stockmeister - 18.8 mm of realized gains on derivatives. See the Reconciliation of GAAP Net Income to Non-GAAP Core Earnings statement in the earnings release.
Reik - take a look at the GAAP Net Income to Non-GAAP Core Earnings statement.
They had the realized losses that stockmester mentioned but they also had realized gains of 18.8 million on their derivatives. Thus, the realized losses and gains (which both impact cash flow) result in a net gain of around 4.9 million in realized gains.
So, yes, they had the cash to cover the dividend last quarter.
Slegermark - I trade both FSC and PSEC and I've been long and short them both at times, independently but not paired up yet.
Someone (maybe it was you?) commented a while back on the AGNC board that you could trade FSC both long and short around it's cycle.
As you know, they are both monthly payors and have differently cycles as FSC is a mid-month ex and PSEC is an end of month ex. Thus, pairing them up would work well. Note that FSC has been a bit weaker vs. PSEC the last few days now that FSC has had it's ex.
The only issue as of late is that PSEC has been doing time to time SPOs. They mentioned it in their latest earnings release and 10-Q. That seems to be keeping a lid on upward price movement but as long as you are aware of it, you can still trade the swings.
Slege - regarding the puts on MITT, sometimes it is tough to get the timing right when using puts to bet the SPO. For example, say you buy the puts now but MITT holds off on a SPO until sometime next week and in the mean time the mReits run another 5% as a group. Now you are right on the SPO but still lose money on the put.
If you go short MITT and say long an AMTG and the sector runs 5% before MITT fires off the SPO, you make money.
xxavtar - MITT did common offerings in Jan 2012, Aug 2012 and Dec 2012. They also did a "from time to time" in Sept 2012 along with two different preferred offerings in 2012.
They have an open S-3 and are about 10% above their last reported book value on 3/31.
After MTGE and AGNC reported their large book drop, there was some discussion here on how to project that to WMC's book, given the similar asset holdings.
I mentioned that the MBS pricing dropped about 1% on the generics for most of what WMC held from year end to the first quarter 2013 end. We know from AGNC and MTGE that the hedges had no real impact in the first quarter.
xxavatar's post yesterday got me thinking that if you simply look at the 12/31 RMBS assets of WMC which were 5,213 billion and multiple that by the 1% drop, you get an unrealized loss of 52 million (the actual number turned out to be 54.8 million so close enough). The 52 million divided by shares outstanding is 2.16 unrealized loss per share.
If we assume that the dividend they paid out roughly matched their core earnings (which was reasonable since WMC doesn't hold back and pays out their core earnings and we knew from MTGE and AGNC that the core wasn't negatively impacted by events in the first quarter), the core and dividend offset. Thus, you could have reduced the year end book of 21.67 by the 2.16 unrealized loss per share and got 19.51 which is close to the actual of 19.42.
My mistake earlier in applying the 1% to the year end book, inappropriately applies the 1% drop to a "net" amount but that ignores the true picture that it was the FMV of just their RMBS assets that got the 1% haircut (not the other items on the balance sheet). The new method above properly takes into account the leverage (which is high for WMC).
aapl - These are just shorter term trades on relative movements. I don't think DX is going to zero and don't disagree with your assessment of DX.
On a short term basis, DX has held up better than the rest of the sector and IVR has been hit harder (chart DX, IVR and REM for the sector for the last week, for example). The trade is looking for IVR to outperform DX on a short term basis. If DX goes up by 1% and IVR goes up by 3% the trade still works.
bj- book value is one metric and it can be used to compare how one mReit is trading vs. another holding similar assets and having similar metrics. Spread, leverage, CPR, core earnings, etc. are important, too.
It also depends where the rest of the sector is trading. We just took a hit in the sector and a number of the mReits are trading at or under book now (book as last reported on 3/31). There are other times when mReits are trading around 1.15X book. Thus, it is relative.
Yeah. I had a mic installed. Look behind your furthest left screen. Sometimes I would miss trades waiting for you to post so this works better.
q45 - I'm not in WMC or MTGE yet but plan on it before the dividend runs. If I had to pick one of the two to buy right now, I'd take MTGE. Among other reasons, they are below last reported book and are not likely to do another offering this quarter.
I have IVR long to DX short. EFC long to RSO short. I'm long AMTG and just shorted MITT against it.
They botched this offering, too. CVRR was trading at 33.20ish and higher on their ex date and high 34's before the ex. They has the S-1 in place before the dividend and then filed an amended one after and this seemed to crater the stock. So, now you have around a 10% drop from that mid-33 level.
If you read the FWP they filed today, you'll see that an underwriter had to step in and buy shares yesterday to stop the free fall.
The offering is for 12mm + 1.8 mm is not for new shares but for existing shares so this is not going to cause a dilution. They have 147.6 mm outstanding shares.
I'm just watching the overall volume today and watching how it trades. We have time before the next dividend and a lot can happen between now and then so I'm not in a hurry to jump in right now but the price looks tempting.
That comment on BV recovery came from the conference call. The transcript should be available later today.
bj - book dropped from 21.67 to 19.42, a drop of 2.25.
Mgmt commented that it recovered about 25-30% on the call, but still this drop puts WMC more in line, relative to book, as other similar mReits.
Phil - Reik's messages have been consistent. Look at the mReit sector and rotate out of the relatively overpriced stocks and rotate into value. He knows his stuff and his record speaks for itself.