Great point, and I think that is exactly what is going to happen, an SPO, if they get the new shares approved. What is interesting is that for the first time taxable income is less than net income, but clearly using the rule of thumb of 90% x 2.03, the dividend couid rise to $1.80, so no wonder undistributed taxable income rose and yes they can afford to allow more shareholders in. The spread is good as well, albeit the leverage is higher and they achieved it through a lower cost of funds (not average yield). It is very good result to say the least.
Net income rose rose from .99 to $2.66 and comprehensive income is a proxy for core. They also sold 5m shares under the drip. If they get the additional shares authorised, then they announce a share offering tomorrow, but we will have a hard time getting in on this one at the type of prices we are accustomed too getting. The book value is up to $29.06, so maybe we will be lucky to see the next secondary at $30. I am really amazed, but happy I have some MTGE as the residual bet. I will be back in here if I can.
For MTGE, we can expect more of the same, and I can only say that Doc has been saying that this company is different from the other MREITs, and I can say he is right.
If the BV is above 29, then BATESAT has shifted up a solid $2, and we shouldn't look for SPO until we're above $32.
They also have until next year to balance out the divs, so doing a SPO early just to pull down the excess isn't necessary. Much preferable, if they're going to fiddle with it, is to alter the div now and SPO after. Bringing the yield back above 18% would make shares burst into flame flowing through the underwriter's hands.
Like I said, I'd be disappointed if they did a SPO before the div. But I'd be buying along with everyone else. I've got about 10% of my port in fallow cash right now, just out of inertia, and if this is going to be where I put it, I don't have much of a problem with that.