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Invesco Mortgage Capital Inc. Message Board

  • marklibera marklibera Feb 22, 2012 6:28 PM Flag

    1st q dividend estimate

    Let's do the math: Assets= $14.2b, spread= 2.13%, expenses 9,650,000, shares= 115,395,695

    14.2b x .0213/4= 75,615,000 - 9,650,000 = 65,965,000/115395695 = $0.57

    Note this calculation is based on GAAP numbers in their earnings report and the dividend is based on taxable earnings which differs from GAAP.

    A few things to note. The spread is down from last quarter in which I think it was 2.6%. If the dividend declines again (as the calculation above show), the stock is likely to decline again. They did use the phrase "stabilized dividend" in the earnings report so they may be able to come up with the extra cents to keep it at $0.65 as there is precedent for paying more than the GAAP numbers calculate.

    It does not appear that any shares were repurchased. As I mentioned, the announcement of a share buyback is done by companies to help put a floor under a falling stock price. It does not mean that the shares were actually repurchased. The mREIT model is to issue more shares and leverage that capital up 4 -9 times, and buybacks do not add to capital, but reduce it instead.

    The news about book value increasing some 5% since year-end is good and gives the stock a little more room to increase, but I think it's going to take a larger increase in the 10 yr to get investors to jump on board. The 10 yr stuck at 2% is not going to do it.

    Finally, what is it with the announcement calendar? In December, they had a surprise dividend announcement and now today's earnings are one day early.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • 4 bps hardly a big move and anyway, the 10 yr is now back under 2%. RSI on IVR now well over 75.

    • 2.03%. Here's the chart over the last year. As you can see, the 10 yr is still trapped in a range. When it breaks out over 2.20%, then you can start to get excited.

    • right now 10 year notes are up past 2%, good for mREITS

    • PWS, you are missing my point about the European debt crisis. It's not about how it directly affects IVR via its lending relationships. Rather, it's about how European banks are deleveraging, by selling risk assets and how European money is moving into Treasuries, putting downward pressure on US interest rates. There have been several reports on how much deleveraging European banks must undergo in order to bring their capital ratios back into line. Deutsche Bank and BNP Paribas are levered some 50-1 which is even greater than Lehman and Bear were leveraged. Selling of risk assets in Europe may present some opportunities for large funds to find high yielding product there, but that means that they aren't buying here which keeps a lid on prices of risk assets.

      Technically, IVR has cleared its 200 moving average, which is good news, but it is also trading at an RSI above 70, which has been an overbought sign. Last time it traded over 70 RSI, it then went sideways for a bit, working its overbought condition through time instead of price. It is putting in a new base and can make the next move toward $18 where it broke down last August. The question is whether interest rates will increase to give it the fundamental reasons to support the technical move higher or whether it will be turned away at the $18 resistance level.

    • Good post but one error, mREITs PPS follow BV 80% and yield 20%. BV has proven time and time again to be much more indicative of PPS than yield ever was. This is what held up NLY over the slow years (price to book vs market conditions and peers).

    • waynesonnen Feb 22, 2012 7:21 PM Flag

      No surprises. We all knew that BV would recover a little. The earnings are relatively flat, as they should be since IVR really did not do much over the quarter (small portfolio rearrangement).

      What I'm looking to see is the swaps roll off and start to add back into BV, as well as free up some money to buy MBSs and increase interest income. This will take a few quarters...

      All in all it's a nice, boering report. Exactly what I like to see.

      My guess for the next dividend: 65 cents.

      • 1 Reply to waynesonnen
      • Wayne...
        I agree with the $.65 for this quarter.
        I think that the the sentence "We believe our portfolio is well constructed to emphasize dividend stability as we also continue to focus on improving our book value" was very intentionally written and that the $.65 dividend is certain for this quarter as well as the next few quarters also.

    • They may be sensitive to possible manipulation back in sept./oct. Harder for anyone to mess with them by annoucing earlier than expected....just a thought.

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