American Capital Mortgage Investment Corp (MTGE) is trading lower Wednesday, after announcing a secondary offering Tuesday night. The firm, which is an mREIT that invests in agency and non-agency mortgages, as well as other mortgage related investments, priced an offering of 12 million shares Tuesday evening, while granting underwriters an option to purchase another 1,791,650 shares to cover overallotments. Investors who have followed the success of American Capital Agency (AGNC), an mREIT formed by the same company, American Capital Ltd (ACAS), have seen this cycle before. Equity offerings have been relatively frequent for AGNC, and have been an opportunity to make money every time over the last few years. It appears that MTGE is following in its predecessor's footsteps, for the benefit of investors who take advantage of the dips caused by the equity offerings.
Second chances are rare in investing. It's fairly easy to look back at history and point out investments you wish you had made, but harder to look at current opportunities and decide which investments will treat you well. Some people look to charts, others forecast economic trends, while others follow the momentum of the market. An excellent way to increase the odds of making money in the long term is to invest in companies that have experienced management with a history of success. Investors who have been in American Capital Agency Corp have seen great returns thanks to management of the company, under the leadership of President and Chief Investment Officer Gary Kain and Senior Vice President and Chief Risk Officer Peter James Federico. Both of these men hold the same titles at American Capital Mortgage.
For investors who got into AGNC early and have enjoyed the ride, and for those who missed the big run in the name and are just getting in now, American Capital Mortgage is shaping up to be a repeat performance. The dip on this equity offering, as well as the offerings that are likely to come over the next few months, should provide great opportunities to investors looking to take advantage of this incredibly high yield.
Additional disclosure: May initiate a long position in MTGE or MTGE calls in the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.