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American Capital Agency Corp. Message Board

  • matchmenot matchmenot Jul 30, 2013 1:19 PM Flag

    ARTICLE FROM ZACH'S WITHOUT THE HOPIUM. MUST READ !!

    Amid volatility in both interest rates and mortgage spreads environment, the mortgage real estate investment trust (commonly known as mREIT) - American Capital Agency Corp. (AGNC) - reported disappointing second-quarter 2013 results with its net spread income per share of 66 cents significantly lagging the Zacks Consensus Estimate of 85 cents.

    Moreover, results compared unfavorably with the prior-quarter figure of 78 cents and the year-ago quarter’s 94 cents per share. The company’s book value suffered a considerable decline during the quarter.

    To counter the challenges, the company lowered the asset portfolio size, repositioned it to be in tandem with the rising rate environment as well as significantly increased the duration of its hedges.

    American Capital Agency reported net interest income of $414 million in the reported quarter that exceeded the prior-quarter figure of $407 million. However, adjusted net interest income came in at $309 million, well below the Zacks Consensus Estimate of $329 million and the prior quarter’s $323 million.

    Behind the Headline Numbers

    American Capital Agency reported an economic loss on common equity for the quarter of 8.2%, or 32.9% annualized. As of Jun 30, 2013, the company's net book value per common share was $25.51, down from $28.93 as of Mar 31, 2013. This was mainly due to wider spreads in the broader mortgage backed securities market compared with benchmark interest rates like the U.S. Treasury and swap rates.

    As of Jun 30, 2013, the company's investment portfolio aggregated $91.7 billion of agency securities. This included $14.5 billion of net TBA (to-be-announced) mortgage positions, at fair value. As of that date, American Capital Agency's investment portfolio comprised $90.4 billion of fixed-rate securities, $0.7 billion of adjustable-rate securities and $0.6 billion of collateralized mortgage obligations (CMOs).

    American Capital Agency’s fixed-rate mortgage assets consisted of $31.4 billion less than or equal to 15-year securities, $0.5 billion 20-year fixed-rate securities and $44.1 billion 30-year fixed-rate securities, $7.2 billion 15-year net TBA securities and $7.3 billion 30-year net TBA securities, at fair value.

    Around $70.3 billion of the company's repurchase agreements were utilized for financing acquisitions of agency securities, while $2.1 billion were used to obtain U.S. Treasury securities. The company's average leverage for the quarter was 5.9x, or 8.4x inclusive of off-balance sheet TBA financing.

    During the reported quarter, the company’s average asset yield on its agency security portfolio was 2.92% (up 12 basis points sequentially) and its average cost of funds was 1.43% (up 15 bps sequentially), resulting in an average net interest rate spread of 1.49% (a sequential decline of 3 bps).

    As of Jun 30, 2013, American Capital Agency had cash and cash equivalents of $2.9 billion, marginally above $2.8 billion at the prior-quarter end.

    Dividend Update

    On Jun 18, 2013, the company declared a second quarter dividend on its common stock of $1.05 per share, reflecting a 16% decline from the prior quarter. This was paid on Jul 26, 2013 to common stockholders of record as of Jun 28, 2013. As a matter of fact, the company paid a total of $3.7 billion in common dividends, or $26.16 per common share, since its May 2008 initial public offering.

    In Conclusion

    Amid the increasing yields on the U.S. Treasury 10-year note and apprehensions that the Fed will soon pull out its quantitative easing policies (:QE) program, mREIT stocks are continuing to lose their shine. The lower-than-expected results during the second quarter at American Capital Agency came as a disappointment. It had also reported dismal earnings in the prior quarter.

    Alongside, the stock made a dividend cut in the recent past, which was much-awaited following a substantial decline in the stock price owing to the skepticism over a rising interest rate and a negative impact on the book value. Another stock – American Capital Mortgage Investment Corp. (MTGE) – also slashed its dividend. It reduced dividend by over 11% to 80 cents from 90 cents paid earlier.

    American Capital Agency is externally managed and advised by American Capital AGNC Management, LLC, an affiliate of American Capital, Ltd. (ACAS). It currently has a Zacks Rank #5 (Strong Sell).

    Sentiment: Strong Sell

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    • Spammer boy the stock is up today. I guess people just ignored Zacks.

      They seem to also not be including the TBA roll income on the net spread.

    • Amid volatility in both interest rates and mortgage spreads environment, the mortgage real estate investment trust (commonly known as mREIT) - American Capital Agency Corp. (AGNC) - reported disappointing second-quarter 2013 results with its net spread income per share of 66 cents significantly lagging the Zacks Consensus Estimate of 85 cents.

      Moreover, results compared unfavorably with the prior-quarter figure of 78 cents and the year-ago quarter’s 94 cents per share. The company’s book value suffered a considerable decline during the quarter.

      To counter the challenges, the company lowered the asset portfolio size, repositioned it to be in tandem with the rising rate environment as well as significantly increased the duration of its hedges.

      American Capital Agency reported net interest income of $414 million in the reported quarter that exceeded the prior-quarter figure of $407 million. However, adjusted net interest income came in at $309 million, well below the Zacks Consensus Estimate of $329 million and the prior quarter’s $323 million.

      Behind the Headline Numbers

      American Capital Agency reported an economic loss on common equity for the quarter of 8.2%, or 32.9% annualized. As of Jun 30, 2013, the company's net book value per common share was $25.51, down from $28.93 as of Mar 31, 2013. This was mainly due to wider spreads in the broader mortgage backed securities market compared with benchmark interest rates like the U.S. Treasury and swap rates.

      As of Jun 30, 2013, the company's investment portfolio aggregated $91.7 billion of agency securities. This included $14.5 billion of net TBA (to-be-announced) mortgage positions, at fair value. As of that date, American Capital Agency's investment portfolio comprised $90.4 billion of fixed-rate securities, $0.7 billion of adjustable-rate securities and $0.6 billion of collateralized mortgage obligations (CMOs).

      American Capital Agency’s fixed-rate mortgage assets consisted of $31.4 billion less than or equal to 15-year securities, $0.5 billion 20-year fixed-rate securities and $44.1 billion 30-year fixed-rate securities, $7.2 billion 15-year net TBA securities and $7.3 billion 30-year net TBA securities, at fair value.

      Around $70.3 billion of the company's repurchase agreements were utilized for financing acquisitions of agency securities, while $2.1 billion were used to obtain U.S. Treasury securities. The company's average leverage for the quarter was 5.9x, or 8.4x inclusive of off-balance sheet TBA financing.

      During the reported quarter, the company’s average asset yield on its agency security portfolio was 2.92% (up 12 basis points sequentially) and its average cost of funds was 1.43% (up 15 bps sequentially), resulting in an average net interest rate spread of 1.49% (a sequential decline of 3 bps).

      As of Jun 30, 2013, American Capital Agency had cash and cash equivalents of $2.9 billion, marginally above $2.8 billion at the prior-quarter end.

      Dividend Update

      On Jun 18, 2013, the company declared a second quarter dividend on its common stock of $1.05 per share, reflecting a 16% decline from the prior quarter. This was paid on Jul 26, 2013 to common stockholders of record as of Jun 28, 2013. As a matter of fact, the company paid a total of $3.7 billion in common dividends, or $26.16 per common share, since its May 2008 initial public offering.

      In Conclusion

      Amid the increasing yields on the U.S. Treasury 10-year note and apprehensions that the Fed will soon pull out its quantitative easing policies (:QE) program, mREIT stocks are continuing to lose their shine. The lower-than-expected results during the second quarter at American Capital Agency came as a disappointment. It had also reported dismal earnings in the prior quarter.

      Alongside, the stock made a dividend cut in the recent past, which was much-awaited following a substantial decline in the stock price owing to the skepticism over a rising interest rate and a negative impact on the book value. Another stock – American Capital Mortgage Investment Corp. (MTGE) – also slashed its dividend. It reduced dividend by over 11% to 80 cents from 90 cents paid earlier.

      American Capital Agency is externally managed and advised by American Capital AGNC Management, LLC, an affiliate of American Capital, Ltd. (ACAS). It currently has a Zacks Rank #5 (Strong Sell).

      Sentiment: Strong Sell

      • 1 Reply to heres_yer_fiber
      • Amid volatility in both interest rates and mortgage spreads environment, the mortgage real estate investment trust (commonly known as mREIT) - American Capital Agency Corp. (AGNC) - reported disappointing second-quarter 2013 results with its net spread income per share of 66 cents significantly lagging the Zacks Consensus Estimate of 85 cents.

        Moreover, results compared unfavorably with the prior-quarter figure of 78 cents and the year-ago quarter’s 94 cents per share. The company’s book value suffered a considerable decline during the quarter.

        To counter the challenges, the company lowered the asset portfolio size, repositioned it to be in tandem with the rising rate environment as well as significantly increased the duration of its hedges.

        American Capital Agency reported net interest income of $414 million in the reported quarter that exceeded the prior-quarter figure of $407 million. However, adjusted net interest income came in at $309 million, well below the Zacks Consensus Estimate of $329 million and the prior quarter’s $323 million.

        Behind the Headline Numbers

        American Capital Agency reported an economic loss on common equity for the quarter of 8.2%, or 32.9% annualized. As of Jun 30, 2013, the company's net book value per common share was $25.51, down from $28.93 as of Mar 31, 2013. This was mainly due to wider spreads in the broader mortgage backed securities market compared with benchmark interest rates like the U.S. Treasury and swap rates.

        As of Jun 30, 2013, the company's investment portfolio aggregated $91.7 billion of agency securities. This included $14.5 billion of net TBA (to-be-announced) mortgage positions, at fair value. As of that date, American Capital Agency's investment portfolio comprised $90.4 billion of fixed-rate securities, $0.7 billion of adjustable-rate securities and $0.6 billion of collateralized mortgage obligations (CMOs).

        American Capital Agency’s fixed-rate mortgage assets consisted of $31.4 billion less than or equal to 15-year securities, $0.5 billion 20-year fixed-rate securities and $44.1 billion 30-year fixed-rate securities, $7.2 billion 15-year net TBA securities and $7.3 billion 30-year net TBA securities, at fair value.

        Around $70.3 billion of the company's repurchase agreements were utilized for financing acquisitions of agency securities, while $2.1 billion were used to obtain U.S. Treasury securities. The company's average leverage for the quarter was 5.9x, or 8.4x inclusive of off-balance sheet TBA financing.

        During the reported quarter, the company’s average asset yield on its agency security portfolio was 2.92% (up 12 basis points sequentially) and its average cost of funds was 1.43% (up 15 bps sequentially), resulting in an average net interest rate spread of 1.49% (a sequential decline of 3 bps).

        As of Jun 30, 2013, American Capital Agency had cash and cash equivalents of $2.9 billion, marginally above $2.8 billion at the prior-quarter end.

        Dividend Update

        On Jun 18, 2013, the company declared a second quarter dividend on its common stock of $1.05 per share, reflecting a 16% decline from the prior quarter. This was paid on Jul 26, 2013 to common stockholders of record as of Jun 28, 2013. As a matter of fact, the company paid a total of $3.7 billion in common dividends, or $26.16 per common share, since its May 2008 initial public offering.

        In Conclusion

        Amid the increasing yields on the U.S. Treasury 10-year note and apprehensions that the Fed will soon pull out its quantitative easing policies (:QE) program, mREIT stocks are continuing to lose their shine. The lower-than-expected results during the second quarter at American Capital Agency came as a disappointment. It had also reported dismal earnings in the prior quarter.

        Alongside, the stock made a dividend cut in the recent past, which was much-awaited following a substantial decline in the stock price owing to the skepticism over a rising interest rate and a negative impact on the book value. Another stock – American Capital Mortgage Investment Corp. (MTGE) – also slashed its dividend. It reduced dividend by over 11% to 80 cents from 90 cents paid earlier.

        American Capital Agency is externally managed and advised by American Capital AGNC Management, LLC, an affiliate of American Capital, Ltd. (ACAS). It currently has a Zacks Rank #5 (Strong Sell). Less
        Sentiment: Strong Sell
        Reply to Q SEZ: LOSSES $7, PROFITS ALMOST $5, LOSSES PUSHED OUT ON DERIVATIVES USING DURATION SO TO SHOW NET PROFITS by theflame_followers •Jul 30, 2013 1:13 PM

        Sentiment: Strong Sell

 
AGNC
19.58-0.06(-0.31%)Jul 25 4:00 PMEDT