>"well seasoned" issuer. I forget the definition, but it means something like the issuer has been in the market selling securities a set number of times or for a defined period of time.
The "well-known seasoned issuer" qualification has less to do with whether a company can file a shelf at all and more to do with how much less paperwork they need to file it and whether they need to get it approved or just submit it before letting the shares go out. The WKSI is on its own recognizance and informs the SEC that it's selling new shares, while everyone else has to get prior permission.
The question now is, who's giving the bigger discount, MTGE or JPM...
You are right Doc, those are just guidelines not hard fast rules, and the 'expectation' of leverage is not broken in my scenario.
First, management always has knowledge of the secondary before it is announced publicly. Knowing full-well that money is coming in, they are good to go with upping the leverage temporarily until the secondary occurs.
What might happen is instead of 90 days at 8x earnings, we get 80 days in the quarter at 8x leverage and 10 days at 12x leverage. Averaged that out over 90 days and you have 8.44x 'average' for a quarter. CPR would reduce this average # even further.
All perfectly legal.
You didn't get screwed ovicp. That type of business needs money to make money, and the best way to get it is to sell more shares. The value of MTGE goes up by the same amount that it takes in when selling shares (and then lends out).
It shouldn't come as a surprise, but the market usually over-reacts. You can expect it to happen again, over and over.
My feeling on these SPO'S, is that management is usually covering up something....They get free money w/o telling you they really need it because of some mismanaged mess they have encountered......It's always they are issuing the new shares to make acquisitions, and that's where the sins lie.....They may make an acquisition, but it won't cost nearly as much as SPO brings in.....That extra money will be used to cover a multitude of sins.....and some nice bonus money as well...Mark this post and refer to it often...
Thanks for the perspective. I have a hard time realizing that folks are fully loaded. I can't imagine assuming that risk.
I assume risk in naked options, but being fully loaded, and not selling, when an mReit is selling at this high a multiple to BV, right after authorization for new shares, is , IMO, investment suicide.
I think Eagle says traders like myself, were screwed, when we sold last week. Well, Eagle and I don't always agree, do we Eagle...;-)
The crazy part is that AGNC Longs will now still hold in the hope, beyond hope, that AGNC will not have a spo, and continue to 34 and beyond. Go for it and I wish you well. I also wish the RR player luck when he pulls the trigger on the next chamber. Same deal.
At least take some of your profits so you have enough cash or margin to buy more in the event of a spo. So , I still have a hard time with your premise, although I know, talking to Ray and others, that they are pretty fully loaded...hey love you Ray...and I know that Ray has an unlimited supply of cash always. Like Salty. He keeps his below decks...;-)
Because they were expecting a DIV increase on <90% payout ... but if pre DIV then it would eat that excess. And probably because they are already fully loaded so would like to see the higher PPS than more shares from SPO like some of us :)
<Hey Fourd, I am sorry I jumped all over you months ago.> .. no you're not :P ... actually I don't recall so no big deal... and you just saved me some time researching by providing thoes numbers -- thanks!
30 days out ... clearly some are panicing now so could still be oprotunity befor SPO :) -- we'll see.
Frankly I really want to see an AGNC SPO (or SPO also) as have may and june 31 puts and also want to own for div (sold early around 31.5. But looks like I bet the wrong MREIT for a SPO for those puts but you never know! Anyway would like to get back into MTGE also so looking forward to SPO! Again, thanks for the numbers!
For MTGE to have a spo here tells me that they DO have immediate intentions for the newly infused money. They also have approximately 1mth. until their next ex-date to allow the money to work. They may even push the ex-date back some. Since MTGE has had two huge spos this quarter, its always possible they will not have one next quarter. Maybe I may plan to hold through the dividend this quarter and sell some on the post ex rise. Maybe its really ACAS we might want to start looking even more closely at. Now they have two big moneymakers working for them, and if ACAS re-institutes a dividend, Look out! Whatcha think?
Can anyone show me any proof, either way, if MTGE and AGNC are in fact raising their leverage prior to a share offering so that the offering is actually earning money before they receive the check from the underwriters ? (or not)
For instance if the average leverage for MTGE last quarter is 8x. In the weeks before the secondary is announced they would only need to bump the leverage up to 12x to account for the 10MM new shares. I think Gary's keyboard monkeys can purchase debt faster than you think and that they purchase the debt long before they get the money to pay for it.
After the new ten million shares are issued the leverage goes back to 8x and we the readers are none the wiser because the 10q's only talk about the average leverage during the period.
So can these secondary offerings in fact be earning money before they are announced to public. You decide.
Plausible or not ?
My thoughts are that they do not announce a secondary publicly until they have already identified the billions of dollars in mortgage securities they plan to purchase with it.
So more like a title loan on your car. Let me explain, MTGE already has .5 billion in cash sitting as collateral for roughly 4 billion in loans. That is the 8x leverage I am talking about. Ramping up to 12x (or 6 billion) is only another 2 billion against the original half billion cash. No credit check needed. Could be the secret to how we are building our NAV through secondary expansion.
Anyone from Investor Relations care to comment ?
My experiance with lenders are they are tight -- you have to show the 20% befor they give the 80%. And from what I have seen from others MREITs, SPO is deployed rater quickly. So I think it's like buying a car, that is, you find the car first, make the deal, then get the fiancing vice get the loan first and then find a car if that is even possible. But I can see, given sound bussiness relationships, they could get the car with agreement of say NET in 30 (leverage up forst then get the fiancing). But perhaps only and Auditor, examining the transactions/dates could get the proof you seek. JUST my opinion...