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.
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. 16, 2014, 4:20 PM
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%).
Nov. 4, 2014, 4:28 PM
- Q3 core earnings of $54.3M or $0.44 per share vs. $63.1M and $0.50 in Q2 thanks to faster prepayment speeds which the company says have declined in Q4. Dividend of $0.50.
- Book value per share of $19.16 slips 3.2% from the end of Q2. Today's close of $16.51 is a 13.8% discount to book.
- Effective interest rate margin of 1.17% down three basis points from Q2.
- Conference call tomorrow at 9 ET
- Previously: Invesco Mortgage Capital misses by $0.07
- IVR flat after-hours
Nov. 4, 2014, 4:14 PM
Nov. 3, 2014, 5:35 PM
- ADEP, AMRS, ATVI, AWAY, AXLL, BIO, BIOL, BIRT, CALD, CBSO, CDXS, CERS, CHUY, CKEC, COHR, CORT, COUP, CRTO, CSU, DOX, DVN, ENPH, EXAM, EXEL, FANG, FEYE, FOXA, FRGI, GAS, GHDX, HR, ITRI, IVR, JAZZ, JIVE, JKHY, JMBA, KAR, MITT, MOSY, MPO, MYGN, NP, NRP, NSTG, NYMT, OAS, OCLR, OKE, OKS, PACD, PAYC, PBPB, PCYC, PEGA, PHH, PRI, PXD, PZZA, REGI, REXX, RLOC, RNR, RP, SBAC, SN, SPA, SQNM, TMH, TNET, TRIP, TTGT, TWO, TWOU, TX, UIL, WPX, XEC, XNPT, ZAGG, ZU
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. 15, 2014, 4:35 PM| 1 Comment
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. 29, 2014, 4:23 PM
- Core earnings of $62.1M or $0.50 per share vs. $0.46 in Q1. Dividend is $0.50.
- Book value per share of $19.80 up 6% from Q1. Today's close of $17.27 is a 12.8% discount to book.
- Effective interest margin of 1.2% is off one basis point from Q1.
- MBS makes up $18.3B of portfolio vs. $17.3B at start of year; residential loans $2.3B vs. $1.8B; commercial loans $95.6B vs. $64.6B.
- Conference call at 5 ET
- Previously: Invesco Mortgage Capital beats by $0.02, beats on revenue
- IVR flat AH
Jul. 29, 2014, 4:08 PM| Comment!
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
IVR vs. ETF Alternatives
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