Seeking Alpha

American Capital Agency (AGNC -3.5%) prices its 50M share secondary at what appears to be...

American Capital Agency (AGNC -3.5%) prices its 50M share secondary at what appears to be $31.60/share for gross proceeds of $1.5B. Underwriters have the option to purchase another 7.5M shares. The float was 338M shares prior to the offering. Book value as of Dec. 31 was $31.64. (PR)
Comments (7)
  • Stan The Man
    , contributor
    Comments (143) | Send Message
     
    Presumably the regular quarterly dividend of $1.25 gets declared in March and paid thereafter. Seems unlikely the dividend would be lowered right after a public offering...
    28 Feb 2013, 10:46 AM Reply Like
  • SivBum
    , contributor
    Comments (1579) | Send Message
     
    Looks like recent dividends have been coming from rounds of share offerings. There is a hint of Herbalife in this.
    28 Feb 2013, 10:52 AM Reply Like
  • Clayton Rulli
    , contributor
    Comments (2472) | Send Message
     
    seems like ACAS is the one to buy
    28 Feb 2013, 11:50 AM Reply Like
  • worldraft
    , contributor
    Comments (7) | Send Message
     
    With this new offering, one would think that, with the good management and the new purchases, not only is the dividends remain but I would think they will actually rise.
    Jean
    28 Feb 2013, 12:58 PM Reply Like
  • kenmanblue
    , contributor
    Comments (5) | Send Message
     
    Why offer new shares at a 3% discount, thereby immediately reducing the value of existing shares? If I recall, previous share offerings were made at book value or higher.
    28 Feb 2013, 02:48 PM Reply Like
  • ngru
    , contributor
    Comments (5) | Send Message
     
    The largest Ponzi scheme in history?
    1 Mar 2013, 09:51 AM Reply Like
  • Stan The Man
    , contributor
    Comments (143) | Send Message
     
    New shares are always offered at some discount to market. Otherwise nobody would buy them. Without the discount anyone could buy at the market price and the company would not be able to sell shares and raise cash. This company has a policy of selling shares when they get above book value, then buying them back occasionally if the shares fall below book. It's worked out very well so far and allows them to offer this giant dividend.

     

    Seems to me the trick is to trade in and out of AGNC and MTGE to anticipate these events. Also to keep buying ACAS until it gets close to its own book value because both those companies get managed by ACAS and pay management fees to ACAS. Since ACAS is working off a giant tax loss, and trades at around a 30% discount to book, and regularly buys back shares with its cash, buying ACAS seems as close to a sure thing as you can find in this market environment. Just look at its chart the past couple of years...
    1 Mar 2013, 11:16 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|