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American Capital Agency Corp. Message Board

call_center_tech 16 posts  |  Last Activity: Mar 2, 2014 11:32 AM Member since: Sep 7, 2012
  • Reply to

    LNCO dividend classification

    by call_center_tech Feb 28, 2014 1:56 PM
    call_center_tech call_center_tech Mar 2, 2014 11:32 AM Flag

    I stated "tax free until they either sell their stock, or cumulative distributions exceed cost basis" which is what you just repeated. Please read carefully before claiming my statement is in error.

  • Reply to

    LNCO dividend classification

    by call_center_tech Feb 28, 2014 1:56 PM
    call_center_tech call_center_tech Mar 1, 2014 12:14 PM Flag

    "Going forward" came right out of the announcement when LNCO was first created. In that announcement, mgmt stated that LNCO distributions for 2012 - 2015 would be mostly ROC and thereafter "qualified dividend". Apparently LNCO has moved up its timeline. Perhaps you need to use Google yourself. I don't claim to be a tax specialist and know all of the intricacies of MLP reporting, but I trust information from a professional CPA experienced in MLP tax preparation over message board participants.

  • Reply to

    LNCO dividend classification

    by call_center_tech Feb 28, 2014 1:56 PM
    call_center_tech call_center_tech Mar 1, 2014 11:45 AM Flag

    No, I don't understand. According to LINN announcements, LNCO was formed as a C Corp for acquisition purposes, with Berry Petroleum as its target. A "side benefit" for shareholders was simplifying tax reporting and IRA contribution, but this was not the main reason. The latest announcement that LNCO would be treating distributions in 2014 as "qualified dividends" to me is a game changer because now the tax advantage of an MLP is lost. At 2014 year end, a LNCO $2.90 distribution will be taxed at 20% plus the possible Obamacare surcharges if all of the distribution is treated as such. The 2014 LINE $2.90 will mostly go untaxed unless the stock is sold. Yes, there is a deferred tax obligation upon sale. I bought LINE and LNCO to earn a nice dividend (now monthly which is even better) for its long term income, and I can cover any capital gain with prior losses.

  • Reply to

    LNCO dividend classification

    by call_center_tech Feb 28, 2014 1:56 PM
    call_center_tech call_center_tech Mar 1, 2014 6:45 AM Flag

    Conference call declaration that going forward, dividends would be treated as "qualified dividends" is pretty straight forward. Tax advice came straight from my CPA tax accountant who prepares my returns and is very familiar with MLP structures and tax consequences, so you can take your snarky "MLP tax 101" elsewhere.

  • Reply to

    LNCO dividend classification

    by call_center_tech Feb 28, 2014 1:56 PM
    call_center_tech call_center_tech Feb 28, 2014 4:45 PM Flag

    I mistook the same statement in the earnings press release, that zero net taxable income would equate to all distributions being ROC. But during conference call, mgmt stated that 2013 was last year LNCO distributions would be ROC and that going forward, most if not all distributions would be "qualified dividends". This differs significantly from LINE, whose shareholders get distributions tax free until they either sell their stock, or cumulative distributions exceed cost basis, at which time distributions are taxed as capital gains. Even though qual. div and capital gains are currently same rate, one big difference is that cap gains can be offset by cap losses, whereas qual div. taxes must always be paid.

  • call_center_tech by call_center_tech Feb 28, 2014 1:56 PM Flag

    According to conference call, 2013 LNCO distribution will be nearly all ROC, but 2014 and forward distributions will be classified as "qualified dividends". Given this, it is highly unlike that LNCO will ever trade at a premium to LINE again, whose dividend characterization will continue to be mosting ROC and thus will have a tax advantage over LNCO. The current spread will likely continue IMHO. I am curious if this was an off shoot of the SEC informal inquiry and was one of the changes LNCO mgmt agreed to satisfy Feds. It would have been nice to know this 6 months ago, when LINE pps crossed over LNCO pps.

  • call_center_tech by call_center_tech Feb 14, 2014 8:06 AM Flag

    Does anyone know how MLPL distributions are taxed? Since most MLPLs treat distributions as Return on Capital, does MLPL do the same? Wrote IR and did not get any response.

  • call_center_tech call_center_tech Feb 11, 2014 6:47 AM Flag

    Obama opposed the Iraq war because his mentor, Rev Wright, called it a racist war, not because he had the intelligence to back up his opposition. Obama was a community organizer and later a state Senator at this time, not someone who was given frequent briefings on world events. Clintons (both Hillary and Bill), Kerry, and the majority of liberals advocated military action back in 2003. 70% of the US supported military action. Obama has proven to be a much bigger liar than Bush because he deliberately lied to get Obamacare passed and to get reelected. But liberals are blind to his deception because to them, the end always justifies the means.

  • Reply to

    February dividend fail

    by cpb38 Feb 2, 2014 8:26 PM
    call_center_tech call_center_tech Feb 5, 2014 11:27 AM Flag

    http://www.bloomberg.com/quote/MORL:US This appeared several days ago and for at least the last few months has published UBS ETN dividends prior to the UBS posting on its web site.

  • Reply to

    February dividend fail

    by cpb38 Feb 2, 2014 8:26 PM
    call_center_tech call_center_tech Feb 5, 2014 9:33 AM Flag

    .062 to be exact, but look at Feb 2013 dividend. It was .031, half of this Feb's dividend. Looks like MORL may be doing some catchup or adjustment this month. Nothing to get excited about.

  • Reply to

    Outlook or merits

    by asstsecretary Feb 1, 2014 9:42 AM
    call_center_tech call_center_tech Feb 1, 2014 12:12 PM Flag

    I also have been invested in mREITs the last few years. Took a big hit in mid 2013 with the first taper pre-announcement and learned a valuable lesson. mREIT managers (such as AGNC) were not as brilliant as many of the writers and analysts had projected. We all knew QE would end at some point in the near future, but these mgmt teams seem to be caught totally flat-footed. Fortunately I was able to bail out sooner rather than later and I started watching REM and MORL. Finally jumped in late last year and have been pleased with the performance of these index trading instruments. Looking at the chart of MORL, it did seem to outperform AGNC and NLY (top two components) while paying a great leveraged dividend. Question is still, are the mREITS on the rebound now? My investment strategy changed considerably, getting out of individual stocks and trading the indexes. I figured that I'm exchanging risk (individual stock vs index - less risk; leverage - more risk).

  • call_center_tech by call_center_tech Jan 29, 2014 10:22 AM Flag

    Many of those who opted for Cash Only and received stock will be selling today. This stock is all over the place the last few days. BV should realistically be in the mid 14s or less. WMC one of the few mREITS trading at a premium. When stock trades in the 15s, shorts will jump in for short term gain. Waiting for the dust to settle.

  • Reply to

    This is BS!

    by doncassel26 Jan 24, 2014 12:14 AM
    call_center_tech call_center_tech Jan 25, 2014 5:51 PM Flag

    The WMC press release also said this about the $16.76 Book Value estimate and the $2.35 dividend which the author of this SA article missed. "Further, the estimated book value does not reflect the dividend announced today." WMC is trading at a premium to BV.

  • Reply to

    I wish we would drop to a penny tomorrow.

    by doncassel26 Jan 21, 2014 11:16 PM
    call_center_tech call_center_tech Jan 23, 2014 11:59 AM Flag

    Don, I meant to say the dividend "per share" will always be 90% of what it would have been. Nothing in this stock dividend affects how much money WMC makes and how much total dividend it pays in the future. It simply has more shares to divide into this total dividend, thus a lesser amount per share. When WMC issued this new stock, it didn't get 10% more capital to reinvest, so the new stock adds nothing to its earning capability, it just dilutes earnings and dividends (per share).

  • Reply to

    I wish we would drop to a penny tomorrow.

    by doncassel26 Jan 21, 2014 11:16 PM
    call_center_tech call_center_tech Jan 23, 2014 10:28 AM Flag

    @Don, actually this "stock dividend" is destroying value, especially for long term investors who owned WMC in a taxable account. Here's my example. 100 shares owned before dividend valued at $10 has total value of $1000. After declaring $1 dividend paid in stock, I own 110 shares valued at $9.091 for the same total value of $1000. But now I owe the State and Feds 30% taxes this year on the dividend amount ($100), so in reality my total value is $970 after this transaction (assuming I have to sell shares to pay taxes). And all future dividends will be ~90% of what they would have been if not for the "stock dividend" because of the dilutive effect of this deal. At the end of the day, the only winner that I see is the IRS. I owned this stock in both my IRA (sold after ex-date) and taxable account (sold before ex-date).

  • Reply to

    I wish we would drop to a penny tomorrow.

    by doncassel26 Jan 21, 2014 11:16 PM
    call_center_tech call_center_tech Jan 22, 2014 11:05 AM Flag

    A stock split does not create value; it simply creates more tradeable shares. That's Gracie's point. You may feel good about having more shares in your portfolio, but if PPS and BV drop (which it has) anticipating this split, then you still own the same $dollar amount of WMC. No need to get personal. Right now WMC PPS is stagnant (even declining) for several reasons. Uncertainty about BV and dilution caused by stock split (i.e. issuing more shares to cover distribution). From all appearances, current price is premium to book. Other mREITs are experiencing a rally because most are trading at a discount to BV and there is an optimism that mREITs and rates are stabilizing.

AGNC
21.88-0.23(-1.04%)Apr 17 4:00 PMEDT

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