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William Packer

 
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  • Avoid Prospect Capital [View article]
    $8.75 Price target here on $PSEC. I think it goes down.
    Oct 14, 2014. 02:07 PM | 2 Likes Like |Link to Comment
  • Avoid Prospect Capital [View article]
    The net investment income is benefited by rising short rates.. The 10 year bond does not have any bearing on this. But the weighted average libor floor is like 2% on those loans.. so fed funds would have to go above 2% to see any benefit. Origination has improved, but is not sustainable unless they can raise additionally equity at or above NAV. If they cannot, then the dividend needs to be readjusted to 8 cents a month. That is a 10.2% forward yield based on the stock price of $9.40 and a discount to NAV (90c on the dollar).

    Personally, I like ACSF better for a lot of reasons including low fee structure, higher quality asset mix, (safer), All floating rate assets with libor floor average of 1.03% and larger discount to NAV
    Oct 14, 2014. 01:49 PM | 2 Likes Like |Link to Comment
  • Update: 16% Yielding Resource Capital Sees A Huge Increase In Loan Originations [View article]
    The book value keeps going down. because the GAAP earnings are like 0.10 and the dividend is 0.20.. so book keeps going down by 0.10 every quarter.
    Oct 5, 2014. 02:41 PM | 1 Like Like |Link to Comment
  • American Capital Agency Corp.'s Dividend Range Scenarios For Q3 2014 [View article]
    http://bit.ly/17a2wZL
    Sep 26, 2014. 01:07 PM | Likes Like |Link to Comment
  • American Capital Agency Corp.'s Dividend Range Scenarios For Q3 2014 [View article]
    PeteF, it is not always about the level of rates so much as it is about spreads between agency mbs and treasuries. Also, Gary Kain trades on the portfolio.. changes are made.. rebalances etc for the environment. This is more of a dividend machine than a get rich quick machine. If you keep reinvesting your dividends you will see growth in dividend income over time. a 200 bp reduction in rates with tightening spreads could give AGNC a NAV increase of 40% or more depending if they went back into spec pools or not and other trading factors. As far as yield... that is just nearly as impossible to calculate. I don't think scott or anyone can help you there. Gary would almost certainly rebalance the portfolio and change leverage to some degree. We simply cannot know the exact level. I do know that NIM would contract and the NAV would go up, the dividend level would stay the same or go down depending on if leverage was kept the same vs seeing it decline with appreciation. The yield based on NAV would decline.
    Sep 26, 2014. 12:23 PM | Likes Like |Link to Comment
  • American Capital Agency Yields 11.75%; It Is An Excellent Income Investing Strategy [View article]
    I agree with dividends.. AGNC or MTGE but I wouldn't touch any of the other MREITs. Where were they when the stocks traded 80c on the dollar? They didn't buy back many shares... They didn't care about shareholders. They cared about themselves and lining their own pockets. So screw em. Many mortgage REITs think that rates are going to rise and they went into non-agency as if that was the "safe place." Lets not forget what happened to American Home Mortgage and other hybrid/non-agency focused names in 2007. If you want returns, AGNC is the safest. I am scared of non-agency - especially with the housing markets latest weakness that is showing up. I am willing to own MTGE but only because of the management team and they only have about 30% of capital there anyways.
    Sep 22, 2014. 11:43 AM | 1 Like Like |Link to Comment
  • American Capital Agency Yields 11.75%; It Is An Excellent Income Investing Strategy [View article]
    The argument that NLY did well since the 1990s or whatever is sort of a weak argument. For the past 30 years, bond yields have trended lower, and thus bond prices have kept going up. There has been pull backs in price, but still... Rates have been going down. If that were ever to change... Nly might not exist as we know it today. I will never forget the quarter of q2 2013 when NLY lost 20 percent NAV vs AGNCs drop of 11%.
    Sep 21, 2014. 01:56 PM | 1 Like Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    The TBA drop counts as capital gains if it rolls when there has been a gain. It has positive carry, you sell, then roll into the next months contract. So it can be taxable from a capital gains prospective... But because of the loss-carry forwards.. It will be unaffected until that is used up.. Also... If agency mbs are down for the quarter even when including the positive carry, then it rolls as a loss. I forgot about the UTI in this case. Thanks.
    Sep 21, 2014. 09:41 AM | 1 Like Like |Link to Comment
  • American Capital Agency Corp.'s Dividend Range Scenarios For Q3 2014 [View article]
    Question: Isnt the ERTI negatively affected currently by the loss-carry forwards? Thus if there was no loss carry forward then the ERTI would be higher and thus ERTI+DROP would be having even a better coverage? Also on a separate issue, I see that 0.88 of gains were excluded because of this loss-carry including the drop. So 0.49 (0.88-0.39 = 0.49) capital gains would have been added to the 0.28 per share of taxable income, thus it would have been 0.77 taxable income and 0.39 of drop income for a total ERTI + drop of $1.16 in Q2.
    Sep 20, 2014. 02:12 PM | 1 Like Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    Question: Isnt the ERTI negatively effected currently by the loss-carry forwards? Thus if there was no loss carry forward then the ERTI would be higher and thus ERTI+DROP would be having even a better coverage? ALso on a separate issue, I see that 0.88 of gains were excluded because of this loss-carry including the drop. So 0.49 (0.88-0.39 = 0.49) capital gains would have been added to the 0.28 per share of taxable income, thus it would have been 0.77 taxable income and 0.39 of drop income for a total ERTI + drop of $1.16 in Q2.
    Sep 20, 2014. 02:01 PM | 1 Like Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    I felt that when AGNC reduced the dividend to 0.65 that they wanted to have it easily covered. So when they did the reduction, I saw that as them being conservative based on the added hedges etc. I predicted that the dividend would go up *possibly* not definitely. So I was simply saying on stock talks that they had room to raise the dividend based on the net spread + dollar roll income. But As Gary and you said, net spread income has flaws. Therefore, I was wrong when considering there was a real possibility of a dividend increase. I had been hoping for some time that AGNC would get back to a more normal level of income to pay out in dividends. They paid $1.40 back when I first was investing in the company. Yields are not all the different from when we paid 1.40 to today... And AGNC's portfolio doesn't look all that different! So what is the deal? Why is ERTI + drop income so freakin' low? Why are we not heading back on track to a 1.00 + dividend level? WMC hits the ball out of the park, AGNC is a baddie? I know the portfolio comp is more weighted to 30 yrs and 20 yr + non-agencies in the WMC portfolio.. but still..
    Sep 20, 2014. 11:48 AM | 2 Likes Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    Another question.. so because taxable income was 0.28 and drop is not taxable because of loss carry forwards... and amounts to 0.39... that means that... only 43% the Q2 dividend was "taxable" ?? 0.28 divided by 0.65. ??
    Sep 20, 2014. 02:35 AM | Likes Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    Well.. just spent some time looking over the past reports.. ERTI seems to be made up of trading gains in prior years. And ERTI was all over the place... Not very stable metric.. yet the dividend was stable... and there was obviously core earnings (net spread income of 1.40 in many of the quarters back then.. followed by a 1.40 dividend. So this is why i kept looking at net spread income a lot of the time.. because really i saw dividends matching net spread income in prior years. And when we missed on net spread.. it appeared that Undistributed taxable earnings covered some of the slack. So here I was looking at net spread income and watching Undistributed taxable earnings go up or down based on that coverage. but now all of a sudden gary is concerned with the cost of swaptions and forward starting swaps? There just seems to be a disconnect here still.. Do you see what i'm saying with all this? ERTI + drop might be a good metric to look at for dividend coverage - but it's not a perfect metric by any means and does not mean the dividend will be cut if it misses. I feel that I have learned a bit from this conversation... so thanks for that Dividends#1. It appears understanding the real earnings of this business is a bit of a difficult process. Because you have the time decay of the swaptions to account for... and the forward starting swaps.. and trading gains/losses...etc. So maybe if we look at net spread income + drop income.. then try to factor in the costs of swaptions + forward starting swaps... we can get a better picture on the dividend level. And obviously swaption positions can go up or down... swaps can go up or down too.. really all the hedges can. So it appears we cannot possibly know the "true earnings power" as gary likes to say. His actions each and every quarter will dictate the earnings for that quarter.
    Sep 20, 2014. 02:20 AM | Likes Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    Further, "William, I have called AGNC and spoken with them, they will be using net dollar roll income + ERTI to cover the dividend." I have a question here. You see, the Q1 AGNC report says the ERTI + drop was 0.61, so they missed??? didn't cover there???

    Then you have the Q4 2013 of 0.65 vs 0.65 ERTI. But confusingly enough, the ERTI has been dropping while other metrics like net spread income have been improving. Also, the portfolio is weighed more 30 year now.. and is kicking off higher interest income, yes? So thus.. like Gary was saying.. maybe we shouldn't look to ERTI + drop to see whether or not the dividend level is covered.
    Sep 20, 2014. 01:31 AM | Likes Like |Link to Comment
  • Mortgage REITs higher as American Capital and Annaly maintain dividends; rates slip [View news story]
    "To this point, taxable earnings as well as UTI will become less relevant in understanding our financial performance and our capacity to pay dividends. For this reason, we will likely deemphasize taxable earnings as a supplement non-GAAP measure in the quarters ahead."

    Doesn't that mean that ERTI will be less relevant? So thus we should look at what when determining the economic earnings power? This seems like a headache.. He is saying taxable earnings don't really matter so much.. and what matters is the economic earnings power.. but then goes on and says that net spread income has short falls... so how are we to determine the dividend coverage if ERTI is not so important anymore? I don't think the answer is simply take ERTI and add drop income?
    Sep 20, 2014. 01:21 AM | Likes Like |Link to Comment
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