Anworth Is Appealing For One Reason: Discount To Book
- Anworth is still trading a substantial discount to book value.
- Based upon the assets in the portfolio at the end of the third quarter and the movements in interest rates the company should see an unrealized loss from swaps.
- I’m projecting the negative impact of the swaps to be larger than the gains would be on MBS.
- The substantial discount to book value is the appealing factor for the stock. Repurchasing shares should drive book value per share.
- Be thankful ANH decreased their position in swaps.
Update: Anworth Earnings Q3 2014 - The Little Company Delivers In A Big WayColoradoWealthManagementFund • Nov. 18, 2014
- Q3 Core EPS of $.13 beat consensus estimates of $.09. GAAP EPS was $.15.
- Net Interest Income of $17,992 (in thousands) is down 9.7% year over year.
- The diluted weighted average of shares outstanding was 125,192 (in thousands), which is down 14.4% year over year.
- The company slightly outperformed by my expectations on earnings by sticking to the share repurchase plan.
- The company still has some red flags, but management has performed dramatically better over the last six months. I am upgrading my position on the company.
Anworth Mortgage Asset Corporation Q3 Earnings Preview
- The EPS should be fairly weak, around $.08, unless management reduces amortization charges or reduces the notional value of hedges.
- The company has been trading at a significant discount to share value and represents a potential value play.
- Share repurchases through asset liquidation would unlock substantial value for shareholders.
- Anworth reports EPS of 7 cents per share, total earnings of $8,618 to common shareholders.
- This earnings report confirmed our initial opinion about earnings power.
- The EPS of 7 cents per share came in slightly below our estimate.
Anworth's Q2 Dividend Is Lipstick On A Pig. All Dividends Are Not Created Equal
- Our proprietary model projects net income attributable to common shareholders in Q2 to be $13.485 million, assuming amortization charges of $11 million.
- Anworth invests in 15-year agency MBSs and agency ARM MBSs. The increased use of hedges may be limiting returns to common stockholders by reducing the net interest margin.
- The 15-year MBSs are carried at an amortized premium to par value. NPV analysis indicates the cash flows discounted at spot rates may be worth less than recorded value.
- Anworth has recently undertaken a plan to invest in single-family homes.
- There may be significant agency costs resulting from a conflict of interest.
Major Anworth Shareholder To Fellow Shareholders: Management Continues To Disappoint, Fails To Aggressively Repurchase Shares
- Despite assuring stockholders that it would do so, it appears that Anworth management has not embarked on an aggressive stock repurchase program.
- In an investor presentation on May 2nd, Anworth stated that it has taken and continues to take actions to increase shareholder value, including through its aggressive buyback program.
- Anworth also stated it increased its ongoing share repurchase program by 10,000,000 shares, and in fact, disclosed that in April 2014, nearly 5,000,000 shares had been repurchased.
- We are concerned that Anworth has now drastically curtailed its buybacks, to the detriment of shareholder value.
Major Anworth Stockholder To Fellow Shareholders: Don't Be Fooled By Management's Attempts To Whitewash Past Failures
- Anworth Mortgage has over a decade of negative returns.
- Historic low price-to-book ratio implies a lack of confidence in management.
- Anworth’s poor performance necessitates change.
- We encourage stockholders to vote for our highly-qualified nominees.
- Vote against management’s excessive compensation proposals (#2 and #3).
Attention Anworth Stockholders: Don't Be Fooled By Management's Cherry-Picked Data
- We believe Anworth has been severely mismanaged to date, and stockholders have seen over a decade of investment declines.
- Management has collected almost $80 million in fees over the past decade despite Anworth’s pathetic performance.
- Stockholders cannot receive full value for their shares due to Anworth’s significant discount to per share book value.
- Stockholders may incur significant losses if our nominees are not elected.
Anworth Mortgage Asset Corp. And The Point Of Javelin
- Activists have once again circled an mREIT trading below book value, namely Anworth Mortgage, hoping for a Javelin-type pay day.
- Western Investment LLC has filed a proxy to replace the board, and has raised the prospect of liquidating the REIT to realize book value.
- Javelin Mortgage went through the same process, and subsequently purchased the activist's (Bulldog) shares.
Despite QE3, Anworth Mortgage's 10% Dividend Yield Is Safe
JPM's Anworth Mortgage Upgrade Completely UnfoundedThomas Kelly • Oct. 22, 2007
Wed, Jan. 14, 1:17 PM
- Agency MBS are off to their worst start relative to Treasurys since 1997 as the big drop in interest rates has investors nervous about a surge in refinancing. Returns on paper backed by Fannie, Freddie, or Ginnie Mae are 60 basis points less than those on Treasurys of similar duration so far this month.
- Also stoking the trend are changes to government programs aimed at making mortgage credit easier to obtain.
- Earlier today, the MBA reported applications for home-loan refis jumped 66% last week.
- Prices of agency MBS currently average 106.5 cents on the dollar, meaning owners would lose 6.5% if immediately repaid.
- Annaly Capital (NLY -1.3%), American Capital Agency (AGNC -1.2%), Armour Residential (ARR -2%), Two Harbors (TWO -0.9%), Invesco Mortgage (IVR -1.9%), American Capital Mortgage (MTGE -1.3%), Dynex (DX -0.5%), Apollo Residential (AMTG -1.2%), Anworth (ANH -0.9%), Western Asset (WMC -1.6%).
- ETFs: REM, MORT, MORL
Dec. 30, 2014, 12:37 PM
- Nearly all the mREITs sell at discounts to their most recently disclosed book value, with sector giants Annaly Mortgage (NYSE:NLY) and American Capital Agency (NASDAQ:AGNC) trading at double-digit discounts.
- Often a sizable haircut to book may make sense, as in the case of Armour Residential (NYSE:ARR) and Javelin Mortgage (NYSE:JMI), both of which just cut their dividend (they have the same external manager).
- Of the 24 companies examined, New York Mortgage Trust (NASDAQ:NYMT) and Capstead Mortgage (NYSE:CMO) stand alone in trading at premiums to book value.
- The full list
Dec. 18, 2014, 4:15 PM
Nov. 5, 2014, 4:40 PM
- Q2 core earnings of $15.9M of $0.13 per share. Dividend is $0.14.
- Book value per share of $6.34 vs. $6.26 at end of Q2. Today's close of $5.11 is a 19.4% discount to book.
- 6.8M shares repurchased during quarter at average price of $5.10 each. Based on $6.26 book value, economic gain of about $7.9M or $0.07 per share (9.5M shares bought back in Q2).
- Total assets (mostly hybrid adjustable agency MBS) of $8.1B vs. $8.6B at end of Q2. CPR of 18% up 400 basis points from Q2. Net interest rate spread of 0.83% up 25 basis points.
- Residential real estate portfolio: As of September 30, up to 79 1-4 unit properties at a total cost of $12.5M. About 70% are rented, 10% in the process of being rented, and 20% undergoing renovation.
- Since quarter's end, purchased/committed to purchase $52M in non-agency MBS, and bought back another 5.67M shares at an average price of $5.09 each.
- Conference call tomorrow at 4 ET
- Previously: Anworth Mortgage Asset beats by $0.04, beats on revenue
- ANH +0.4% after-hours
Nov. 5, 2014, 4:11 PM| Comment!
Oct. 20, 2014, 9:11 AM
- Today's announcement is the authorization of another 10M in buybacks. Anworth (NYSE:ANH) last lifted the repurchase program by 10M shares in late May (it repurchased 9.5M shares in Q2, and as of its Q2 earnings report had bought back 2.3M shares in Q3). This followed another 10M share boost in March and 5M late in 2013 as the company fought off a proxy fight from Western Investment.
- The last reported float was 123.8M shares, but it's probably somewhat less at the moment.
- Source: Press Release
- Shares +1.4% premarket
Oct. 9, 2014, 10:40 AM
- It's been a good week for mortgage REITs (REM +0.7%) which rose on Tuesday as the broad market tumbled and brought yields down with it, rose more on Wednesday, this time alongside a major broad market rally on dovish FOMC minutes, and are on the move higher again today as the averages again head south.
- Down to 2.28% earlier in the session (a 16-month low), the 10-year Treasury yield is now flat on the day at 2.32%.
- This week's strong move comes following a tough September in which the mREITs gave back a nice chunk of their YTD gains.
- Annaly (NLY +1.2%) is up nearly 5% over the last four sessions. American Capital Agency (AGNC +1.5%) is ahead more than 6%.
- Others: Armour (ARR +1%), Chimera (CIM +1%), CYS Investments (CYS +1.2%), New York Mortgage (NYMT +1.3%), Anworth (ANH +0.8%), Dynex (DX +1%), Javelin (JMI +1.5%), Five Oaks (OAKS +0.9%).
- Other ETFs: MORT, MORL
Sep. 25, 2014, 6:38 AM
- Anworth Mortgage (NYSE:ANH) hires Brett Roth as SVP and portfolio manager, where he'll focus on investments in non-agency MBS and residential mortgage loans.
- Prior to joining Anworth, Roth for 15 years held senior positions investing in non-agency paper for Trust Company of the West.
- Source: Press Release
Sep. 18, 2014, 4:34 PM| Comment!
Aug. 1, 2014, 4:56 PM
Jun. 19, 2014, 4:29 PM| Comment!
May. 27, 2014, 4:14 PM
- Fresh off its proxy fight victory, Anworth Mortgage (ANH +1.1%) boosts its buyback program by 10M shares. Under pressure from Western Investment, the company lifted the repurchase plan by 10M shares in March and by 5M late last year.
- The float is about 139M shares.
- Source: Press Release
- Shares +1.7% AH
- Previously: Western Investment proxy fight fails
May. 23, 2014, 7:05 AM
- All six of Anworth's (ANH) director-nominees have been reelected, with each getting at least 72% of the vote, according to a preliminary count, says Anworth.
- "The Board's Strategic Review Committee will continue to work with Credit Suisse to identify specific transactions to execute Anworth's announced diversification strategy and make recommendations regarding potential capital markets transactions."
- Source: Press Release
- Previously: Anworth responds to activist claims; talks about new investments
May. 15, 2014, 9:22 AM
- Anworth Mortgage (ANH) management gets more support in its proxy fight with Arthur Lipson's Western Investment, as Glass Lewis and Egan-Jones recommend shareholders vote for the Anworth slate of directors at May 22's annual meeting.
- Source: Press Release
- Previously: Anworth board slate recommended by ISS
May. 9, 2014, 12:29 PM
- Anworth Mortgage (ANH +0.3%) management gets a boost in its proxy fight with Arthur Lipson's Western Investment as Institutional Shareholders Services recommends owners vote for all six of Anworth's director nominees.
- "It is perhaps especially telling that the key parts of the dissidents plan appear to be actions the new board has already identified and begun implementing," says ISS. Indeed, Anworth is ahead 27% YTD, among the stronger performers in the mREIT sector after boosting its buyback program and lifting the dividend.
- Previously: Anworth deals with activist investor
May. 1, 2014, 9:12 AM
- Accusing Arthur Lipson of using selective dates, Anworth (ANH) management notes its 16-year post-IPO total cumulative return has been about 267%, or 8.4% compounded annually, exceeding the returns of the NARIET Mortgage-REIT Index.
- Full letter to stockholders
- From yesterday on Seeking Alpha: Arthur Lipson makes his case
- Yesterday's earnings call (transcript) was somewhat popcorn-worthy as analysts, notably KBW's Michael Widner, wonder - to put it politely - what the heck management is up to by getting into the single-family and apartment rental business.
- After all, notes Widner, the expertise needed to manage an MBS portfolio is somewhat different than that needed to effectively select, buy, and manage rental property. "It just strikes me that I don't understand how [the strategic review committee is] coming up with conclusions that you need to be in more businesses rather than focusing on one."
- CEO Joe McAdams responds that he expects a dramatic change in the U.S. mortgage market and feels it necessary to look for business outside of holding a portfolio of MBS. Widner: "As an analyst, it just seems like it's all very unknown. And what you're telling us is there's going to be a lot of change, but you can't tell us what that's really going to look like. And I guess that makes it difficult to render an investment opinion, or at least a very strong opinion either way on what the future looks like."
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