to go up and then buy AGNC after interest rates have stopped increasing.

    • You don't even understand the business you invested in, all you know is they pay a dividend. They make their money on the carry trade, buying long term 30 yr MBS, 3.5%. and borrowing money short term which was under 1% a year ago. Now the 10 yr. treasury is up to 2.77% and agency MBS is 3.5%, they only have 7/10 of a percent to go before there is no profit. I have simplified what is going on, there are so many factors, such as hedging, portfolio durations, prepayments, etc. This is very simple fact, profitability has been reduced dramatically and some M-REIT's could be loosing money. I believe AGNC lost last quarter, but not from the spread. The spread is fast approaching Zero, they will have to cut the dividend substantially.

      If you know your M-REIT history, Annaly the oldest and the best did this in the last cycle, I don't see why this won't be repeated and the magnitude will be much greater because there is so much MBS and M-REIT's this time and it looks like all were caught off guard for the sharp increase in rates. I wasn't, I was waiting, too many people were on one side of the trade, low short rates, and stable long rates, till infinity. NOT ANYMORE, THE SHAKEOUT HAS STARTED.

      • 4 Replies to dr_klumps
      • Actually moron the spread in rates has widened which is good for Agnc. The problem is bond prices have declined hurting BV. But this is temporary your idiocy notwithstanding.

        Sentiment: Strong Buy

      • nickspinner@sbcglobal.net nickspinner Jul 8, 2013 4:53 PM Flag

        The spread is increasing, not decreasing. mREITS will soon be making huge profits.

        Sentiment: Strong Buy

      • You don't even understand the business you invested in, all you know is they pay a dividend. They make their money on the carry trade, buying long term 30 yr MBS, 3.5%. and borrowing money short term which was under 1% a year ago. Now the 10 yr. treasury is up to 2.77% and agency MBS is 3.5%, they only have 7/10 of a percent to go before there is no profit. I have simplified what is going on, there are so many factors, such as hedging, portfolio durations, prepayments, etc. This is very simple fact, profitability has been reduced dramatically and some M-REIT's could be loosing money. I believe AGNC lost last quarter, but not from the spread. The spread is fast approaching Zero, they will have to cut the dividend substantially.

        If you know your M-REIT history, Annaly the oldest and the best did this in the last cycle, I don't see why this won't be repeated and the magnitude will be much greater because there is so much MBS and M-REIT's this time and it looks like all were caught off guard for the sharp increase in rates. I wasn't, I was waiting, too many people were on one side of the trade, low short rates, and stable long rates, till infinity. NOT ANYMORE, THE SHAKEOUT HAS STARTED.

        Sentiment: Strong Sell

      • I do not understand why you compare 30 y MBS and 10 y Treasury to calculate income spread. mREIT finance their operations on Repo market where maturities are less than 3 month usually.
        I think the spread between MBS and Repo is going up now and that increases AGNC potential income.
        Repo rates are dependent on Fed Funds rate and will stay low until rise of Fed Funds that may not happen within 2 year.

    • The reality is....no div. Is offered for next 3 mo. At which time, i know for a fact agnc will be forced to reduce it again. last cut 18% which is greater than the div. At that time. so declining asset. why buy it at all. and in this great economy and record market, why sit. in a decling asset. when you could simply pick better investments. there are thousands that are waaaaaaay outperforming this 2 year bear...or dog....or pig. just to feed kain 35mil +++++. stupid investment. no real reason to stay. at all!!!!!

      Sentiment: Strong Sell

 
AGNC
23.51+0.12(+0.51%)Jul 23 4:00 PMEDT

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