• William Packer
    This appears to be the turning point in yields. $AGNC $MTGE $AMTG. Yields unlikely to retest the 2.3% level, more likely to rise from here.
    8/20/14
    Reply (35)
    • William Packer: The housing market appears to be on solid footing following this weeks data. Non-agency is the place to be. Avoiding or lowering rate risk..
      8/20/14
    • William Packer: will be a key driver of performance among mortgage reits going forward. $AMTG has a huge spread and it is supported by floating rate paper.
      8/20/14
    • William Packer: Of all the Mreits, the only one I want to be invested in given the environment is $AMTG.
      8/20/14
    • William Packer: The FED basically came out and said rates are going up really soon. Whether or not the economy can handle that will be the question...
      8/20/14
    • William Packer: A flattening yield curve seems unlikely.. more likely that rates push up to 2.80% on 10s over the next few months.
      8/20/14
    • William Packer: My expectation is that volatility will go up substantially from here in the bond market. If I was an agency mortgage REIT...
      8/20/14
    • William Packer: I would use this time to put on some swaptions.
      8/20/14
    • Rob1492: William... Are you shorting WMC? It is over 15...
      8/21/14
    • William Packer: I have not gone short $WMC yet for any of my clients. I don't short stocks in my personal account.
      8/21/14
    • William Packer: I am going to short some today for my clients and pair it up with other mreits.
      8/21/14
    • William Packer: I could not find any shares to short.. I just tried... Its in high demand to short right now.
      8/21/14
    • William Packer: I just put one of my clients short $AGNC today @ 23.46. I did this for my smallest client who only has about 5k to invest.
      8/21/14
    • William Packer: It's his only position.. -213 shares of AGNC @ 23.46 lol.
      8/21/14
    • William Packer: My thoughts are that agency mortgage reits will go down in value as yields rise. book could drop by 10% in the next couple months on AGNC.
      8/21/14
    • William Packer: and then if you take that new number... $23.634.. and you put a 0.88 p/b multiple on it... the stock will drop to $20.79.
      8/21/14
    • William Packer: But most likely if book drops by 10% .. the multiple will be more like 0.80 p/b... so ... $18.91 stock price.
      8/21/14
    • William Packer: it's cool to be stuck in agency paper.. am i right? It's great.. cuz then you get get destroyed when you're caught off-sides.
      8/21/14
    • William Packer: Do you know how hard it is to hedge a portfolio the size AGNC has? It takes days to hedge unless you wanna move the market.
      8/21/14
    • William Packer: Fear takes over and p/b multiple gets crazy cheap... like before.. 0.77 p/b not out of the question in a sell off in treasuries/agencies
      8/21/14
    • William Packer: That's why I like hybrids right now... with a focus on non-agency... Because housing data came out this week telling us housing is OK.
      8/21/14
    • William Packer: That is good enough for me.. time to hide from agencies until the fed stops hiking rates. Agency might be bear market until 2016.
      8/21/14
    • William Packer: If you stay in Agency-focused you are asking for trouble.. that is why I don't even like MTGE right now.
      8/21/14
    • Rob1492: But William... With that short you have to be right by 2.5% a quarter just to cover dividend... There are much easier ways to make a dime
      8/21/14
    • Rob1492: I think one of the best rate rising bets is CMGI dividend over 10 discount to BV and negative duration
      8/21/14
    • William Packer: I don't see a stock ticker listed as "CMGI"
      8/21/14
    • William Packer: I can always have him go long a different mortgage REIT to offset the dividend costs later on. $500 a year of dividend loss won't kill him.
      8/21/14
    • Rob1492: sorry CHMI... One of your old favorites!
      8/21/14
    • William Packer: especially if the dividend needs to be cut later on when AGNC hedges up. Then costs go down. turns into a downward spiral.
      8/21/14
    • William Packer: When rates rates go up.. it will hurt the NIM too.. so lower NIM + higher hedge cost + falling book value.. = WIN for my client.
      8/21/14
    • William Packer: I still like $CHMI but I like $AMTG more right now.
      8/21/14
    • Rob1492: I don,t see AGNC cutting divi again... They were very defensively positioned in quarter 1 and covered dividend
      8/21/14
    • William Packer: I just went long for his account @ 23.36 and went short SPY @ 199.00, 25 shares. So he has two 5k positions on... using margin.
      8/22/14
    • William Packer: I think the S&P 500 is range bound and will drop again.. More Ukraine drama coming it seems. bond yields are going to fall for a lil bit.
      8/22/14
    • William Packer: out of AMTG and back into AGNC @ 23.325
      8/22/14
    • William Packer: 19000 shares
      8/22/14