There will be many more up weeks for AGNC over the next 2 months. $25 price coming. Why? Positive earnings report and book value of $26, Dividend run up... 10 year bond is in the 2.40s, (but doubt it will break 2.42. We will see) Most likely range bound though... between 2.42 and 2.66
backing up the truck.
If you are so sure rates are going up why don't you short the 10 year futures contracts? Or short some treasury bonds? Or buy some swaps? You can add hedges to your own merit positions. Like I am long 21,500 mtge shares and short 4 10 yr treasury futures. It will protect you from nav declines but not stock discount/premium #$%$.
Well you have non-agencies and agencies both up pretty good in Q2. And... non-agencies up more than agencies.. so... Book actually might be closer to $23 since spreads narrowed and non-agency is up so much. I am long 21,500 shares and 215 sept $20 call options @ 0.50/share cost.
oh lol. when i saw the headline named "WOW" i thought you were going to write about how you saved all this money by switching to geico so now you can buy more shares of agnc every month. This board has always been here for entertainment only. check out seeking alphas website and look up agnc there.
I see no reason that the stock couldn't move to $24, a slight premium to book value over the next 3 months. Earnings report should give a lift - along with analyst upgrades. This used to trade dollars per share above book. Also.. think about it this way.. as they build out the MSR platform... interest rate risk will drop because the MSR hedges a lot of rate risk.. So NAV vol drops but the returns stay high from the dividend income. Should be a winning situation for getting the stock back above book.
You would think that the spread between MTGE and AGNC would shrink.. because you can sell AGNC and buy more shares of MTGE to get a higher yield while having less rate risk.
well hatedahft, MTGE could be at an even bigger discount to book. Non-agency is outperforming agency mbs lately.. so.. maybe $22.40 to $22.80 book on MTGE not including dividend. MTGE should be able to push it's book value up... back to it's historic highs in the 24's.. especially if rates are still stuck in low vol mode and non-agency continues to do well. Yet the P/B is still really weak. Not much sense in that. When do we get back to trading at a multiple of book? 1.05x to 1.20x range. Alkkov, I don't think MTGE will run with more fed-funds risk. Being a hybrid gives you a larger spread, and i bet they keep on all the same swaps but just add MSR to give it less rate risk overall. Sure, limits the upside if rates move lower, but i think they are more focused on generating positive carry with a stable book value.
Bet u don't have the guts to step in front of this treasury bond rally. 2.47 on 10s and I went short here on bonds while staying long mtge. Every tick is $125 gain/loss.
Lesbians, gays, bisexuals and transgenders should NOT be discriminated against. This was helpful legislation. I think they should be given free therapy if they seek it too. Just in case some of them are LBGT because of an mental disturbance. I am not saying all of them are mentally disturbed.. its just.. I have personally had a number of friends who were LGBT who did finally get into therapy and found out they were not gay etc and now are married straight with kids.
And rates aren't going to Pluto here.. Even after fed hikes.. Short rates will be targeted at 2% new-neutral according to Yellen. So 4 to 4.5% 10 yr bond yield. Mreits will hedge up more and book values will likely be little changed. 5-10% declines overall? Factor in dividends and total returns will be positive STILL lol.
Have you seen the 10 yr bond? it's 2.47%. It keeps falling... it's down like 60 basis points from 7 months ago. What rising rate environment are you talking about? We are in a falling rate environment. Might even drop below 2% by the end of the year. That said, I am short the 10 year treasury at 2.475%, 4 contracts (US 10 yr futures). I also own 21,500 shares of MTGE and have 215 $20 MTGE September calls . I must warn you... That if you are short, you should consider covering until post earnings at the very least. I believe AGNC and MTGE are going to go up 15% or more over the next 3 months. Remember, these things can trade above book value very easily. Especially since the rates are coming down. I am not trying to root against you. I am simply stating the obvious. Heck, you might even make some good money shorting later this year.. but right now.. being short is a losing strategy. Keep a close eye on the 10 year bond.
Because falling interest rates MUST be bad for Mreits.... Oh and guess what market says rising rates are bad too. So I guess it's a lose-lose.
2.42 of the 10 year bond yield. I think this is the place to get short on rates. I like WMC here and I like being short the 10 year treasury bond futures. I went short the futures at 125'237 sell average, 4 contracts.
2.40% on the 10 year treasury bond yield. WOW. lol. Yields have crashed down and problem is.. the economy is not all that weak. Job growth was really good last month and I feel that the negative GDP print was already priced in. So I went short 10 year treasury futures today. 4 contracts. This is a more long term short position and based on my belief that rates will go up over the next 12 months as the market shifts it's view to fed funds. Fed funds is likely to see increases in 2015 and 2016. Low rates like 2.40 on the 10 year bond will be a thing of the past. It's like the calm before the storm. lol. Sell AGNC here or buy long dated puts at an OOM strike because now is the best opportunity to hedge up or SELL and buy cheaper.
Not bad actually. I am long 8 contracts on the 10 year treasury futures and long 21,500 shares of MTGE. I think yields go to 1.6% on the 10 year. So a complete move back to the old levels. Go figure. BIG CIRCLE.. Now it's a game of who is overhedged LOL.
Eww.. Sidelines is a bummer. And alkkov is not on the sidelines. He is making too much bank to go to the sidelines lol. He writes covered calls against positions and uses other hedging to protect when appropriate. I am not on the sidelines either. I am hedged up because i went short 4 10 year treasury futures with the 10 year yield at 2.51%. I actively trade within the bond market with a close eye on fed policy. All you need to know is that we are in the lower portion of the rate range and it's likely rates will rise over the remainder of the year and into the first quarter of next year as they try to get ahead of the curve (fed rate hikes will threaten the bond market). Strong jobs data suggests we are definitely on track for the fed to start raising rates in Q1 2015 or Q2 2015.
Only reason Mreits got #$%$ in 2013 is cuz they all bet heavily that rates would fall due to all that QE. Problem was they started taper talk only a couple months after QE started. QE caused yields to ties not fall.. Then when QE taper started and continued - yields dropped. Opposite reactions to what market players thought would happen.
In yields lower in one day. 2.47% on 10s and mtge unchanged on day. agnc outperforms again. I really hate this stock lol. Is it too much to ask that the stock price follows the bond market in both directions not just when rates go up?