ColoradoWealthManagementFund • Tue, Nov. 18
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Update: Anworth Earnings Q3 2014 - The Little Company Delivers In A Big WayColoradoWealthManagementFund • Tue, Nov. 18
- 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
Tue, Apr. 22, 3:47 PM
- The path for Anworth's (ANH +0.6%) stock price continues to be upward amid activist investor Arthur Lipson's effort to boot management and replace the board. "Existing management, which is the McAdams family, has certainly failed shareholders,” says Lipson. “The simplest route could be to liquidate the company.”
- Following Phil Goldstein's successful campaign pressuring Javelin Investment to get busy with buybacks, Anworth looked like the next weakest in the herd, and Lipson's Western Investment began building a stake in December (it now owns about 4% of the company).
- Anworth in March did boost its buyback program and looked to expand its investment options with the formation of Anworth Properties. Later that month, it lifted the quarterly dividend by 75%.
- Now up 30% YTD, the stock price of $5.50 compares to end-of-year book value of $5.98 per share.
- Western's proxy statement
- The annual meeting is May 22.
Wed, Apr. 9, 2:43 PM
- Mixed earlier, a lot more green creeps into the mortgage REIT sector (REM +0.6%) after the FOMC minutes suggest members aren't in as quite of a rush as thought to hike rates. The 10-year note yield is back to flat on the session at 2.68% (was as high as 2.72% pre-release), and the short end is doing even better (steeper curve) with the Dec. 2015 Eurodollar contract higher by six basis points.
- Leading the move higher are American Capital Agency (AGNC +1.1%), Chimera Investment (CIM +1.1%), and Hatteras Financial (HTS +1%). Also among those ahead are Annaly (NLY +0.7%), Anworth (ANH +0.6%), Ellington (EFC +1.3%), (EARN +0.1%), and Javelin (JMI +0.6%).
- Related ETFs: MORT, MORL
Mon, Mar. 24, 9:43 AM
- It's not just Annaly. Compass Point is ringing the register on a wide swath of the mortgage REIT industry today. American Capital Agency (AGNC -1.6%), Anworth Mortgage (ANH -1.3%), Armour Residential (ARR -1.2%), CYS Investments (CYS -1%), Hatteras (HTS -1.5%), and Western Asset Mortgage (WMC -1.4%) are all cut to Hold from Buy.
- All have been big gainers this year, likely narrowing their discounts to book value and - in at least one case - maybe climbing above it.
- ETFs: REM, MORT, MORL
Fri, Mar. 21, 9:13 AM
- The Q1 quarterly payout will be $0.14 per share vs. $0.08 previously for an annualized yield of 10.7%. The company this quarter discontinued hedge accounting for its interest rate swaps after determining they were "no longer necessary or effective components of the company's asset/liability management strategy."
- In particular, the assets the swaps were intended to hedge now have substantially lower principal balances and thus less sensitivity to unexpected rises in short-term rates. The swaps themselves remain in effect.
- The company expects the $0.14 payout is inline with its earnings power this quarter and into the future, and notes the fair value of these legacy swaps is already reflected in book value - thus there should be no book value hit from the higher dividend.
- As tipped last week, Anworth (ANH) has formed Anworth Property Services to invest in other areas of real estate.
- Board member Charles Black has decided to step down and will be replaced by Mark Maron, a parter at Acre Corp., a private equity commercial real estate firm.
- Press release
- No trades yet premarket, but the stock closed last night at $5.21, continuing to trade at a substantial discount to Dec. 31 book value of $5.98.
Fri, Mar. 14, 3:25 PM
- Anworth Mortgage (ANH +1.9%) has its tail in the air after the company boosts its buyback program by 10M shares. Thus far in Q1, the company has bought back 4.023M shares at an average price of $4.93 each. For the year ended Dec. 31, Anworth repurchased 7.646M shares at an average price of $4.95 each.
- Anworth is also expanding its investment horizons, forming Anworth Properties to invest in other sorts of mortgage assets and real estate rental properties.
- Company book value per share as of Dec. 31 was $5.98 putting the current price of $5.34 at a 10.7% discount to book.
- Press release
Tue, Feb. 11, 4:17 PM
- Book value per share of $5.98 is up from $5.89 at the end of Q3 and compares to today's close of $4.89, putting the stock at a 18.2% discount to book. Is Kain a buyer?
- The company made quick work on its December authorization to buy up to 5M more shares, purchasing 2.97M shares in Q4 at an average price of $4.41 each. Thus far in Q1, Anworth (ANH) has repurchased another 1.55M shares at an average price of $4.68 each. The float is about 140M shares.
- CC tomorrow at 1 ET
- Press release, Q4 results
Tue, Feb. 11, 4:08 PM
Fri, Jan. 31, 10:26 AM
- Working today - and for the whole month of January - as the broader market sells off are the REITs. The sector - both the equity REITs and mREITs - had been punished in 2013 as rates moved higher starting last May, but another four basis point decline this morning brings the 10-year Treasury yield down to 2.66% after starting the year at about 3%.
- At least for the mREITs, nearly all put in what may turn out to be major bottoms late in 2013 amid jitters over year-end tax-loss selling and the commencement of the taper - sell the rumor, buy the news ... indeed.
- Mortgage REITs: Annaly (NLY +1.1%) +7.4% YTD, American Capital (AGNC +1.3%) +9.1%, Invesco (IVR +0.5%) +6.7%, Anworth (ANH +0.6%) +10.9%, Apollo Residential (AMTG +0.7%) +9.1%, AG Mortgage Investment (MITT +0.6%) +5.6%.
- ETFs: REM, MORT, MORL
- Equity players: Realty Income (O +0.5%) +9.6% YTD, National Retail (NNN +0.7%) +9.8%, AvalonBay (AVB +0.8%) +4.1%, Public Storage (PSA +0.6%) +4.9%, Boston Properties (BXP +0.2%) +7.8%, Liberty Trust (LRY +1%) +7.9%.
- Related ETFs: IYR, VNQ, REM, DRN, REZ, URE, SRS, RWR, ICF, SCHH, DRV, ROOF, KBWY, RTL, REK, FRI, FTY, PSR, FNIO, WREI
Thu, Jan. 23, 2:23 PM
- One sector nearly fully in the green on a big down day for the broad averages is the mortgage REITs (REM +0.6%) as investors - worried about further declines in book value - take comfort from a big 10 basis point dip in the 10-year Treasury yield to 2.76% (off from 3% at the start of the year).
- Leading are CYS Investments (CYS +3.1%), Annaly (NLY +1.7%), American Capital (AGNC +1.4%), (MTGE +1.5%), Invesco (IVR +1.8%), Anworth (ANH +1.3%), and AG Mortgage Investment (MITT +0.7%). The sector elephants - Annaly and American Capital Agency - are head 6% and 8% YTD, respectively.
- With the big drop in yields at the long end, how long will it be before investors stop fretting about declines in book value and shift to concern over narrowing spreads!
- Related ETFs: MORT, MORL
Thu, Jan. 16, 10:00 AM
- It's mission accomplished at Javelin Mortgage (JMI) for Phil Goldstein's Bulldog Investors, but there are other "vulnerable companies," says JMP's Steve Delaney. “Management doesn’t have a lot to stand on if the REIT’s stock is trading at 80 percent of its book value."
- Javelin has returned 33% since Bulldog disclosed a stake (and called for fast buybacks) late last summer even as the rest of the sector - including giants Annaly (NLY) and American Capital Agency (AGNC) - continued to decline. Goldstein has deferred to comment on his next target but has said he's eyeing both equity and mortgage REITs.
- Anworth Mortgage (ANH) - trading in the area of a 30% discount to book - is a "clear target" for an investor like Goldstein, says Delaney. The company repurchased 2.8M shares in Q4 and boosted its authorization to another 5M.
- Annaly and American Capital are likely too big to be targets, says Delaney, as is a smaller shop with a big backer like Leon Black's Apollo Residential Mortgage (AMTG).
- Related ETFs: REM, MORT, MORL
Dec. 24, 2013, 11:05 AM
- Anworth (ANH +1.6%) gains after boosting its stock repurchase program by 5M shares. Thus far this quarter, the company has bought back 2.8M shares vs. a float of 140M.
- Earlier this month, Anworth slashed its quarterly dividend by 33% to $0.08 per share. The payout was $0.12 in Q3 and $0.15 a quarter before that. The annualized yield of 7.6% is light for the mREITs, but the discount to Sept. 30 book of 30% is large even by the standards of the beaten-up sector.
- Press release
Dec. 20, 2013, 12:12 PM
- "Do the math," says SA contributor REIT Analyst, eyeing a short opportunity in Western Asset Management (WMC +5.4%) following its surprising $2.35 dividend announcement last night.
- The rise in the stock today puts it above November 30 estimated book value per share of $16.76 - this at a time when the rest of the mREIT sector (REM+1.2%) is trading at a significant discount to book, including American Capital Agency (AGNC +1.3%) at more than a 20% discount, and Anworth (ANH+1%) at nearly 30% - just to name two. And don't forget the dilutive share issuance necessary to pay out the stock portion of the dividend.
- Among others who announced dividends last night, Annaly (NLY +2.1%) gains after surprising no one by cutting a nickel to $0.30, and Chimera (CIM+2.2%) rises after announcing a special $0.20 dividend.
- Lumped in with the mREITs, but with a slightly different business model is Arlington Asset Management (AI +3.3%) which continues a big run this year after holding its payout steady. SA contributor Darren McCammon reminds Arlington is a C corp, so - for taxable accounts - its yield is taxed at lower qualified rates, making its 13.4% annualized payout comparable to an mREIT paying 16%. Check McCammon's post for the rest of the advantages. The stock is up 28% YTD vs. big declines for the mREIT sector.
- Related ETFs: MORT, MORL
Dec. 16, 2013, 3:35 PM
- The mortgage REIT sector (REM -0.6%) is lower on a bright green day for the rest of the market, with Anworth Mortgage's (ANH -1.2%) 33% dividend cut Friday night offering another excuse to Sell. Anworth is an agency mortgage player, investing mostly in adjustable mortgages. Anworth's new forward yield of 7.5% is so far out of line with the double digits of the rest of the industry, it suggests even more declines are in store for the stock, or big dividend cuts lie ahead for competitors. At $4.19, Anworth is selling for a near-30% discount to September 30 book value.
- Down the most today is American Capital Mortgage (AGNC -2.7%), and its non-agency cousin, American Capital Agency (MTGE -1.7%) is off sharply as well.
- Others: Annaly (NLY -1.3%), Armour (ARR -1.2%), Western Asset (WMC -1.8%), Apollo (AMTG -1.4%), Ellington (EFC -0.4%), (EARN +0.2%)
- Related ETFs: MORT, MORL
Dec. 13, 2013, 5:06 PM| 2 Comments
Nov. 1, 2013, 3:52 PM
- The stock now rates a Hold with $5 price target following last night's earnings report. Relative to some of the other mortgage REITs, Anworth's (ANH -4.1%) results weren't horrible.
- Book value fell 2%, but the company earned its $0.12 dividend. Net interest income slipped 18 basis points to a barely visible 0.82% as funding costs increased. Prepayments, however, didn't see a spike like other ARMs players Capstead Mortgage and Hatteras Financial.
- Anworth earnings coverage.
Oct. 31, 2013, 4:37 PM
- Core EPS of $0.12 vs. $0.15 in Q2, and current $0.12 dividend.
- Book value per share of $5.89 slips 2% from the end of Q2.
- Portfolio size taken down to $8.77B from $9.45B. Leverage drops to 8x from 8.7x.
- Net interest spread of 0.82 falls 18 basis points from Q2, with cost of funds on repo agreements and hedging instruments jumping 14 bps to 1.12%.
- CC tomorrow at 1 ET.
- Q3 results, press release.
- ANH +0.4% AH.
ANH vs. ETF Alternatives
Anworth Mortgage Asset Corp is in the business of investing in U.S., agency mortgage-backed securities, or agency MBS, which are obligations guaranteed by the U.S. government, such as Ginnie Mae, or federally sponsored enterprises.
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