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Dane Bowler  

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  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Whosez,

    I cannot say for certain. My guess would be that the hedges can only be adjusted upon expiry.
    May 8, 2013. 09:53 PM | Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Virtalex,

    You are correct.

    If they maintain their leverage and lose 10% of book value, it would translate to approximately a 10% reduction in sustainable earnings.
    May 8, 2013. 03:14 AM | Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Thank you Scott, I look forward to your article
    May 7, 2013. 11:07 PM | 3 Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Spok,

    I think the primary thing that made AGNC get hurt more than NLY in the first quarter was that their hedges completely failed. They were hedging interest rate changes on treasuries, which had little change, while the values of their securities changed drastically.

    Basically, they paid to protect themselves from what happened but it didn't work.

    We could compare it to a guy who pays his car insurance bill but gets in an accident of the sort that is not covered by the insurance.
    May 7, 2013. 04:37 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    tildonwood,

    In my opinion, all mREITs are dangerous at the moment due to the uncertain interest rate environment. Perhaps try a hybrid Equity REIT like Northstar Realty Finance. It still provides a great dividend, but with the added safety that comes with hard assets.
    May 7, 2013. 02:15 AM | 1 Like Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Scott,

    I don't doubt that you know more about tax accounting than I do, so I will concede this point.

    I just don't want minor things to interfere with the main point. Whether they are forced to pay a dividend or not it is not sustainable at the current level. Perhaps the tax law as you state it would make the cut occur later, but that would just make it all the more deleterious to book value.
    May 7, 2013. 02:13 AM | 1 Like Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Mike,

    Great question. I am not quite certain as to how repeatable dollar rolls are, but they strike me as very situational. Their profit margins require many factors all going right. In my opinion it is too high risk to consider as reliable income.
    May 6, 2013. 11:27 PM | Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    I was not suggesting that it will drop to $25.50. It is very common practice for investors to set up entrance points on stocks. It should not be construed as a prediction, but rather a preparation for a potential scenario.
    May 6, 2013. 08:58 PM | Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    I wasn't suggesting that it would drop to $25.50. It is a simple if-then statement about a good entrance point.
    May 6, 2013. 08:56 PM | Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Scott,

    I write exclusively about REITs and am well aware of the 90% rule. It is such a commonly known fact about REITs that I found it too tiresome a concept to mention.

    If they have another quarter like the first quarter, the tax LOSSES will wash the taxable income already stored, thus alleviating them of the obligation to pay.

    Further, the obligation to pay is not sufficient to prove sustainability. Sustainability necessitates there be a repeatable source of income of equal or greater magnitude to the dividend.

    This is not the case. It is not sustainable.
    May 6, 2013. 08:55 PM | 2 Likes Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    bryce,

    What you are referring to is comprehensive income. Yes I realize that the comprehensive income was sufficient in 2012, but it is not RELIABLE as it is not recurring. AGNC simply can't rely on the market value of their securities to always go up. Environments change.
    May 6, 2013. 06:52 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    tndrroot,

    unrealized gains do not add to cashflow. As a majority of earnings in the past have been unrealized gains, cashflows are also insufficient to support dividends.

    Also, there is a big difference between WAS sustainable and IS sustainable. The mREIT environment is changing and they can no longer count on a continual rise in market value of their securities. As we saw in the first quarter earnings report, even a slight decline in fair value of their securities can be devastating to book value and earnings.

    I hope this helps to clarify and thank you for furthering the discussion.
    May 6, 2013. 06:42 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Ed,

    Well, they should cut it now, but they could choose to keep it going at the expense of book value. In my opinion, it is likely to be cut in one of the next 2 dividend declarations.
    May 6, 2013. 06:34 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Not A Terrible Q1, But The Dividend Is Still Not Sustainable [View article]
    Pablo,

    I am referring not to the amount of taxable income, but rather the source. much of it came from 1 time events and is not repeatable. Consequently there is little evidence to believe they can maintain that much income in the future.

    This was evidenced by the first quarter report, where the taxable income was not even close to sufficient to support the dividend.

    I hope this helps to clarify.

    In terms of enlarging, it should work, but it might depend on which browser you use.
    May 6, 2013. 06:33 PM | 2 Likes Like |Link to Comment
  • Aviv REIT: Attractive Roll-up Opportunity In The Healthcare REIT Sector [View article]
    Jeb,

    I don't doubt that some patients are suffering, but they are not suffering BECAUSE of AVIV or its affiliates. I find it strange that you would have a moral objection to investing in a company that helps the sick and injured.

    To each their own.
    May 6, 2013. 09:54 AM | Likes Like |Link to Comment
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