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American Capital Agency (AGNC -3.3%) experiences a flash crash, plummeting 11% in the opening...

  • Tuesday, August 7, 2012, 10:25 AM ET
    American Capital Agency (AGNC -3.3%) experiences a flash crash, plummeting 11% in the opening seconds of trade on volume of 5.7M shares (normally trades about 100K in the first 2 minutes). One wonders if any stops got triggered.
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This news story has 49 comments:

  •  
    My stop was triggered spot on. @$33.00
    7 Aug 2012, 10:36 AM Reply Like
  •  
    Well done. Now that you have sold at $33, what are you gonna do? Buy back at $34?
    7 Aug 2012, 12:50 PM Reply Like
  •  
    Or has the share price been pumped up on this site as this company gets probably more comments than many other companies.

    Maybe it will eventually fall to near or slightly above the book value?
    7 Aug 2012, 10:36 AM Reply Like
  •  
    I have always maintained that this stock is being pumped on this site
    8 Aug 2012, 08:40 AM Reply Like
  •  
    This one was way overdue for a pullback.

    If you like money, wait for it to stop going down and buy more shares.

    If you don't like money, buy shares now and send them to me.
    7 Aug 2012, 10:42 AM Reply Like
  •  
    Who cares? If you invest for the long haul and the dividend keeps flowing, flash crashes are meaningless.. Well, they only mean something to day traders and those folks can just suffer.
    7 Aug 2012, 10:42 AM Reply Like
  •  
    OK..someone lost a lot of money in the first minutes, we may see many executions in the 30.50-30.75 range, question is: why? Who did pull the trigger?
    Another glitch from a fat finger? Smart money leaving the boat?
    Same story, not so deep with NLY..
    7 Aug 2012, 11:02 AM Reply Like
  •  
    We discussed the historically high and unsustainable premium over book value for AGNC last week, with a lot of disagreement, saying that the excessive amount of the premium notwithstanding, people are still looking for alternative sources of high yield. It was our opinion that this would not be the case for long, since prices of MReits have much more correlation to company fundamentals (net book value, in this case) than almost any other equity security.

    Here it is.
    7 Aug 2012, 11:05 AM Reply Like
  •  
    It's not just AGNC... many mREITs are getting hit today. Can't find any reason for the high volume selling. Guess we'll see how it plays out.
    7 Aug 2012, 11:06 AM Reply Like
  •  
    Looks like a concerted sell action from I do not who.... too much volume, timing and focusing only in Mreits. No bad news like interest policy changes, issuers difficults, new prepayments, etc.
    7 Aug 2012, 11:18 AM Reply Like
  •  
    Virtually all the mREITs are at a premium, just a correction by hedge funds dumping because short term cap gains are more than yield is. Dump a few million shares and it'll move the price. AGNC showed a dent in the armor suddenly not so golden anymore.

    These stocks are yield enhancers, not core positions, they are hugh risk stocks.
    8 Aug 2012, 12:19 PM Reply Like
  •  
    Market being manipulated. Slick wallstreet does it to small investors again. Agnc will stick around 1.1 book value and spike around div time.
    7 Aug 2012, 11:48 AM Reply Like
  •  
    While many of us are "investors" as opposed to day "traders", I believe it is past time for some changes to the operation of the electronic masters that now rule the markets. WHY IN THE HECK WAS THE DOWNTICK RULE EVER ABOLISHED? Reinstating that rule would have stopped events like this morning's flash crash.

    All of the very best,
    Don
    7 Aug 2012, 11:50 AM Reply Like
  •  
    Looks like we're rebounding a bit.
    7 Aug 2012, 12:17 PM Reply Like
  •  
    nothing has changed since yesterday , AGNC is still the same fundamentally and paying over 14 % , it will rebound quickly. Yes, daytraders should be shot and the downtick rule reinstated .
    7 Aug 2012, 12:23 PM Reply Like
  •  
    I was stopped out at $32.
    Anyone know what is really going on with the REITS?
    Haven't seen any real reason for the sudden drop across the board. Fed hasn't done anything stupid (yet) so what then?
    7 Aug 2012, 12:45 PM Reply Like
  •  
    Total overreaction. Sold 33 then 32 sep puts on this stock today. Best REIT out there.
    7 Aug 2012, 12:47 PM Reply Like
  •  
    There is no reason(s) for this high volumne drop across the board other than market manipulation. I guess it was just the mREITs turn this time.
    7 Aug 2012, 12:52 PM Reply Like
  •  
    I'm holding with my investments. I learned a long time ago that panic selling is the surest way to lose a lot of money. When the smoke clears, then I'll make a decision.
    7 Aug 2012, 12:53 PM Reply Like
  •  
    This is similar to the flash crash that happened last July 29. It was a "strange day" for the REITs, and the millisecond data for several of them are posted here for your inspection: http://bit.ly/N0rger
    7 Aug 2012, 01:04 PM Reply Like
  •  
    Little brother MTGE took a huge hit this AM also has rebounded to positive territory now
    7 Aug 2012, 01:07 PM Reply Like
  •  
    you always have some stinking short players out there and some Institutional rascals waiting to take advantage of a situation.

    The entire mReit portion of the Reit Sector has been oversold for about a good month or so. Thus setting the stage for some profit taking and other mischief. Patience is a virtue here as mtge clearly shows us today. While stops are nice to some degree they can be a real problem too. Personally, I prefer monitoring and trying to time a market buy or sell order. It certainly doesn't work all the time & when travelling I will place them if I feel that there may be reason to expect volatility.

    But by and large the mReit sector should still continue to outperform the other market sectors.
    7 Aug 2012, 01:26 PM Reply Like
  •  
    Kingdad, do you think this is intentionally done my the Market Makers to clear out the stops and make more money on the transactions turning?
    7 Aug 2012, 04:27 PM Reply Like
  •  
    I was busy when it happened and the "news" about it is worthless. Why did it happen? Anyone have an eyeball on the decline while it was happening? Watching level 2 it would be easy to see if a water fall of stops were being taken out. Did anyone see this? Or, was it a large block of several million shares in one transaction?

    The decline unnerved me that much more against the mREITS. I have been on the sell side for awhile now and this prompted me to dump half of all my holdings. Some have started to recover and I'd be better off if I didn't sell any today with the rebound but this may foretell more declines to come.

    Owning a stock and then going rah rah rah on the message boards is not the way to go. I feel sorry for the small investor that has been relying on these for income. These dividends may be now on the cutting board.

    The best part of ownership is that there is plenty of volume to get out when the panic hits. Overall I still have a small profit on the shares I continue to hold.
    7 Aug 2012, 01:35 PM Reply Like
  •  
    I know people buy shares for many different reasons, but this runup and now selloff of AGNC is incredible on its face and adds to the irrationality exhibited in many facets of the market today. In my view, mREITs are not and never have been a security that should be purchased for capital gain purposes. It's nice if we get a capital gain of course, but this is a dividend yield purchase and not a growth stock. Those that get cold feet now because of whatever scare forces are at work should not have had positions in the first place. I have seen nothing to date suggesting the dividend is being imperiled yet.

    Seeing the comments of a few here, it is incredible to me how amateur some investors truly are.
    7 Aug 2012, 01:54 PM Reply Like
  •  
    I thought these Mreits were relatively safe as long as operation Twist is in effect.
    7 Aug 2012, 02:09 PM Reply Like
  •  
    Stop triggered at $32. Then it promptly went back up. Double ouch.
    7 Aug 2012, 02:18 PM Reply Like
  •  
    AGNC does experience high volume "flash crashes" on occasion. Some in / out for ex dividend. Other times who knows. I do notice AGNC seems to be a risk on/off trade moving contra to the indexes especially when the VIX is elevated. What impressed me recently was the one day when there was 10 times the normal volume, and it only went down a dollar or so, then rebounded in the next few days.
    7 Aug 2012, 02:37 PM Reply Like
  •  
    A few days ago I was thinking about putting in a stop. Now I'm glad I didn't.
    7 Aug 2012, 03:06 PM Reply Like
  •  
    ...confidence gaining in whole mkt. $$ coming out of hiding in REITS....
    7 Aug 2012, 03:15 PM Reply Like
  •  
    Some investors are using mREITs like money markets accounts. They withdraw their money from mREITs to buy other stocks, which they have been doing yesterday (8/6/12) and today. mREITs are better than stuffing money in U.S. Treasury bonds.
    7 Aug 2012, 03:15 PM Reply Like
  •  
    I watched it happen but It was down and up in nearly the same instant. It was too fast for me to add to my holdings. I think this a terrific value in the $30 range. Those that have mentioned MTGE are absolutely correct. It rebounded very nicely.

    This entire sector has been getting hit these last couple days but panic seldom helps.
    7 Aug 2012, 03:25 PM Reply Like
  •  
    Mine triggered at $33.70. I'll wait for a good time to get in again.
    7 Aug 2012, 03:28 PM Reply Like
  •  
    Our approach was to sell last week when it started to act strange. After a pretty big runup, and being so far above book, pullbacks are inevitable in our view, so we sold. Will we be "right"? Who knows? Our intention is to buy back in when it gets closer to book, as mentioned above. We love the company. But that may not happen. And long term these MReits will not be great investments when rates rise, divvy or no. And that will be when no one expects. So we say enjoy while you can, trade on fundamentals, but beware the downside which will come at some point.
    7 Aug 2012, 03:46 PM Reply Like
  •  
    My entire position was triggered at $30.40! I feel totally robbed.
    7 Aug 2012, 03:58 PM Reply Like
  •  
    This is the reason I never use Stop Losses. I have never, I repeat never had a triggered Stop Loss I did not regret. Consequently, I no longer use them. I have tried to configure them every way I know how and there is no way to protect yourself from a flash crash. REIT's are Buy and Holds unless there is some specific reason to sell a holding.

    In the case of AGNC, I do not understand how they lost .88 the 2nd qtr.
    7 Aug 2012, 04:00 PM Reply Like
  •  
    As a retiree and div investor for about five years now, I use this rule for trading. When a stock value climbs to where I am one year ahead in divs, I sell.
    I bought AGNC at $28.75.
    I sold at $34.95.
    This is not rocket science.
    7 Aug 2012, 05:23 PM Reply Like
  •  
    OK you sold. Now what do you do with that cash? You have only offered half an answer.
    8 Aug 2012, 10:09 AM Reply Like
  •  
    I bought at $28 for income, then around 18%.

    See no reason to sell now.

    I'm holding.

    Silver
    7 Aug 2012, 06:27 PM Reply Like
  •  
    I no longer use stop loss orders due to flash crashes. They are dangerous. I still have a nice gain in AGNC and will continue to hold for the div unless the price sinks beyond my level of tolerance.
    7 Aug 2012, 09:27 PM Reply Like
  •  
    IMHO the AGNC flash crash was due to investors using a SELL STOP instead of a SELL STOP/LIMIT. Or a STOP can be executed at close when the volatility has settled.
    8 Aug 2012, 05:35 AM Reply Like
  •  
    Look at the Nanex.com data for the "strange days" like 7/29/11. If you look closely enough at all the trades across all exchanges, there are a lot of weird things going on, like places where bids are higher than asks, big differences on different exchanges, etc. During a flash crash, there is no guarantee that any stop will trigger near your price.
    8 Aug 2012, 10:15 AM Reply Like
  •  
    Fundamentals haven't changed and so long as the Fed keeps rates at zero, AGNC will be a money machine paying out 14%. So go ahead and sell because of some technical glitch. It'll be your loss.
    8 Aug 2012, 08:41 AM Reply Like
  •  
    The last earnings report showed that AGNC is not immune to issues and therefore the high premium may not be warranted. I don't think this was a mistake, I think some people with alot invested wanted to get out. For days before this I had a gut feeling something was going to happen, I should have listened.
    8 Aug 2012, 08:49 AM Reply Like
  •  
    I just wish AGNC paid monthly.
    9 Aug 2012, 09:26 AM Reply Like
  •  
    Once the big sell off occurs in this stock, it could go below book value, that will be the time to pounce on it.
    9 Aug 2012, 07:26 PM Reply Like
  •  
    Big selloff? On an mREIT minting money, so long as Fed Funds Rate remains at zero, with 14% dividends? PuhLez....
    10 Aug 2012, 09:30 AM Reply Like
  •  
    I am not saying the stock will crash, but once the market normalizes or if 10 year treasury bonds spike it will cause a sell off. Saw it last year. Again, there is no reason to buy an mREIT above book value.
    10 Aug 2012, 04:24 PM Reply Like
  •  
    I agree. Little reason to buy, especially 12% above book, already down from the 17% at such time that we shared our concern with everybody only a couple of weeks ago.There is probably truth to the idea that if there was any time that these names should attract a premium, it would be now, with the paucity of reasonable options. Nevertheless, AGNC has never proven that it can sustainably attract premiums that we're seeing at current levels. AGNC et al are very attractive investments, and market timing rarely works. Still, at this point, AGNC is so grossly overvalued in relation to any past performance that the risk/reward ratio is too strongly skewed to the downside. I sold out of all of my positions in AGNC, MTGE and HTS right at the top (50% smart and 90% luck). I have since begun to add back a small percentage as the prices correct, and I'm now at about 25% of where I want my total investment in this space to be. I'll continue to be a buyer if these stocks decline, and I will jump back into AGNC all the way if its premium declines to a more sustainable 5% or so.
    11 Aug 2012, 01:09 PM Reply Like
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