The mREIT sector gets another downgrade - American Capital Agency (AGNC) is cut to Neutral at...

The mREIT sector gets another downgrade - American Capital Agency (AGNC) is cut to Neutral at Macquarie which cites its high valuation amidst a weakening reinvestment environment (high MBS prices) and increased interest rate risk. Shares -0.5% premarket.

Comments (17)
  • Kurtwalter
    , contributor
    Comments (72) | Send Message
    When AGNC cut its dividend from 20% to 16% its share price actually went up - so what does "neutral" mean? Dividend to be cut? Is there a better alternative out there?
    15 Aug 2012, 07:20 AM Reply Like
  • shj
    , contributor
    Comments (37) | Send Message
    In the context of analyst opinions this is one opinion... go here for a better view:, chasing the fickle nature of analyst opinions is a roadmap to ruin...
    15 Aug 2012, 08:14 AM Reply Like
  • MexCom
    , contributor
    Comments (3056) | Send Message
    I sold most of my position. DHF was recently panned here on SA on the 10th. It has since stabilized. The cash I raised from sell this takeroo all went into DHF. Lower dividend but a more conservative managed portfolio with high yield bonds.
    15 Aug 2012, 12:37 PM Reply Like
  • antiqueron
    , contributor
    Comments (105) | Send Message
    Some analist trying to shift money out of a good investment to poor ones. These mreits taking to much away that they cant play with. if we get unto something good they are always trying to beat it up. Div next month, bad time to sell it.
    15 Aug 2012, 08:11 AM Reply Like
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
    Just sitting on AGNC is better than any of these clueless have done in the last 24 months. M/M Q/Q Y/Y whichever way you look at it.
    Including Gross, Einhorn, and all the other "geniuses" which blabber daily on TV.


    So... they try to shoot down AGNC, to justify their existence.
    So... listen you guys - whatever AGNC you sell, I buy
    15 Aug 2012, 08:25 AM Reply Like
  • Moosh
    , contributor
    Comments (126) | Send Message
    Pinocchio1, I agree with, And I am buyer as well.
    Long AGNC.
    15 Aug 2012, 09:32 AM Reply Like
  • harrystc
    , contributor
    Comments (6) | Send Message
    If it is good enough for Vanguard and Fidelity, it is good enough for me. And those huge mutual fund companies are getting 15% and then paying 4% to their fund investors. If there was huge volume and those funds were getting out, that would be an important signal. Otherwise, it is only a few weeks until 9-1-12, the next ex-dividend day. Why leave now?
    15 Aug 2012, 10:07 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2850) | Send Message
    "Cut to neutral, price target is $32" Seems more like they are saying not to put new money in, because the upside is capped right now, which I agree with. However, with total dividends received and reinvested now approaching what I originally put into my position in AGNC, I'm not going to believe this analyst over the management team.
    15 Aug 2012, 10:32 AM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (2076) | Send Message
    Yet another attempt to get people to sell a good product. I can never figger these people out. I have folks getting mad at me on my boat for wanting them to be safe and courteous.
    Man, we are de-evolving.
    15 Aug 2012, 10:42 AM Reply Like
  • Jack Rice
    , contributor
    Comments (1264) | Send Message
    Then throw 'em overboard! ;)
    15 Aug 2012, 12:21 PM Reply Like
  • Jack Rice
    , contributor
    Comments (1264) | Send Message
    This general downgrading of mREITs isn't so much an appraisal of quality as a prognosis of pricing, given the current rate environment. Some analysts (but not all -- Nomura reiterates a Buy) think AGNC's premium to book value is at its limit, and if AGNC can't grow its book in the face of further easing -- which in theory it should -- then its current pricing will be hard to sustain.


    On the other hand, as others have suggested, a yield of better than 14% is what it is -- far better than that of any other current income play -- and the market will pay for that. If, for example, AGNC can sustain its dividend, then a price of 40 would still yield over 12%. If AGNC's price goes to 33 then the market will see a 15% yield and respond accordingly.


    The economy WILL bottom at some point, and rates WILL begin to rise. Meanwhile, the mRIETs continue to grab the falling knife as they replenish their portfolios.


    It's ironic that not long ago we were hearing the tiresome refrain of how rising rates were the mREITs' nemesis, when it's further easing -- actually easing of top rates -- doing the damage. In its projections, AGNC sees slowly rising rates as the ideal scenario. I should very much like to see this put to the test.


    Anyway, the key phrase here is "sustaining the dividend". Today presents a different scenario than the last dividend cut by AGNC. The price-to-book is higher now, so there's less "forgiveness" for another cut. If the dividend is cut, then there will have to be a book value increase in order to sustain the price.


    I'm long AGNC.
    15 Aug 2012, 11:31 AM Reply Like
  • ChuckJ
    , contributor
    Comments (79) | Send Message
    Looks like a buying opportunity to me.


    15 Aug 2012, 11:46 AM Reply Like
  • baltimorecharters
    , contributor
    Comments (3) | Send Message
    MO is smoking hot !!!!!!!!!! AGNC is on fire :)
    15 Aug 2012, 05:49 PM Reply Like
  • est1212
    , contributor
    Comments (24) | Send Message
    AGNC is a solid stock for a retirement income. Why sell? At least it guaranties a high yield by the end of 2014 since the Fed will not raise the interest rate soon.
    15 Aug 2012, 09:57 PM Reply Like
  • joecap4c
    , contributor
    Comments (83) | Send Message
    analysts exist to make weatherman and economists look good. If they were to hit the mark often as they try there would be many happy early retirees in their profession. Follow SHJ's link
    16 Aug 2012, 01:41 PM Reply Like
  • jmacjohn
    , contributor
    Comments (42) | Send Message
    Who is Macquarie? Looks like one who gives the signal to short. They speak; it happens. Why don't we tell it like it is. This is the name of the game - and it is controlled by the big money. Short and cover.
    And they put Martha in prison! How many investors did she hurt by her "insider knowlege". The government as usual barks up the wrong tree.
    16 Aug 2012, 02:19 PM Reply Like
  • The Autonomous Guy #23
    , contributor
    Comments (205) | Send Message
    AGNC may have a "High" yield, but what are you all going to do


    when the stock plummets..Big time....Haven't any of you been


    watching the 10 and 30 year bonds???? They have been going up


    and up recently, and AGNC has been going down .!!!!


    Dumped all positions in it today. Made a few $$$$ on it...


    Gotta know when to cut bait.


    Time to take that $$$$ and reinvest in some "Tech " stocks


    that I've been following.


    Good luck with your mReits.
    16 Aug 2012, 11:07 PM Reply Like
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