Two Harbors Investment Corp. (TWO), a real estate investment trust,recently issued a public offering of 50 million shares at $10.44 a share to increase its liquidity. In a bid to cover over allotments, the company will also provide a 30-day option to the underwriters for purchasing an additional 7.5 million shares.The offering is expected to close on July 18, 2012.
Two Harbors raised gross proceeds of $522.0 million from the offering before underwriting discount and commissions. The company intends to utilize the proceeds generated from the transaction to purchase financial assets, residential mortgage-backed securities (RMBS) residential mortgage loans, residential real properties and for other general corporate purposes.
As of March 30, 2012, Two Harbors' cash position stood at $545.7 million. The company raised net proceeds of $691.9 million through the issuance of 73.6 million shares of common stock during the first quarter of 2012.
During the first quarter 2012, the company reported core earnings of 34 cents per share compared with 40 cents per share in the year-earlier quarter.
Two Harbors Investment Corp. is a Maryland-based corporation focused on investing, financing and managing residential mortgage-backed securities (RMBS) and mortgage loans. The company’s portfolio includes Agency RMBS and non-Agency RMBS. Agency RMBS are those whose interest and principal payments carry guarantees from federally chartered entities or government agencies while non-Agency RMBS are those that are not issued or guaranteed by such government entities.
As of March 31, 2012, the total value of the company’s portfolio was $9.4 billion, of which approximately $7.5 billion was Agency RMBS and derivatives and $1.9 billion non-Agency RMBS.
Two Harbors currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Redwood Trust Inc. (RWT) holds a Zacks #2 Rank, which implies a short-term Buy rating.
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