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American Capital Agency Corp. Message Board

  • shane_cu shane_cu Jan 27, 2012 10:33 AM Flag

    What's a good entry point?

    I have my money on the sideline waiting to jump in. I see the PPS fluctuates a lot. Any long timers here have any buy in recommendations at this point? Thanks in advance.

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    • I thought I was done accumulating AGNC till it dropped below $26 last Oct and I couldn't resist.
      The market is so volatile that for those with patience the rewards are great.
      Wait till the entire market is way, way down on bad news then buy.

    • I've been doing well going in every time the price dipsbelow $28. This stock has ranged between $27-$29 for the past few months.

    • Buy and hold, sell on Div runup, sell after Div ... it really just all depends and is a little more complicated then that, in fact, it can be show that using a combination give best overall performance. But the one part that always hold true is a good low entry point -- enough said!

    • Quite a morning. Great coffee and really good reading. Post after post.Thanks

    • yourbestfriendintheworld yourbestfriendintheworld Jan 29, 2012 12:49 PM Flag

      >>Buy after SPO and sell after div and run up... Repeat

      Just want to point out the interesting part of this.

      Most people will buy after the SPO and sell after the div runup but just before the div. I'm of the belief that most of the time the div doesn't take the full $1.40 out of the stock price, so there's an advantage to be had in collecting the div and selling on the ex-div date, losing only part of the div back to the market.

      The hitch is that the peak of the runup sometimes comes a few days before ex-div, which adds some lost opportunity. Timing that peak may be the best strategy after all, but it becomes a guessing game at that point, not a mechanical operation.

      There's a little guessing in the ex-div-date sale tactic, as there's sometimes a bounce after open, and you will of course try to catch that. Certainly you will hope to get out before a SPO hits, if mgt want to do the bang-bang.

    • "Thanks."

      You're welcome.

      "Have you used this strategy?"

      Yes. My ROI on AGNC in 2011 was significantly higher than AGNC's yield using this approach.

      "Also, does this REIT typically drop on and/or around ex div day?"

      Yes. If you would like to look at greater detail, look to the "Historical Prices" section of Yahoo's AGNC site and you will see the price movement post X-d.

      "Thanks again"

      My pleasure. Good Luck

    • What could be deemed "good entry point" I'm sure varies person to person. Under the prevailing conditions, I'm going to have to see $26 - $27 --something well below the current frenzy buying.

    • Thanks,
      Have you used this strategy?
      Also, does this REIT typically drop on and/or around ex div day?
      Thanks again

    • Buy after next X-div and don't pay over $28 per share.

      First: the dividends are taxed as ordinary income, not as quailfied 15% dividends(unless you have it in a ROTH IRA)....the point being; waiting until after the $1.40 hair cut from the stock going X-div will save you the taxes on the dividend.

      Second: It will give you more time to do more DD on AGNC; two concerns would be the SPO, but more important is "prepayments" on their portfolio of loans...we'll know more about prepayments from the earnings release.

      All things being what they are,(There is a lot of information you'll find doing more DD), I think AGNC is a good investment for a couple more years...maybe longer depending on Fed action.
      BUT I think you can buy this stock at a price lower than todays price MINUS the dividend AND "savings" on the tax bill from the next dividend payment.

      Good luck! You've found a good stock to invest in>>>>>just don't pay too much.

      PS if the share price drops below $28 before next X-div you might want to buy....depending on the news that dropped the share price.

      • 2 Replies to ezmoney8
      • Thanks to all for sharing info, it's been quite a class on REIT investing!

        A retired broker friend put AGNC on the top of his list, so I got set up, read every post and finally bought at $28.11(too high but I wanted to learn!) in aug/sept, got two divvies then sold a few days ago at $29.20. will be buying back in according to the BATESTAT plan.

        Thanks again!

      • I'm hoping for a SPO. I finally got to sell some shares for a profit that I paid too much for a few months ago. Holding money now so I can replace those shares with more at a lower price after an SPO or a price drop. Learned my lesson not to buy too high.

    • Buy and Hold !!!---it has worked for years, and according to Bernake, it will continue working until late 2014.

      • 1 Reply to intheendiwillwin
      • waynesonnen Jan 27, 2012 11:16 AM Flag

        Agreed that buy-and-hold will work here when you consider the dividends, even if cut, over the next 3-4 years.

        But the question was "what is a good entry point."

        Surely with AGNC trading over $2 from its last BV, the chances of another offering are high. And higher yet since the Fed has committed low rates through 2014.

        IMO: Wait for a better entry price. Either we see an offering, or we see a market pullback. (People seem to sell almost anything on market pullback w/o understanding that somehting like this has virtually no credit risk.)

        Alternatively, buy a little now (e.g. 1/3 desired position) and more when the opportunity arises. Personally, I'll wait...

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