American Capital Agency (AGNC) prices its 32M secondary, estimating gross proceeds of $1.09B...

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gnork Comment (1)
 
They closed at 35.29 yesterday. They are sabatoging their own stock.
18 Jul 2012, 09:49 AM Reply Like

68osb68 Comments (97)
 
This is SOP for mReits. They'll invest the $1.09 for the benefit of all shareholders.
18 Jul 2012, 09:58 AM Reply Like

AlbyVA Comments (339)
 
I was lucky when I sold some shares yesterday to take a little profit off the table.. As for this secondary offering, don't worry. This is the only way for mREITs to get capital for reinvestment. That billion they suck from the market will yield many more times that, which you'll receive as a dividend. This is a "dividend" play stock. Not a by low, sell high, stock. If you want that, something like Apple or IBM might be what you seek.
18 Jul 2012, 10:12 AM Reply Like

couldashoulda Comments (50)
 
I recollect (maybe wrongly) that there was an alpha analysis that history shows the best time to buy successful reits was when they came out with a secondary and the price dropped short term. Does anybody have any statistics??
18 Jul 2012, 11:29 AM Reply Like

Boog Comments (96)
 
...don't have any stats - but I'd ignore the stock offering (it's a slight positive) . The more important thing is the devil in the details. The net interest margin took a large hit (down to $.94) and the CPR increased. Those facts coupled with a stock price that's too much of a premium above book value caused me to bail yesterday after-hours. I'm waiting for a price closer to book value before re-entering.
18 Jul 2012, 01:25 PM Reply Like

LHP46 Comments (12)
 
Wise move. Are you convinced (apparently not) that AGNC has discovered some unique way to minimize CPR? That no mREIT but AGNC has this ability? Apparently there are investors that believe this as they are bidding the stock up to this premium. Makes little sense to me, and I think you picked a great time to exit. No doubt AGNC's stock price will continue to rise, and if I were a speculator I'd buy on that basis. But as an investor I think other mREITs offer better value.
18 Jul 2012, 01:43 PM Reply Like

Boog Comments (96)
 
re: AGNC minimizing CPR....I recall reading (somewhere) that they focused their investments on relatively small mortgages - perhaps around 100K or so - a level that makes it less attractive for refinancing. Either I recall wrongly, or their strategy simply didn't work.
Investors who understand MREITs generally fall into two two camps in my opinion. Both understand the effect of secondaries (and view them as buying opportunities), they understand that compressed interest rate margins mean less profit and falling dividends - which GENERALLY means a falling stock price. One camp says "so what, I'm in it for dividends and the VERY long haul, not capital gain - and I'll take a 9-10% dividend any day". This camp apparently believes their capital losses are just paper losses that they'll "never" realize. The other camp says "I won't tolerate substantial loss of capital - as it eats away at my dividend gains and I can't predict when I might need to recall my investment $'s ".

I happen to fall into the latter camp.
18 Jul 2012, 03:10 PM Reply Like

TwistTie Comments (2446)
 
mReit Formula:

HP + HD + SSO = TP

High Premium + High Dividend + Secondary Stock Offering = Temporary Pullback

Anybody scooping up shares?
18 Jul 2012, 03:56 PM Reply Like

Boog Comments (96)
 
not yet....
18 Jul 2012, 04:01 PM Reply Like

Nostradumbass Comments (48)
 
I'm not buying more. Got in at $28 for a 17%+ return, not for a capital return, and I think there's a bubble building in mREITS now. Disappointed by AGNC's move.
18 Jul 2012, 04:45 PM Reply Like

joecap4c Comments (37)
 
TT
I always jump in at the secondary I also sell some agnc for a 5-6%
cap gain before hand as worked over recent past. They don't issue mortgages.
18 Jul 2012, 05:44 PM Reply Like

whatanorder! Comments (44)
 
I bought some at 34.03 pre-market today, some at 33.93 just before the close, missed on a lower limit in after-market. I have stepped limit orders in the 33's on for tomorrow. Based on previous performance [& we all know how reliable that is] I predict a dip lower & a close higher tomorrow. In the recent past that's been followed by ranging for a few weeks or resuming an uptrend.
The best thing the stock has going for it is its yield. Hence the biggest ~7/23 upcoming risk is not earnings which I don't expect to differ from yd's pre-announcement much, but a dividend cut which I also think unlikely & probably with a marked but transient effect even if it occurs. The other big shorter-term risk to AGNC is a raging risk-on bull market in anything else...imho fwiw. :-)
18 Jul 2012, 10:53 PM Reply Like

madav1138 Comments (2097)
 
Looks like the stock will start deflating a bit from here. It did not bounce back up after the secondary like it has in the past, I think its way too high, will wait for 29 again.
21 Jul 2012, 07:37 AM Reply Like