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Apollo Residential Mortgage, Inc. Message Board

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  • poorman99 poorman99 Jul 5, 2012 9:39 PM Flag

    Why Is AMTG Less Than Book?

    I sold out of half my AGNC position today (got in back in March at 29.50) so $5 + a div, resulting in a 20# return in roughly 4 months was just to much no to skim a little.. Which now has left me looking at where I can put it back to work and this one caught my eye and left me asking the same question...

    I don't know the answer but if you look at MTGE vs AGNC, both have the same management team, leverage, very similar metrics, strategy, etc... However MTGE is currently at around 113% to book vs AGNCs 118%, so a roughly 5% discount

    I'm wondering if this discount is because the stock is smaller, somewhat more thinly traded, and a hybrid.. If so then it suggests to me that maybe other smaller, thinly traded hybrids (like AMTG) should be at a roughly 5% discount to larger agency REITs with similar leverage (like NLY which is around 106%, so seems to support the "theory" at least)..

    If true though the better question to me seems to be is 5% the right amount of discount? Regardless stock still looks and feels "cheap" here (just not sure if it's hair on fire and running around screaming cheap or not yet).. Regardless probably dip my toe in tomorrow or Monday if things head back down south on the jobs report.

13.885+0.095(+0.69%)11:41 AMEDT