Non-agency has done poorly, they've done OK. That's about what you would expect. If housing does OK, this should trade at book or above, if not, hedges should work. These guys are pros, I don't think they're going to get incinerated ala IVR. I can live with mediocre performance at $5 below book (sounds like I'm rationalizing, doesn't it?)
Actually, I think the agency leverage is misleading. They're also shorting whole mortgages for some esoteric reason that I wouldn't be able to understand or explain, but it hedges the exposure to agency.