WMC, MTGE and AMTG look like they are in good shape to hold the divy.
AGNC had net spread income of 78 cents plus 40 cents of dollar roll income. They had undistributed taxable income of 1.08 or more than enough to cover the upcoming divvy. Taxable income was down Q1 but in the conference call GK make it clear that was an unusual circumstance and will greatly improve in Q2.
I don't agree with most on this board that AGNC will have a divvy cut the upcoming announcement. I wouldn't be shorting this stock here or before the divvy announcement. GL
yes, you are correct. i was a little confused to see a declaration date of 4/1 when the balance sheet date was 3/31.
I think one of the reasons we see such a book value drop is that WMC booked the declared 4/1 divvy of 95 cents. Otherwise book would have been 20.37 at 3/31.
"2 The net book value per share is adjusted for the $0.95 dividend declared on April 1, 2013. 3 Adjusted for the $0.95 dividend declared on April 1, 2013."
"how the market is voting"
Yeah, but the market is a "mob" and can turn on a dime. Really the question is.... can WMC support the divvy, if it can what is a fair rate of return? Right now WMC yields 17% with plenty of taxable income to cover several quarters.
I see very little chance of a SPO. Maybe AGNC/MTGE has the market bewildered by adding TBA purchases and everyone is trying to project and trade off book value not the amount and stability of the divvy.
geezz.. ybf, i thought you would set up a charitable trust with the remainder going to the ybf college of hedge fund mangers. me, if i left it all to the wife she would move the kids home, build an amusement park in the back yard and bury me under the dance floor in the square dance barn.
When AGNC Q1 earning came out, it took down the whole Mreits space. When I look at the earning in light of the environment we are in, they don't look that bad. If you look at the spread, it was 1.18 (.78 on-balance sheet and .40 dollar roll income) v .89 cents Q4 . If you look at book, it was artificially brought down by expectations of a fed exit. Many blame TBA as a source of book weakness but TBA actually performed better than the on-balance sheet transactions. As for taxable income, the reduction was primarily due to TBA marked -to -market declines in TBA prices. Per GK "We don't want you to project the $0.50 number because there were significant influences from declines in TBA prices where the hedges were not all included. So, that part I think should be pretty clear and we do expect taxable income to be noticeably stronger in Q2."
For my money, the numbers may not look great but Q2 should be better especially with a full quarter of dollar roll income. GL
I bought the real estate primary for my family. When I am gone, I know my wife can run and operate the portfolio unlike trading stocks. Upon my demise, I will probably set the building up in a gift trust with my wife trustee and beneficiary and give each of my children a home in a 15 year residence trust with each child as co-trustees of each others residence trust. The kids will have a choice of a home I have selected for them (never to be mortgaged or rented) or 200K in the residence trust only to be invested in CDs (or home) with no ability to make distributions from the trust. I want to make sure my kids always will have a place to live and my wife income.
I have to agree with your purchase of a apartment complex. I have 96 units in 3 buildings and 11 single family homes (8 bought as foreclosures or short sale) all mortgage free. I have a management company that takes care of the property that does everything for 10% off the top. It's basically mailbox money. I have found that I have averaged about 7.5% ROI (net rents) each year with some tax advantages (depreciation) and now have seen some appreciation in the buildings.
I have found that a good management company can make all the difference in occupancy rate and collection of rents. GL
book value won't pay my light bill but undistributed earnings ((core + drop)) - divvy) will. BTW did you notice AMTG "core + drop" ... not shabby.
I don't have access to the latest article at Barrons however I read the 2-16 article. The article seems to claim that LINE overstates the cash flow by not deducting the full costs of the derivatives, in particular the put options which have been profitable to LINE. Barrons claims that all of the derivatives should be expensed on the income statement where LINE says these are assets to the company and an integral part of the corporate strategy and accounted for as an asset and depreciated.
Let me say I am not real familiar with the oil industry and its accounting practices however I did take a look at the balance sheet. A couple of observations... first of all the LINN did not purchase any put options in 2013 so the derivatives in question were put in place in 2012. Second LINN does show the derivative instruments in the asset section of the balance sheet , third LINN values those derivatives mark to market and shows an Gains (losses) on oil and natural gas derivatives on the income statement. All of this looks consistent with GAAP. The independent auditors are ERNST & YOUNG LLP.
Here's what Wells Fargo had to day about the current article:
In response, analyst Praneeth Satish of Wells Fargo said the Barron’s related sell-off is a buying opportunity, as the article "brings up old points of contention." At issue are the company's hedges, maintenance capex, and weak Q1 results.
"While clearly some of the practices that LINE is employing are on the aggressive side, we believe the Barron’s article significantly overstates the effect on LINE's DCF. We continue to believe LINE’s distribution is secure and poised to grow at a mid-single-digit annual growth rate over the next five years. Finally, we continue to believe the LNCO financing vehicle provides the company with a competitive advantage and could help both support distribution growth and improve Linn's leverage ratios over the coming years,” said Satish.Wells Fargo has a Buy rating on Linn Energy $40-44
"March 2013 $.917 Down 20% from Dec"
Not sure you are including TBA in your calculations. $8.0 million of TBA dollar roll income is included in "Unrealized gain (loss) on other derivatives and securities, net" on the income statement. Per 10-q:
"Realized and unrealized gains and losses on other derivatives and securities during the first quarter include $(4.8) million related to interest rate swaps and swaptions, $(16.8) million related to short treasury securities, $8.0 million of TBA dollar roll income and $(4.1) million of net losses on TBA mortgage positions."
spread with TBA was .79 v .84 previous Q, not too bad. taxable income .80 with UTI of .45. Divvy looks safe, book is a moving target.
"timing of the investments"
may be some truth. spread income dropped 22 cents when average net interest rate spread drops only 6 basis.
Yeah, book declined but you have to look to the reasons. Is book now back to 31 and core the issue. maybe. will agnc find income streams while spreads are compressed. I still bet GK
It may fall but is it a buy or not. AH seems to be trading off book value which may be an aberration.