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Invesco Mortgage Capital Inc. Message Board

  • steverosse48 steverosse48 Aug 26, 2011 1:16 PM Flag

    My viewpoint...

    after being slaughtered it seems IVR's moves are faster & further to the downside and slower & weaker to the upside, than any other mREIT. One might think that is odd given the dividend shouldn't be impacted by BV/hedge losses which do not affect cash flow nor dividend. I'm sure hoping they maintain the $0.97 dividend. So far IVR has financially destroyed me. I'm trying mightily to hold on. I over allocated and my basis is well over $20. So what are other people in my situation doing?

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    • I see there has been a few articles endorsing the virtues of owning IVR... I sure hope they know what they're saying. Today it's off more than any other mREIT

      • 1 Reply to steverosse48
      • I'm not sure how much more support or advice you could possibly get regarding your long position here, however, I will offer this: if you intend to continue to hold this, find something else to do to take you away from the ticker - going long IVR is not a minute-to-minute proposition, if you perceive it as such you will drive yourself batty.

    • Steve,I'm in the same position.I hold 1000 @ 20.19. If you hold for 6-9 months you will earn $3 in Dividends. I take mine in Cash. So, really you will be even or slightly ahead. I have also looked @ 20.00 calls out of the money thru January 2012 for .20-.30 cents. I am thinking of buying 20 contracts on any weakness. So, for $400 I could control 2000 additional shares. When it goes up those contracts will double or triple your return with alot less risk. GL

    • If you didn't sell, you haven't lost anything. It's just a number on paper. Are you a trader or
      investor? If the former and you need a write-off,
      take it. If the latter, perhaps this is an opportune time to buy some more, IF all the fundamentals have remained the same > due diligence.

    • Steve,

      You could hold your IVR, but use the upcomming dividends to lower your cost basis. This strategy will allow you to collect your dividend without paying taxes: Sell 1-day before x-div date, then buy back on x-div date. There's no guarantee that this will allow you to sell or buy back with the maximum benefit. Assuming the dividend is 80 cents or more, you will be able to knock your cost basis down bu at least 50-60 cents w/o paying taxes. I would not play games with timing; I'd buy-back on opening bell on x-div date. The safest sell may be just before market close the day before x-div. One problem with this is if IVR declares a dividend or 90 cents or more; then there may be buyers on x-div date. However, I doubt that you'd pay more than 20 cents above the previous closing price (adjusted for dividend), which is still better than paying 30% in taxes.

      Depending on how many shars you own, you may want to think about doing with with 1/3 or 1/2 of your position.

      FYI: I own only 1000 shares here. I'm far more diverse than you. Nevertheless, with a cost basis of 20.50 I plan to sell/buy all of my shares. My tax rate is 30%; why not take advantage of the wash rule? Of course, this "strategy" is contigent on where IVR is trading the day before x-div, as well as the actual dividend and the market sediment of IVR.


      Wayne

    • One thought would be to sell half your IVR and put it in CYS and then stop looking at it ever fifteen minutes. CYS is just about the opposition of IVR in every respect (much less hedging, lots of long duration mortgages, agency only etc).

      You could also sell your MVR and put in it MORT, the new Mreit ETF and, again, just forget about it and go play golf or do whatever it is you do.

    • Susan, that's what I have been saying. The drop in the market was not enough to warrant QE3. Krasting's column on zerohedge speculates that Bernanke is going full speed ahead, just as he committed to zirp for 2 more years even though he had 3 dissents. When was the last time the Fed had 3 dissents? It indicates he's willing to do almost anything because he has the votes.

      I agree with you that QE can't keep stocks up unless it is permanent and if it was permanent, it would cause a currency crisis. However, it can give stocks a lift and fighting that would cost you some money.

      We still have 4 weeks before that Fed meeting and there's much going on with the European bank issues not to mention the next unemployment report.

    • Bernanke talks and since he left the door open for Q-3 it did not sell off....I don't think he wants to do Q-3 and know he will see a lot of political opporsition to it, plus many analysts and economists are now saying that more easing will get less result than last time around....All that being said, I was lucky enough to close out part of this position on Tuesday and move it to AGNC.....my biggest concern here is how much bad hedging was done and have the IVR management discontinued it.....Clearly the market is up in anticipation of some easing at a future day...With a huge hurricane that will impede the edonomy on the east coast as well as bad unemployment numbers and downward revision of growth (or lack of it) in GDP fhs markets original reaction of a 200 point sell-off was the proper response....In summary I believe some investors will try to exit if we get another day or two to the upside....Q-3 even if it occurs which won't happen unless the market falls seriously from here, will not have the impact in did last time around..if you look at many stocks their share price is NOW LOWER than last Sept 1st when the Q-2 was announced....all that money printed with a net of about zero gain in most stocks....Good nite, Susan

    • this is no time to diversify; you must maximize your holdings in IVR as much as you dare. i do believe there will be a dividend run, and soon.

      beware of other stocks like CYS and HTS which may soon offer more shares.

      when a stock was totally trashed like this one was, you can figure the book-value-damage is past already.

    • Good question. That’s why not too many want to touch it. To answer is to admit that one is in the same boat. Just remember the company you keep; IVR has a high institutional ownership and it’s been going up, not down.

      To answer your question on a large dividend investment that has dropped wildly, I personally like to look within its class at other opportunities for the money and objectively assess where I would put new money if evaluating the investment class anew.

      I was the one guessing 0.83 in an earlier post “**Guess the dividend**”. I consider it “worst case” but at current pricing that payout would yield over 19% and thus still put IVR in class with ARR, AGNC, RSO and CYS. So you must ask yourself, which of these investments will hold or increase value best.

      The MSN MoneyCentral stockscouter rating for IVR is a 9 (out of 10). CYS is 8, AGNC is 9, ARR is 8 and RSO is a 7.

      Someone already showed in an earlier post that IVR has the lowest P/E ratio. I find that interesting since earnings are required but I give it less credit than revenue and income growth. The best of the bunch is AGNC for quarterly growth (382% earnings and 375% Revenue). The worst is RSO (-31 earnings and 127 revenue). ARR is pretty flat. IVR looks respectable (252% earnings and 227% revenue) and I like that income is growing faster than revenue.

      AGNC also has the advantage of a longer history but both are roughly doubling their annual incomes. The following links spell out bottom-line annual income and revenue growth for IVR and AGNC:
      IVR:
      http://financials.morningstar.com/income-statement/is.html?t=ivr&stocktab=finance
      AGNC:
      http://financials.morningstar.com/income-statement/is.html?t=agnc&stocktab=finance

      The remainder of the analysis will be easier once the payout is declared.

      If you’ve already sold some of your IVR at higher levels to re-enter lower, you might want to instead diversify into AGNC and possibly CYS. By owning all three your risk is only class risk and not all one company. Otherwise, hanging on to IVR does seem reasonable.

    • steve, there are many things to consider, including the general tone of the market and the economic stats that affect it and the company's fundamentals. I start from the point of view that failing to pay attention to the technicals got me in a position to have to try to mitigate a larger loss than if I had recognized the risk earlier when the technicals turned down. The mark down of the hedge positions was a fundamental issue (and one that most people couldn't foresee), but the technicals showed that the market was very concerned by it after it was announced. That being said, to me the chart looks like $19.50 is the upside and downside risk is around $15.50. Of course, technical support and resistance levels are only good if they hold. They are just guides, not final destinations.

      I'm not sure if the stock is going to run up prior to the dividend announcement because I think there is now doubt about whether the payment will be the same amount. No one can tell how the stock will react to the announcement, whether the amount stays the same or is reduced. To me, that's an additional risk that you are playing by staying in the stock at that time; if you can't accept the loss associated with that risk, then you need to buy insurance.

      You could choose to try to grind this out through a combination of small additional purchases, stop losses and covered call writing. I probably won't be doing that.

      Instead, I'll probably be looking to exit on a bounce. The goal is to stay in the game to play again, perhaps when things are clearer, both at the company and with the economy. I don't think you have to worry about the stock running away to alltime highs. good luck

 
IVR
17.28+0.09(+0.52%)Jul 22 4:04 PMEDT

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