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Matt Priore  

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  • American Capital Agency: Context On Repurchases, And Have More Already Occurred? [View article]
    Hi MDN1,

    Thanks for the comment. A couple points-

    While 4M shares is a small amount with respect to the float, it does actually have a somewhat material impact at such deep discounts. The repurchases were made at $19.86, a 17.25% discount with respect to quarter ending BV. Those 4 million shares were on the books for $96M in equity, and they were removed for $79.44. This provides $16.56M in value to shareholders, and spreading that across the 348.8 remaining shares increases BV/share by .05/share (rounded). That isn’t a complete game changer, but with spread income for the quarter running at .60/share, this is similar to an increase in spread income by 8%, and is another legitimate way that management can provide value to shareholders.

    While I certainly agree that management's goals are not perfectly aligned with investors, this sort of fee schedule is fairly standard industry wide with respect to closed end funds so it’s hard to envision it changing. This consideration simply forces investors to assess the commitment level of the management team to respecting their responsibility to shareholders - when we see such staunch oppositions to repurchases from some managers, it calls into question their objectives in running their funds and we become more hesitant to throw money over the wall. When AGNC signals that it is cutting 1M in annual fees to provide .05/share to investors, that signals (to me at least) that management is running the fund for the shareholders and that the incentive divergence is a minimal concern for AGNC when compared to other companies in the same space.
    Aug 11, 2015. 12:31 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Context On Repurchases, And Have More Already Occurred? [View article]
    Hi user27205633,

    I'm happy the content was helpful, thanks for the comment!
    Aug 10, 2015. 03:38 PM | 2 Likes Like |Link to Comment
  • American Capital Agency: Context On Repurchases, And Have More Already Occurred? [View article]
    Hi Bruce,

    I am very glad you enjoyed the article, thanks very much for the comment!
    Aug 10, 2015. 03:31 PM | Likes Like |Link to Comment
  • American Capital Agency: What We Are Watching For In The Q1 Report - The Return Of Swaptions? [View article]
    Hi Rob,

    Not exactly - swap movement relative to MBS doesn't affect the spread. The spread only relates the borrowing interest rate for AGNC (short term rates) to the MBS assets (longer term rates). Having to buy move expensive forms of hedges will slightly decrease the spread since some of the costs are factored into the interest expense, however the price movement of those hedges directly impact it.

    While hedges such as swaps generally do mimic agency MBS rates, there is no explicit need for the two to be in sync / short term asymmetry won't necessarily correct. Swap performance relative to MBS may in some cases signal a 'buy MBA and leverage up' scenario but that is entirely dependent on what management believes is driving the mismatch.
    Apr 27, 2015. 02:39 PM | Likes Like |Link to Comment
  • American Capital Agency: What We Are Watching For In The Q1 Report - The Return Of Swaptions? [View article]
    Hi goochsj,

    Thank you for the praise, glad you liked it!
    Apr 27, 2015. 11:20 AM | Likes Like |Link to Comment
  • American Capital Agency: What We Are Watching For In The Q1 Report - The Return Of Swaptions? [View article]
    Hi Rob,

    Thanks very much for the comment, I'm happy you liked the article!
    Apr 27, 2015. 11:18 AM | Likes Like |Link to Comment
  • RadioShack: A Bankruptcy Buying Opportunity Or Lost Cause [View article]
    Hi jacky.durkin

    That is precisely why I wanted to put forth this overview content. As markcc pointed out, there is potential for bankrupt companies to skyrocket after they optimize their operations. That really isn't RadioShack's story.

    Their bankruptcy is not cyclical where they may have a short term cash crunch or an imbalanced set of initiatives within a profitable business. Their balance sheet is underwater. The opportunity to liquidate assets isn't all they need and it doesn't appear on the surface that there are meaningfully profitable arms of RadioShack's business that could survive and develop into a 9 figure market cap company (especially considering the implications on scale of a bankruptcy filing).
    Jan 16, 2015. 05:22 PM | Likes Like |Link to Comment
  • American Capital Agency: Where Is NAV And What's Driving The October Rebound? [View article]
    Hi Scott,

    Thanks very much for the comment and the praise. Glad you enjoyed the article, and as usual I'm glad to see the numbers fell within the overlap of our two projections (as they have for each of the past 4 quarters).
    Oct 28, 2014. 05:47 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Where Is NAV And What's Driving The October Rebound? [View article]
    Hi John,

    Thanks for the comment glad you enjoyed the article. I was certainly glad to see the true performance validate the analysis.
    Oct 28, 2014. 05:44 PM | 1 Like Like |Link to Comment
  • American Capital Agency: Where Is NAV And What's Driving The October Rebound? [View article]
    Hi Bruce,

    Thanks for the comment, I'm glad you liked the article.

    In terms of the 1:1 BtM ratio, it certainly isn't being seen anywhere in the industry now but these things can change quickly. A few years ago AGNC market price was consistently >110% of NAV, allowing for significant secondary offerings almost every quarter. After QE3, this all changed in about a year's time, with premiums to book turning into 25% discounts across the industry. It took 2 quarters in 2014 for these discounts to shrink from 25% to 10% an I don't believe its beyond reasonable that market pricing could continue to gain on BV over a few months time.

    All of that being said, you're right that I am probably in the minority with this opinion. I certainly don't believe these things happen overnight, but I think with QE3 coming to close and AGNCs structural changes to provide investors with more transparency and more incentive to hold through the entire quarter, the necessary puzzle pieces are in place for this to happen.
    Oct 27, 2014. 04:38 PM | Likes Like |Link to Comment
  • American Capital Agency: Where Is NAV And What's Driving The October Rebound? [View article]
    Hi M Plaut,

    Thanks for the comment. I agree with KRT_investor below that the dividend will likely be a consistent .22/share each month for a while now. I think it conflicts with managements objectives to deviate each month and they are clearly making far more interest income than $0.66/share so it reasonable.

    Despite the 'raise', we should keep in mind that this is essentially a rounding error. It amounts to .04/share per year, or a yield increase of just ~0.17%. Even though its nice that management rounded up to .22 rather than down to .21, I don't believe this is a game changer by any stretch.
    Oct 27, 2014. 04:19 PM | Likes Like |Link to Comment
  • RadioShack: 'Lifeline' Just A Risk Free Cash Advance On 4:1 Dilution For Shareholders [View article]
    Hi Captainmuggles,

    I'm very glad you appreciated the article, thank you very much for the praise and the comment.
    Oct 5, 2014. 11:40 PM | Likes Like |Link to Comment
  • RadioShack: 'Lifeline' Just A Risk Free Cash Advance On 4:1 Dilution For Shareholders [View article]
    The reason it can't really be viewed that way is because it is not the same security at all. That debt facility is extremely low risk top priority debt and doesn't carry any of the risk buying a share of RadioShack does. Pricing of equity (0 value in bankruptcy) versus pricing senior debt (likely 100% value in bankruptcy) can't really be compared. It was just a transaction that opened up the possibility for the seemingly very SG friendly $120M agreement and had no significant risks associated with it.

    But hey, for every short there needs to be a long. Obviously you have a bullish standpoint and you are well within your rights to think of it that way and act on it. All I would say is that I would more than happily take the other side of that transaction at $1.50
    Oct 5, 2014. 08:25 PM | Likes Like |Link to Comment
  • RadioShack: 'Lifeline' Just A Risk Free Cash Advance On 4:1 Dilution For Shareholders [View article]
    Hi jibje2,

    You've done a great job trying to break down all the components and look at things from all angles. I'm a little confused by some of your numbers, but obviously everyone can come to their own price projections.

    One detail to consider that you've indirectly brought to light in your psychology section:
    I think a lot of investors watching Radio Shack are probably in the same boat you are. If they are already long, then they don't see this deal and say 'hey what a great deal, time to buy more shares!' which would be ideal for a price increase. I don't know how much 'new money' comes in and says 'great, I didn't buy before, time to buy now' either. There will however be a lot of shorts willing to open or extend positions since the price has a pretty clear ceiling in a few months time + the big risk catalyst (this deal) has come and gone and wasn't anywhere close to as generous as the bulls would have liked.
    Oct 5, 2014. 01:17 PM | Likes Like |Link to Comment
  • RadioShack: 'Lifeline' Just A Risk Free Cash Advance On 4:1 Dilution For Shareholders [View article]
    Hi Madridista,

    To clarify for other readers - They are not paying down the debt as you suggest. There is a reason why RadioShack still needs to restructure that facilty and those terms in March. It doesn't retire anything but instead changes the owner of the debt facilty.

    Saying this that's a capital infusion is like saying if someone sells an unsecured bond backed by RadioShack to someone else on the secondary market that RadioShack is getting new money (obviously not true). Its a tangential transaction that was essential in order to allow the $120M transaction go through based on the power the holders of that debt had.

    You're obviously free to call it whatever you like, but it is by no means new money for Radio Shack.
    Oct 5, 2014. 11:44 AM | Likes Like |Link to Comment
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