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American Capital Mortgage Investment Corp. Message Board

  • instantwinbutton instantwinbutton Aug 24, 2013 8:38 PM Flag

    Latest Post on pairs. This is the winning strategy. Sorry for the other rambling post.

    Ok wait, i just eliminated the EARN AND ZFC because they are too small of companies.. too thinly traded. I did change things some. This actually makes more money daily too.
    I am posting this to show you a winning strategy. If you disagree with the line up.. comments are appreciated but keep in mind this has been strongly back tested and wins almost daily. I hope this helps some of you. Expecially reik reik. Please back test this yourself reik and you will definitely see what I mean. Great historical performance.. strong winning strategy throughout history.

    PAIRS:

    Long WMC, short CYS

    LONG MTGE, short MITT

    LONG CMO, short HTS

    LONG TWO, short JMI

    Long AGNC, short NLY

    LONG NYMT, Short DX

    LONG IVR, Short ARR

    Rational:

    pair 1: WMC is a better manager and makes more money than CYS. They lose less money too as rates rise. *positive dividend spread here as well*

    pair 2: MTGE has a stronger management team than MITT. MTGE is better at hedging. The dividend is 2% against you here. But that is based off current yields and is subject to change.. MITT also has lost more book value than MTGE in the Q2 declines. MTGE is the better investment in terms of price history, 5 day, 1 month, 3 month, 6 month. Clearly MTGE wins.

    Pair 3: CMO Vs HTS!! Ok. This one.. CMO is perhaps the most conservatively run mortgage reit. yes.. that is true. No one would argue otherwise. It operates in short duration ARMS which should give it a boost to its dividend soon. HTS has longer duration ARMS which are difficult to hedge and they have failed badly at hedging them. The book value is getting killed at HTS and they are being forced to delever some soon if they haven't already. In a rising rate environment you want to be in short duration ARMS.. Can HTS bounce back and start kicking CMO's butt? Only if rates drop meaningfully from here... but the bad taste of major book value losses still grip shareholder nerves and is likely to weigh on the stock.

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    • pair 4: TWO has a strong management team and has constantly delivered for shareholders. The stock price along does not tell the entire tale as there has been special dividends and a spin off of SBY. However, stock performance vs the peer group has been excellent. JMI on the other hand has poor stock performance and a terrible management team that often does secondaries which dilute shareholders.. they are small potatos and don't have the expertise to survive a higher rate environment.. ultimately i think they will go to 0. (same management team as ARR but has non agency capabilities)

      pair 5: NYMT vs DX. NYMT continually outperforms DX. Price history says it all... pull them up on a chart and click compare. Book value losses are nasty for DX last quarter. Not a fan. NYMT is better at hedging. small book loss vs DX's large one.

      Pair 6: IVR vs ARR.. I am not going to go deep into why this is a good pairing but I will say that IVR has had its mistakes but is no ARR that's for sure. Their stock has continually done better than ARR despite its 21% drop YTD.

 
MTGE
16.41+0.09(+0.55%)Jul 28 4:00 PMEDT