Invesco Mortgage Capital Sports An 11.6% Yield And A New Strategy
- Invesco Mortgage Capital has substantially changed their risk exposure factors.
- The company has been reducing the interest rate exposure by taking on credit risk.
- The company is now using a portfolio that is more subject to the credit risks on borrowers.
- The change in exposures may be appealing to mREIT investors that want more diversification of their risks.
- Company has been making correct strategic decisions to increase credit portfolio exposure.
- Invesco has been successfully diversifying funding sources.
- Stock offers impressive yield of 11.80% and current stock valuation stays cheap.
Update: Not So Happy Holidays For Invesco Shareholders As The Company Announces Dividend Cut
- Invesco Mortgage has just announced its latest dividend, and to the surprise of some, the company cut the dividend.
- I previously opined that I felt the dividend was in jeopardy.
- This is obviously bearish news for the company and I maintain a hold recommendation.
Insiders Are Buying 12.6% Dividend Invesco Mortgage Capital
- Insiders have increased their holding in IVR by 12.6% (24,631 shares) over the last six months.
- IVR had a so-so Q3; but it has had a total economic return of 15%+ year to date in 2014.
- IVR is moving away from interest sensitive investments into less interest sensitive investments such as commercial mezzanine loans. Read more if you are interested in IVR.
Right Strategy And Attractive Returns Key Features Of Invesco Thesis
- Company rightly diversifying asset portfolio, with initiatives in commercial and non-agency segment.
- IVR has expanded sources of funds to reduce reliance on repo market.
- Offers attractive total returns and is trading at discount to book value.
Update: Invesco Mortgage Reports Its Q3 - Too Weak For My Liking
- Invesco Mortgage has just reported its third quarter earnings which saw quarter-over-quarter weakness.
- The prediction I had for the company was that it would be unable to cover its dividend and this came to pass.
- The present news is so-so and there are better places to put capital, so I'm now changing my outlook from a moderate buy to a hold.
- I am often asked about Invesco, and to-date, I have yet to opine.
- Invesco has several strengths and weaknesses relative to my preferred mREITs American Capital Agency and Annaly Capital.
- I offer a comparative analysis of critical mREIT metrics and opine on the future direction of the companies.
- Is it time to back the truck up or steer clear?
11.5% Dividend Payer Invesco Mortgage Capital Is Returning Large Profits In 2014
- IVR pays an 11.5% dividend.
- IVR gained $1.27 per common share in book value in Q2 2014 for a total economic return of about +9.6% for Q2 alone and 16% for 1H 2014.
- Further, IVR is positioning itself strategically for eventual rising interest rates. Read more for more details. A well-run income investment may be worth your time.
This Mortgage REIT With Its 19% Upside Potential Is A Must For Investors
- Attractive opportunities in non agency and commercial MBS.
- Short term rates are expected to remain low.
- Access to FHLB funds reduces the dependency on repo market.
Invesco Mortgage Capital: 3 Different Insiders Have Purchased Shares This Month
- 3 insiders purchased Invesco Mortgage Capital stock within one month.
- The stock was sold by no insiders in the month of intensive purchasing.
- 2 of these 3 insiders increased their holdings by more than 10%.
Invesco Mortgage: Efforts At Rebalancing Portfolio Set It Apart
- Company working to improve earnings, support dividends and protect book value.
- IVR has also successfully reduced duration and exposure to rate sensitive assets.
- Company’s recent quarter’s results show book value increased by 1.9% quarter-on-quarter to $17.97 per share.
Dec. 9, 2014, 12:57 PM
- Unable to catch a bid for a few sessions, mortgage REITs (REM +1%) have turned higher in afternoon action, led by Annaly (NLY +0.7%) and American Capital Agency (AGNC +1.5%).
- Helping are jitters in the stock market (though U.S. averages are well off the lows), and a 10-year Treasury yield that's retreated all the way to 2.21% after hitting the mid-2.30s on the back of Friday's strong jobs number.
- Armour (ARR +1.1%), Two Harbors (TWO +0.9%), CYS Investments (CYS +1.4%), Invesco (IVR +1.8%), American Capital Mortgage (MTGE +1%), Hatteras Financial (HTS +2%), Capstead (CMO +2%).
- Other ETFs: MORT, MORL
- Also showing some green are the recently beaten-up BDCs, including Prospect Capital (PSEC +0.2%), Fifth Street Finance (FSC +0.2%), Ares Capital (ARCC +0.5%), FS Investment (FSIC), Triangle Capital (TCAP +1.7%).
- ETFs: BDCL, BDCS, BIZD
- Previously: Money flows back into fixed income (Dec. 9, 2014)
Nov. 19, 2014, 3:42 PM
- A check of the mortgage REITs following FOMC minutes which shows the discussion moving a bit more seriously towards rate hikes finds the sector (REM -0.5%) modestly lower.
- Individual names: Annaly (NLY -0.3%), American Capital Agency (AGNC), CYS Investments (CYS -0.3%), Invesco Mortgage (IVR -0.9%), New York Mortgage Trust (NYMT -0.4%), Hatteras Financial (HTS -0.8%), MFA Financial (MFA -1%), Capsteam Mortgage (CMO -0.6%), Ellington Residential (EARN -0.4%).
Oct. 13, 2014, 4:19 PM
- Both equity and mortgage REITs saw plenty of buying as nearly all of the rest of the market was lit up bright red, and Treasury ETFs signaled a sharp drop in yields when government bonds reopen for trade tomorrow (closed this session for Columbus Day).
- A sampling of equity names: Senior Housing Properties (SNH +1.2%), Medical Properties Trust (MPW +1.4%), Gramercy Property Trust (GPT +1.7%), Equity Residential (EQR +0.7%), Inland Real Estate (IRC +0.9%), Sovran Self Storage (SSS +1.1%), Highwoods Properties Trust (HIW +1%).
- One equity REIT sector in the red along with the rest of the market is lodging amid worsening Ebola fears: Ashford Hospitality Trust (AHT -2.9%), Sunshine Hotel Investors (SHO -1.4%), LaSalle Hotel Properties (LHO -1.5%), Summit Hotel Properties (INN -1.5%).
- Mortgage REITs: American Capital Agency (AGNC +1.4%), CYS Investments (CYS +2.2%), Invesco (IVR +1.1%), American Capital Mortgage (MTGE +1.5%), Western Asset (WMC +1.1%).
- ETFs: IYR, VNQ, REM, MORL, MORT, DRN, URE, REZ, SRS, RWR, SCHH, ICF, ROOF, DRV, KBWY, RTL, REK, FRI, FTY, PSR, IFNA, FNIO, WREI
Sep. 30, 2014, 3:05 PM
- Many in the sector (REM -0.9%) presented today at the JMP Financial Services and Real Estate Conference. Those heard in full by this reporter - CYS Investments (CYS -1.6%), Hatteras Financial (HTS -0.9%), and MFA Financial (MFA -1.3%) - presented nothing alarming, but the sector is nevertheless lit up bright red.
- Other presenters included Capstead Mortgage (CMO -1.2%), Arlington Asset (AI -2.2%), Dynex Capital (DX -1.7%), Invesco (IVR -1.2%), Armour (ARR -2%), New York Mortgage Trust (NYMT -3.2%), Javelin Mortgage (JMI -1.5%), Five Oaks Investment (OAKS -1.9%), and Apollo Residential (AMTG -1.1%).
- Related ETFs: MORT, MORL
- Previously: CYS's Grant not buying hawkish ideas from Fed
- Previously: Hatteras updates on Q3 at conference
- Previously: MFA Financial positions for further housing improvement
Sep. 18, 2014, 1:10 PM
- The entire sector is in the red, but the biggest declines are being seen in the industry giants, about the only spots large investors can move a lot of shares quickly: Annaly Capital (NLY -1.6%), American Capital Agency (AGNC -1.6%).
- Yesterday's FOMC statement may have left in the "considerable period" language, but the committee remains on course to begin a rate hike cycle in less than a year.
- Further, the selloff on the long end of the curve can has reached the sizable stage - the 10-year yield is up 32 basis points in a month, and has now erased about all of the summer's decline. Book values could take a hit (though hedging is likely to ease the pain).
- REM -0.7%
- Other ETFs: MORT, MORL.
- Other names: Armour (ARR -1.3%), Invesco (IVR -0.7%), Hatteras (HTS -3%), Capstead (CMO -0.3%), Western Asset (WMC -0.4%)
Sep. 2, 2014, 2:26 PM
- REITs and other so-called "shadow bankers" for the last several years have used captive insurers to join Federal Home Loan Banks, thus getting access to more dependable financing and better terms than they otherwise could.
- The FHFA for some time has voiced its concern over the practice, and under new rules just proposed, would sunset those existing memberships over a five year period.
- ETFs: REM, MORT, MORL
- Two Harbors (TWO -1.8%), Invesco Mortgage (IVR -1.9%), Hatteras Financial (HTS -1.2%), Dynex Capital (DX -1.1%), PennyMac Mortgage (PMT -1.5%), Annaly Capital (NLY -0.8%), American Capital Agency (AGNC -0.3%).
Jul. 3, 2014, 9:56 AM
- A few days ago, the 10-year Treasury yield stood at about 2.50%, but it's been on the rise all week and shot up to near 2.7% this morning following the strong jobs print and drop in unemployment to 6.1%. Checking the short end of the curve, Eurodollar futures are selling off as well, and now have baked in more than one rate hike between now and one year from now, and 75 basis points of hikes by the end of 2015.
- Previously: Treasury yields jump, gold slumps after strong jobs print
- Off 1.1% today, Annaly Capital (NLY) is down nearly 5% since this time last week, with a similar move having taken place in American Capital Agency (AGNC -1.2%).
- Chimera (CIM -1.4%), CYS Investments (CYS -1%), Invesco Mortgage (IVR -1.8%), American Capital Mortgage (MTGE -1.6%), New York Mortgage Trust (NYMT -1.2%), AG Mortgage (MITT -1.8%), Ellington Residential (EARN -0.7%), Dynex (DX -0.8%), MFA Financial (MFA -0.9%).
- ETFs: REM, MORT, MORL
Apr. 10, 2014, 11:49 AM
- Lit up bright green as the market's momentum names again break down and lead the averages - and Treasury yields - lower are the mortgage REITs (REM +0.5%).
- The 10-year yield is off six basis points to 2.63% and Eurodollar futures in the last few sessions have rallied strongly, pricing out at least one rate hike between now and the end of 2016.
- CYS Investments (CYS +1.7%), Invesco Mortgage (IVR +1.3%), Hatteras Financial (HTS +1.3%), MFA Financial (MFA +1.4%), Two Harbors (TWO +0.8%), American Capital (AGNC +0.6%), (MTGE +0.5%).
- One day after making a number of additions to its management team - including a couple of hires from the New York Fed - Annaly (NLY +0.5%) is also posting gains.
- Related ETFs: MORT, MORL
Mar. 19, 2014, 10:14 AM
- A check of the mortgage REITs as dividend announcements continue to roll in finds the sector marginally higher, but Dynex (DX) lower by 1% after cutting its payout by 2 cents to $0.25 per share. Hatteras Financial (HTS -0.3%) and Invesco Mortgage (IVR +0.3%) both held their dividends steady - as has been the norm for the sector this quarter.
- Even with today's decline, Dynex - at $8.95 per share - trades above Dec. 31 book value of $8.69.
Mar. 7, 2014, 12:46 PM
- The mortgage REITs are maybe the poorest performing sector amid a big move higher in interest rates, and formerly bullish Deutsche Bank ringing the register on New York Mortgage Trust, CYS Investments, and American Capital Mortgage after nice runs for all have pulled them close to (or above in NYMT's case) book value.
- There's also an earnings miss this morning from one of the last of the players to report Q4, Western Asset Mortgage.
- Annaly (NLY -2.1%), American Capital Agency (AGNC -2.3%), Armour (ARR -1.4%), Two Harbors (TWO -1.8%), Invesco (IVR -2.7%), Capstead (CMO -1.2%), MFA Financial (MFA -2%), Apollo Residential (AMTG -1.7%)
Jan. 31, 2014, 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
Jan. 29, 2014, 3:15 PM
- For the most part, the mREIT sector (REM -0.2%) is getting little boost from another big swoosh down in interest rates - the 10-year Treasury yield off 7 basis points to 2.69%. Confused about how to play the dislocations caused by massive QE purchases of MBS, mREIT managements are likely similarly confused about how to play the taper (another $10B reduction today).
- Peeking into the green in afternoon action are Annaly (NLY +0.9%), Chimera (CIM +0.8%), and American Capital Agency (AGNC +0.2%), but Armour (ARR -0.7%), Invesco (IVR -1.2%), American Capital Mortgage (MTGE -1.2%), Hatteras (HTS -1.7%), and Western Asset (WMC -2.6%) are nicely lower.
- Capstead Mortgage is set to be the first of the mREIT to report Q4 results after the bell today.
- ETFs: MORT, MORL
Jan. 23, 2014, 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
Jan. 10, 2014, 11:18 AM
- It's a big dip in interest rates today (the 10-year yield off 8 bps to 2.88%), but buyers are doing little more than tiptoeing back into beaten-down mortgage REITs.
- Leading are Annaly (NLY +1.3%) and American Capital (AGNC +1.4%), (MTGE +1.1%), and Armour (ARR +0.7%), CYS Investments (CYS +1.2%), and Invesco (IVR +1.1%) are also posting decent gains. All are quietly up in the area of 5-10% off of their 52-week lows set late last year.
- Related ETFs: REM, MORT, MORL
Dec. 6, 2013, 11:42 AM
- There's a bit of green spreading across the mREIT sector this morning as Treasurys reverse an early plunge following the strong jobs report - the 10-year yield is now off 3 basis points to 2.85% after climbing to 2.93% just after the 8:30 ET release.
- However, there's no relief for sector leaders Annaly (NLY -1%) and American Capital Agency (AGNC -1.5%), both of which continue to reel following Goldman's Sell recommendation yesterday - each have carved out new 52-week lows this morning. There may be plenty of players in the mREIT sector, but for the institutional big boys who have the Goldman report on their desks, there's just NLY and AGNC. Others in the red include: Armour (ARR -0.7%) and CYS Investments (CYS -1.1%).
- Posting gains: Chimera (CIM +0.8%), Invesco (IVR +0.2%), Hatteras (HTS +0.2%), Dynex (DX +0.7%), New York Mortgage (NYMT +0.3%), Apollo Residential (AMTG +0.7%), Javelin (JMI +1.1%), AG Mortgage Investment (MITT +2.3%).
- Related ETFs: REM, MORT, MORL.
Dec. 2, 2013, 4:42 PM
- Invesco Mortgage's (IVR) board approves the repurchase of another 20M shares (about 15% of the float). During this quarter, the company has bought back about 6.84M shares at an average price of $15.02 each. Today's close of $14.79 is a 16.2% discount to Sept. 30 book value per share of $17.64.
- Adding to its non-agency investments, Invesco recently purchased an interest in a pool of 398 recently-originated 30-year prime residential mortgages with unpaid principal balance of about $300M. The company also boosted its investment in floating rate commercial real estate loans to about $108M by closing on two deals totaling $39M.
- Shares +1.4% AH.
- Press release
IVR vs. ETF Alternatives
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