Bovisutor, my impression is it would be bad to sell off any major part of the portfolio RIGHT NOW.
They want to hold what they have.
1) If you want to try and maintain spread income, you would have to replace it with higher price MBS which will hurt you later on when the price of MBS drops. They don't want to buy MBS at it's peak price.
2) Or they could just not replace what they sell, reduce leverage, and reduce the spread income. Maybe they can pad their dividend for a while with the MBS gains in this case, but again this may not be a sustainable model if MBS remains at elevated prices (see point one above).
Avatar, I agree entirely and tried to tell others there is too much emphasis on core income right now. QE3 has changed the dynamics of the agency marketplace. The investments on the books of AGNC are highly appreciated and can be sold now to reduce leverage and wait for a higher rate environment.
The sell off of these highly appreciated assets would support the divy and buy back would help support the stock price.
This is not the optimal way to run an mreit but as they say you can not fight the fed but you may be able to take advantage of the fed. I see the same business model for the next several quarters to QE3 releases its grip on the agency sector. Hopefully by that time, leverage will be reduced, interest rates higher and back to the sustainable core income.
The good news is we are at book and plenty of UTI and AGNC will clearly survive QE3.