MTGE has been facing a lot of pressure from investors lately and even before the latest sell off in May to switch more of their funds into the non agency space. Based on certain comments made by management this month, I have reason to believe we could see the non agency side of MTGE be substantially higher.. perhaps has high as 50% percent. i think that... looking forward at the book value.. and the company's own projections of interest rate sensitivity are not even something we can look at to get an idea of the current sensitivity due the massive changes the company probably went through during the quarter.So I am thinking that the book of MTGE probably is about $23.60 to $24.00 but its way too soon to know.. But again, just some new comments floating around and management has clearly been hinting at higher non agency allocations in the presentations made lately. As far as the earnings yield here.. i think that MTGE will have improved ROE's going forward and I think they will wind down the agency portfolio as the year progresses. They have been very picky in the past at deploying into the non agency space. So i see leverage down significantly in Q2. For the AGNC fund... I see the leverage going higher due to the losses mark to market. I see the hedge book expanding significantly and because of that I think that the earning power of AGNC will be lower. Probably around $1.00. So a cut in AGNC's dividend to $1.00 would not be out of the question at this point starting this quarter. I see MTGE's dividend staying flat at 0.90 for this quarter, but going higher in Q3 to $1.00.
Interest rate sell off is so overblown and over done.. Treasuries and MBS are going to bounce from these levels.. at least in the short term. The dividend will give some extra support.. just see what happened to MITT's stock price after announcing. So I see MTGE @ $23.50 at least before going EX. At least $23.50. Book is $23.45 or better.. depending on non agency.
mrwizard... Tell that to the put option writers for many stocks that come crying the blues after the stock crashes lower lol. People write these hedges for income etc, and feel comfortable with the margins.. but the valuation of hedges changing rapidly with market conditions. In this case.. the value of their hedges went up really fast as treasuries sold off.
Chief, I love how everyone said QE3 was going to be bad for NLY... and now everyone says Ending QE3 is bad for NLY. MAKE UP YOUR MINDS! lol. QE3 compressed spreads and lowered your dividend.. but you know.. you guys apparently are really scared of your dividend going back up lol
Someone here made a comment before but i confirmed that they were incorrect.
PSEC had close to 31-33% institutional ownership
MTGE has 52.69%. Confirmed with Tdameritrade.
No. They do not. They have 3.5 and 4.0 paper. It's on the presentation. Also, I am very aware of mortgage rates.. I'm an active subscriber to Mortgagenewsdaily live mbs prices. I have a dashboard that shows every tick in real time.. for mbs.. and treasury.
It's moving so fast that even with hedges .. the loss to book value is more then the dividend.. its a negative return profile. I'm not even sure when that will end. The selling is so furious in MBS... At this rate - next month will be a 5% mortgage. Will MBS ever catch a break? Long mtge - and I hope they dropped the TBA's and went long Non agency in Q2.
I don't think mtge remains down today. We probably close higher. Data told us all that tapering wont start until September but maybe longer due to adp telling us June job data to be not as good. So I see it worsening in second half which means no taper this year. But time will tell.
Perfect storm? If the jobs day comes in low we get a double whammy pop for mtge. 21.70+ close 2morrow.
Probably run to 23 by our dividend declaration then pop to 23.75 or better by end of next week. We will see
Wow two is not a ponzi. Learn to find the facts before you speak. I don't own any two, but I do own a lot of mtge. two works by using leverage and hedging to protect against larger interest rate moves. It's a play on recovering housing values too, with its non agency holdings and now they even got into MSRs. Two will continue to do well for its shareholders and is attractively valued.
I want to note that MTGE is at a 3% more discount to Q1 book then AGNC. Thus MTGE is cheaper. AND MTGE's book will hold up better AGAIN in Q2 due to the nonagency. MTGE should trade at a premium to AGNC.
Hatedahft, its just beginning is my theory. Mtge may even over correct to the upside because people will sell agnc for the safety and performance of non agency. It's the same management team.. So they want to own only 1 of their stocks.. And it's going to be mtge.
Mbs Prices went up today. Interest rates lower. Book value higher. Sell agnc and buy mtge trade is the new norm, as market cap of agnc too high compared to mtge. rotation is going to be ongoing due to volume constraints. Mtge is going to pop big time is my theory based on all this support.
It's not over, I don't think. People that own agnc are selling and buying mtge. it will continue as the market cap of agnc is too big compared to mtge. it's a risk management approach, they are selling agnc because mtge does better in rising rate environment. Housing fundamentals strong. I think mtge will out perform agnc over a long period of time going forward based on quarter improved performance in mtge vs agnc. Hope this helps.
Mtge will do better fundamentally over agnc because of non agency which has had a directly opposite effect to book in correlation with the drop of agency value. Meaning... Non agency up huge. See mfa presentation.