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Fifth Street Finance Corp. Message Board

  • thewisejman thewisejman Feb 12, 2013 10:11 AM Flag

    MTGE SPO pricing

    "American Capital Mortgage Investment Corp. (Nasdaq: MTGE) ("MTGE" or the "Company") announced today that it priced a public offering of 20,000,000 shares of common stock for total expected gross proceeds of approximately $513 million before expenses. "

    That is about $ 25.65 a share for the SPO. According to CNBC, last year there are almost 250B of global SPOs and the trend continues in 2013.

    I was lucky for once since I sold all my MTGE shares yesterday before closing at 26.35 (it announced its SPO after closing) and just bought some back at 25.70 and will buy more if it drops. I am waiting for NCT to drop a bit more before I will bite because it did not drop that much and with a yield that is less than 9%, I may as well hold FFC.

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    • J,

      I initially got MTGE almost a year ago at about $22. Since then, I've enjoyed the 90 cent dividends, as well as almost $4 pps increase. If I sold at 26.35, as you did, I'd have to pay short-term capital gains. In order for me to make out on that trade, I'd need to be able to buy back at $1 less. Then I take the risk that I cannot buy something as good... Maybe is I opened another account for trading, I could play these offerings. But that's not my investment thesis.

      I know MTGE is good for its 90 cent dividend; they have plenty of undistributed income to maintain that for a number of quarters. This is a hybrid mREIT with 70% agency and 30% non-agency. I like the mgmt team and I see no reason to worry about my money with them.

      NCT: Waiting for it to drop. LOL. You'll be waiting a long time. Mortgage-servicing rights have been HUGE profits for banks, and with an improving housing market, you can bet that many people want to own NCT becasue of their exposure to excess MSRs. Remember, NCT is actually controlled by FIG, and FIG also controls NSM. Combined, they have the resources to be a big player in the mortgage servicing industry. BAC is getting out of MSR, and I anticipate more deals from BAC soon. In addition, I expect FIG-NSM-NCT to acquire mortgage servicing rights from other banks.

      After the spit-off, NCT will continue its core business as a comercial REIT. I see a lot of opportunity in that area as well. Example: Just look at how NRF has grown recently.

      For me, the beautiful thing about NCT's spin-off is that my cost basis in NCT will become near zero, and I'll still be looking at good dividends. And I also own the spin-off (NRZ ?), which has the potential to double in pps within a year or two -- plus dividends.

      No: You won't see NCT drop much, if any. Period.

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