The upward pressure on rates that caused Q1's losses has reversed, says AGNC CIO Gary Kain on...


The upward pressure on rates that caused Q1's losses has reversed, says AGNC CIO Gary Kain on the earnings call, and the decline in book value partly reversed in April (don't speak too soon Mr. Kain, the 10-year yield is up 10 bps today). Kain has taken advantage of lower MBS prices to add to the company's portfolio. Prepayments and dollar rolls remained benign in Q1, and Kain expects them to remain so. (slides)

Comments (8)
  • PLAZMO44
    , contributor
    Comments (31) | Send Message
     
    I am buying more shares today for the $5 annual dividend which now yields 16.25% at the current price.
    3 May 2013, 11:39 AM Reply Like
  • mostserene1
    , contributor
    Comments (3692) | Send Message
     
    I'm hanging on to my shares. This was a wake-up call to Mr. Kain.
    3 May 2013, 11:40 AM Reply Like
  • MadProfit
    , contributor
    Comments (5) | Send Message
     
    As a retiree and former risk manager, my investment horizon is much longer. So, aside from the very short term stock price gyrations that can be shocking to the short sighted trader or investor, I would ask the readers to assess the following: (1) Is management nimble and wise to ride the current interest rate moves - up/down and twists - to manage the MBS and funding portfolio?, (2) Is the current yield competitive with the rest of the REIT arena and common stock space in that the total yield will match or beat the S&P500 yield? (3) Will there be any regulatory or accounting changes that will absolutely kill the REIT investment space such as a 100% elimination of the mortgage deduction; thus, making home ownership a dinosaur and the REIT market a model T Ford, and (4) The impact from a rapid short term interest rate increase that is not reasonably hedged or anticipated by the REITs? I have my own opinions, views and forecasts taking into account the various earnings calls and presentations that I have been reviewing. The key question for me is, "Am I comfortable with the return and risk profile and the various REIT managements ability to manage that risk/reward profile?"
    3 May 2013, 12:03 PM Reply Like
  • Mexicoway
    , contributor
    Comments (4) | Send Message
     
    And what is the answer to your own questions?
    5 May 2013, 09:19 PM Reply Like
  • B.Wain
    , contributor
    Comments (3) | Send Message
     
    The key criterion in the interest rate spread between costs and revenues (namely, 1 yr and 10 yr treasuries). Mr. Kain has been
    navigating that spread very well and with rates at present levels
    he should produce ample earning. Further, so long as the Fed
    continues to buy $40B of mortgage securities monthly, the
    MBS market should be stable at least for another year or two. The
    reported losses are non-cash mark-to-market adjustments that
    should have just a one quarter effect.
    3 May 2013, 01:35 PM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (2083) | Send Message
     
    Today the smoke, Monday the mirrors.
    Which is good, I sure don't know.
    Capt. Brian
    The Lost Navigator
    3 May 2013, 07:51 PM Reply Like
  • hendro
    , contributor
    Comment (1) | Send Message
     
    When are the dividends payed out?
    4 May 2013, 01:52 AM Reply Like
  • Mexicoway
    , contributor
    Comments (4) | Send Message
     
    The next ex dividend date will be around the 18th of June and dividends are paid quarterly about 5 - 6 weeks after the ex-dividend date
    5 May 2013, 09:19 PM Reply Like
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