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American Capital Agency Corp. Message Board

  • dr_klumps dr_klumps Jul 11, 2013 2:21 PM Flag

    SELL INTO STRENGTH

    This is way above book value. Bernanke's statement doesn't make sense, they will continue QE only if Unemployment is over 7%. Unemployment is dropping. 195,000 new jobs last months, 225,000 new jobs in July, and 250-275,000 new jobs in August. Hiring is accelerating, due to more part timers. Taper will happen sooner than later, fourth quarter is worst case.

    Take any strength to sell this. BV is around $20 it may be lower, so this is over book and loosing money like nuts.

    I think it's important to understand the FED's history of QE policies as it portrays to the markets today. As the FED's rhetoric has been more of a notion of "tapering" and ultimately eliminating its QE 3 program, the market has speculated the ramifications on how such an act will impact the markets in regards to overall interest rates. As such, debt instruments have rapidly declined in value including substantial drops in higher-yielding equity investments. Due to the extremely rapid rise of overall U.S. interest rates, rapid MBS price declines (across the entire secondary mortgage market) has caused substantial market-to-market / fair market value ('FMV') write-downs on assets held by the mREIT sector within the past few months.

    As a result, AGNC will sustain material MBS devaluations for the second quarter of 2013. People may argue that the market is ahead of itself in regards to the extremely rapid rise in US interest rates, but the markets themselves dictate the rules in regards to FMV under Generally Accepted Accounting Principles (GAAP).

    Note also, the hedging expenses and losses from the whipsaw. Just as soon as these guys paid record fees for hedging for rising rates, bam, treasuries are dropping. "VEGA" risk. Volatility is costing big bucks and all the expense is getting subtracted from book. Ratio's getting violated, leading to less leverage and forced selling.

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    • This is way above book value. Bernanke's statement doesn't make sense, they will continue QE only if Unemployment is over 7%. Unemployment is dropping. 195,000 new jobs last months, 225,000 new jobs in July, and 250-275,000 new jobs in August. Hiring is accelerating, due to more part timers. Taper will happen sooner than later, fourth quarter is worst case.

      Take any strength to sell this. BV is around $20 it may be lower, so this is over book and loosing money like nuts.

      I think it's important to understand the FED's history of QE policies as it portrays to the markets today. As the FED's rhetoric has been more of a notion of "tapering" and ultimately eliminating its QE 3 program, the market has speculated the ramifications on how such an act will impact the markets in regards to overall interest rates. As such, debt instruments have rapidly declined in value including substantial drops in higher-yielding equity investments. Due to the extremely rapid rise of overall U.S. interest rates, rapid MBS price declines (across the entire secondary mortgage market) has caused substantial market-to-market / fair market value ('FMV') write-downs on assets held by the mREIT sector within the past few months.

      As a result, AGNC will sustain material MBS devaluations for the second quarter of 2013. People may argue that the market is ahead of itself in regards to the extremely rapid rise in US interest rates, but the markets themselves dictate the rules in regards to FMV under Generally Accepted Accounting Principles (GAAP).

      Note also, the hedging expenses and losses from the whipsaw. Just as soon as these guys paid record fees for hedging for rising rates, bam, treasuries are dropping. "VEGA" risk. Volatility is costing big bucks and all the expense is getting subtracted from book. Ratio's getting violated, leading to less leverage and forced selling.

      Sentiment: Strong Sell

      • 1 Reply to still_ivan_bliminse
      • This is way above book value. Bernanke's statement doesn't make sense, they will continue QE only if Unemployment is over 7%. Unemployment is dropping. 195,000 new jobs last months, 225,000 new jobs in July, and 250-275,000 new jobs in August. Hiring is accelerating, due to more part timers. Taper will happen sooner than later, fourth quarter is worst case.

        Take any strength to sell this. BV is around $20 it may be lower, so this is over book and loosing money like nuts.

        I think it's important to understand the FED's history of QE policies as it portrays to the markets today. As the FED's rhetoric has been more of a notion of "tapering" and ultimately eliminating its QE 3 program, the market has speculated the ramifications on how such an act will impact the markets in regards to overall interest rates. As such, debt instruments have rapidly declined in value including substantial drops in higher-yielding equity investments. Due to the extremely rapid rise of overall U.S. interest rates, rapid MBS price declines (across the entire secondary mortgage market) has caused substantial market-to-market / fair market value ('FMV') write-downs on assets held by the mREIT sector within the past few months.

        As a result, AGNC will sustain material MBS devaluations for the second quarter of 2013. People may argue that the market is ahead of itself in regards to the extremely rapid rise in US interest rates, but the markets themselves dictate the rules in regards to FMV under Generally Accepted Accounting Principles (GAAP).

        Note also, the hedging expenses and losses from the whipsaw. Just as soon as these guys paid record fees for hedging for rising rates, bam, treasuries are dropping. "VEGA" risk. Volatility is costing big bucks and all the expense is getting subtracted from book. Ratio's getting violated, leading to less leverage and forced selling.

        Sentiment: Strong Sell

    • Just cover and stop the B.S.!!!

    • Book is in the $25s if you read seeking alpha.. The author uses a model and lays out how that model works and the details of the model and its pretty in depth. It shows the book at various levels throughout history and his model and how they add up together to make a $25+ book by Q2 end. Check it out.

    • in other words sell on weakness and sell on strength. Great.

      Sentiment: Strong Buy

    • Not time to sell yet! ...it will take 1.9 million new jobs to get to an unemployment figure of 6.5%, that's a lot of jobs! At the rate of 200,000 new jobs per month (do the math) that's MORE than a few months down the road... Also, unless you’re an insider giving up secrets, you don't have a clue what the BV currently is at; nice try with an elaborate (skewed facts) post...

      Sentiment: Hold

      • 1 Reply to sanemann
      • It is worst than expected, Credit Suisse is taking down target price by $5 and saying that isn't enough for the second quarter. I estimated $6-8 dollars down with 2.5% 10 yr. Treasuries. What I did not factor in was VEGA risk, Gamma, Convexity...... Everything hit with forced selling into no conviction bids. Very magnified losses, there was no rebound at all that Mgmt. hinted at in early June. I am saying 8-10 drop in BV very easily. They are going to have to sell to reduce leverage for duration risk. Everything hit, all at the same time. ENORMOUS LOSSES.

 
AGNC
18.88-0.13(-0.68%)May 27 4:00 PMEDT