The beauty of Seeking Alpha is the fact that folks can begin communicating within each and every article written, and express their points of view. As long as the comments are not confrontational or irrelevant, the entire community we have, can chime in.
That being said, there is an obvious emotional attachment to some stocks, and when any author on Seeking Alpha writes negatively about them, all hell breaks loose from time to time. Many investors even believe that authors have a bias against the stock or the shareholders.
This is utter nonsense.
The authors on SA have developed a following because we actually offer regular everyday people a peek into the way another individual investor views a stock's performance and offers his/hers opinion, hopefully for a well-balanced way that readers of both pro and con articles can decide for themselves.
In this article I am only going to show you what the finest research analyst firms think about both American Capital (AGNC) and Annaly Capital (NLY). I will not offer my opinion today and just let these analysts give you their rating.
The StarMine Method Used By Fidelity Investments
I do not develop my opinions in a vacuum. I actually read about these stocks, participate in or listen to the conference calls, read the financials reported as best as a non-expert can, and look at the world around me and the realities we face.
That does not mean I am right 100% of the time or wrong 100% of the time. It means that as the world turns, so do opinions and so do my opinions. The same is true of professional research firms. I have come to rely on Fidelity Investments to give me some food for thought as to how the "big boys" think, and then I formulate my own opinion.
Fidelity has a ranking system called ESS or "Equity Summary Scores". Please take a few minutes to read the methodology that StarMine and ESS uses.
The key takeaways would be as follows:
- A ranking of every stock on a scale of 1-10. 1 being the most bearish and 10 being the most bullish.
- The research firms used by Fidelity and StarMine have been shown to be right more than wrong, and they have a rating themselves from 1-100+. The higher the rating a research firm has, the more reliable they have been.
- The stock rating system is based on the overall view of each of these top research firms, and given a number based on the firms' recommendations. From there, an investor can actually read the reports from each firm and accumulate significantly more knowledge than by not doing anything but guessing.
- A stock will be rated if 4 or more research firms have written their opinions. Currently, more than 1500 stocks are rated.
- A new research firm will not be rated as highly as one who has a track record, even if the new firm has been right 100% of the time in the short term.
- This system has been used by Fidelity and StarMine since 2009.
How Does This Method Rank AGNC And NLY
Rather than bore you once again with my thoughts, let me put up the important charts for you to decide what is what.
This chart on AGNC shows how often the stock's rating changed in just one year. The most recent rating of 1.9 has been in place for 24 days.
This chart shows the stock's price performance over the last year. The direction has been obvious and the ratings for each duration quite accurate in the last 6 months at least. The rating is also not perfect as you can see from the bearish rankings and the divergence of the share price.
Here we have the latest rating on AGNC and which analyst said what.
Not many changes over the last year as you can see, and if anyone cares to go back and review the articles I wrote, and when, it might be interesting to see if there is any correlation.
As you can see, aside from small spurts, NLY has had a difficult year.
This is the latest rating on NLY and which analyst said what.
Combine The Ratings With The Dividend Direction
These two charts should be sufficient for both NLY and AGNC:
These facts are already known of course, but I am not giving my opinion here.
So What About The Future?
Obviously nobody can see what lies ahead. The only thing we, as investors, can do is to look at the realities surrounding us and decide whether or not they mean anything at all for the future direction of these two stocks. There is not an expert on the planet who can extrapolate anything for certain.
We simply do not know.
With the headwinds that both of these companies face, and with the Federal Reserve manipulating interest rates for who knows how long, what is YOUR decision about these stocks right now.
Are you a buyer, a holder, or a seller?
Read, Decide, Invest (or not)