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American Capital Mortgage Investment (MTGE)

  • 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%).
  • Jun. 26, 2014, 3:54 PM
    • Enjoying the decline in interest rates even among some hawkish stomping of feet by St. Louis Fed boss Jim Bullard, the mortgage REIT sector (REM +0.9%) is broadly higher. Sector giants: Annaly Capital (NLY +0.6%) and American Capital Agency (AGNC +1.1%).
    • Others: Two Harbors (TWO +1.9%), Chimera (CIM +1.8%), American Capital Mortgage (MTGE +1%), Cherry Hill Mortgage (CHMI +1.4%), New York Mortgage Trust (NYMT +1.1%).
    • Other ETFs: MORT, MORL
  • Jun. 17, 2014, 4:18 PM
    • Annualized, the $0.65 payout makes for a yield of 12.8% based on today's $20.33 close. The dividend is payable on July 28 to owners of record as of June 30. The ex-dividend date is June 26.
    • Source: Press Release
    • MTGE flat after-hours in light trade.
    | Comment!
  • May. 15, 2014, 6:56 AM
    • It sounds like it could be a valuation call by JMP's Steven Delaney as the rise in book value in Q1 didn't match the quick gain in the stock price. Shares still trade at a discount to book (last night's $19.92 close is an 8.3% discount to March 31 book of $21.78), but the no-brainer part of the trade may be over.
    • It's may also be notable that management - an aggressive buyer of company stock late last year - brought share repurchases to a near-halt in Q1.
    • MTGE no trades premarket
    | Comment!
  • Apr. 30, 2014, 4:49 PM
    • Net income of $48.8M or $0.95 per share, with spread and dollar roll (core) income of $0.62 missing estimates by $0.02 and coming against the quarter's $0.65 dividend. $9.2M of operating income from Residential Credit Solutions (MSR business). As of the end of the quarter, company has about $37.3M, or $0.73 per share in estimated undistributed taxable income.
    • Book value per share of $21.78 up from $21.47 at the end of last year after including $0.65 payout. 4.5% economic return from the $0.65 dividend and $0.31 per share increase in book value.
    • Investment portfolio of $5B agency MBS, $700M of net long TBA securities, $1B of non-agency MBS, and $41.3M of investments in agency mortgage REITs.
    • CPR on agency portfolio of 5.7% about the same as Q4. Net interest spread of 2.23% slips 7 bps from Q4.
    • Buybacks fizzle to a near-halt: 200K shares or 0.4% of the float repurchased during quarter at average price of $19.67 each.
    • CC tomorrow at 11 ET
    • Source: Press Release
    • Previously: American Capital Mortgage beats by $0.29, misses on revenue
    • MTGE +0.4% AH
    | Comment!
  • Apr. 30, 2014, 4:33 PM
    • American Capital Mortgage (MTGE): Q1 EPS of $0.95 beats by $0.29.
    • Revenue of $42.15M (-3.2% Y/Y) misses by $9.35M.
    • Press Release
    | Comment!
  • Apr. 25, 2014, 4:43 AM
    • The amount that lenders originated in mortgage loans plunged 58% on year Q1 to a 14-year low of $235B, almost entirely due to drop in refinancing. The figures are from industry newsletter Inside Mortgage Finance.
    • Loans for acquisitions were flat on year and lower than in Q4.
    • The trend is the latest indication that increasing interest rates are hampering the housing recovery. The average 30-year fixed-rate mortgage was 4.5% last week, up from 3.6% in May last year, when rates spiked after the Fed indicated it would scale back its QE program.
  • Apr. 24, 2014, 10:36 AM
    • A check of the mortgage REITs (REM +0.1%) finds not a lot going on stock price-wise following the first Q1 earnings reports from the sector this week (CYS Investments and Hatteras). As expected, book values grew and prepayments remained at a low level.
    • Perhaps unexpected was a good deal of caution from CYS management about mortgage prices - right now, it's finding better value in Treasurys, and awaits a pullback in MBS prices before boosting those holdings. "The mortgage market is a little kid playing with matches," said CEO Kevin Grant on the earnings call (transcript). "We just don't know when everybody's fingers are going to get burnt. The traders that play in this market, they know this and they know they are playing with matches."
    • Amid the low supply of MBS out there, Hatteras (HTS +0.1%) management on its call (transcript) says it now has 10 originators delivering wholesale product to the company covering more than half of monthly cash flow needs. Up next is expansion into jumbo ARMs.
    • Other sector ETFs: MORT, MORL
    • Individual names: Annaly (NLY +0.6%), American Capital (AGNC +0.7%), (MTGE +0.2%), Armour (ARR +0.1%), Two Harbors (TWO -0.6%), Invesco (IVR -0.1%), Capstead (CMO +0.3%), MFA Financial (MFA +0.1%), Western Asset (WMC +0.5%).
  • 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
    | 1 Comment
  • Apr. 4, 2014, 3:15 PM
    • What's working today? With the exception of Western Asset Mortgage which had a massive secondary offering, the mREIT sector is nearly universally higher as money rushes out of the previously perkier areas of the market.
    • Not hurting is a seven basis point decline in the 10-year Treasury yield to 2.73%.
    • Up the most are the two largest and also investor favorites Annaly (NLY +1.4%) and American Capital Agency (AGNC +1.3%). Others: CYS Investments (CYS +1%), American Capital Mortgage (MTGE +0.5%), MFA Financial (MFA +0.5%), Dynex (DX +0.9%), Armour (ARR +0.5%).
    • Related ETFs: REM, MORT, MORL
  • Mar. 20, 2014, 4:20 PM
    • American Capital Mortgage Investment (MTGE) declares $0.65/share quarterly dividend, in line with previous.
    • Forward yield 13.18%
    • Payable April 28; for shareholders of record March 31; ex-div March 27.
    | Comment!
  • Mar. 19, 2014, 3:13 PM
    • A check of sectors following the FOMC statement and updated projections suggesting a quickened pace of rate hikes in the future finds the banks and life insurers notably moving higher. Both groups have struggled earning a spread amid ZIRP and are positively levered to higher rates.
    • Lenders: Bank of America (BAC +1%), Citigroup (C +1%), JPMorgan (JPM), Regions (RF +1.7%), KeyCorp (KEY +0.9%), SunTrust (STI +0.7%).
    • Life insurers: MetLife (MET +1%), Prudential (PRU +0.7%), Lincoln National (LNC +1%).
    • Not necessarily positively levered to higher rates are the mortgage REITs (REM -1.6%): Annaly (NLY -1.8%), American Capital (AGNC -1.7%), (MTGE -1.9%), Armour (ARR -1.3%), Two Harbors (TWO -2%) CYS Investments (CYS -3.3%), Capstead (CMO -1.3%), MFA (MFA -1.8%).
    • Related ETFs: MORT, MORL
  • Mar. 10, 2014, 9:32 AM
    • Another bull cashes in chips on a mortgage REIT name after a nice run, with Wunderlich Securities cutting American Capital Mortgage (MTGE) to a Hold from Buy. For MTGE in particular, it's the company's 2nd downgrade in as many days.
  • Mar. 7, 2014, 7:11 AM
    • Keep an eye on the hot mortgage REIT sector today as Deutsche cashes in its chips on three bullish calls.
    • New York Mortgage Trust's (NYMT) cut to Hold is a valuation call, with analyst Stephen Laws acknowledging solid Q4 results and good prospects going forward, but noting the stock price is already near his raised price target of $7.75 (from $7). NYMT is the rare mREIT at the moment trading above book value.
    • Neither CYS Investments (CYS), nor American Capital Mortgage (MTGE) are at book, but both have moved a lot closer to it this year, and Laws cuts both to Hold, believing dividends, not capital appreciation will drive any returns from current levels. "Given investor concerns of higher interest rates, we believe it is unlikely that shares of agency MBS managers will trade at or above book value in 2014."
    • Deutsche, he says, currently forecasts the 10-year Treasury yield to hit 4% before year-end, likely keeping a lid on price-to-book ratios for the agency players.
    • Related ETFs: MORT, MORL, REM
  • Feb. 15, 2014, 9:00 AM
    • "Get used to it," is what American Capital Agency (AGNC) CIO Gary Kain hears from many about the significant discount to book value his stock (and the entire agency mREIT sector) sell for. If things like banks and closed-end funds can trade at discounts, why not agency REITs? It's all about collateral, responds Kain. The fixed agency MBS market is the world's 2nd most liquid, totally transparent, and offers negligible bid/ask spreads. There is complete certainty with respect to book value, not always true with other sectors selling at discounts.
    • Presentation transcript here, presentation slides here
    • Off the purchase of a 7.5% stake (8.5% if MTGE is included) in Hatteras (HTS) - the only of AGNC's mREIT purchases made public so far - Kain said he wanted to get exposure to hybrid ARMs, but they're not easy to buy in size. A sizable American Capital buy could have moved the market by half a point or more. The better way to get a decent stake was by buying Hatteras at around a 20% discount to book.
    • Clearly feeling his oats after a tough 2013 (he notes book value fell just 5.5% while the stock declined 14.3%), a confident Kain says buyers of agency mREITs are not only purchasing a portfolio of MBS selling for significant discounts to where they trade in the open market, but those MBS - having already priced in a stronger economy and a Fed QE exit - have room for sizable upside.
    • Related ETFs: REM, MORL, MORT
  • Feb. 12, 2014, 10:58 AM
    • Perhaps taking a dig at American Capital's (AGNC +0.3%), (MTGE +1.4%) Gary Kain, Hatteras (HTS +2.3%) management - speaking on the earnings call - says it's not buying up any shares of other mortgage REITs because it would then lose control of the hedging.
    • Kain (actually the two mREITs of which he is CIO), of course, is now an owner of Hatteras, disclosing last week an 8.5% stake in the company amid his decision to buy up the common stock of agency REITs while they're trading at significant discounts to book value.
    • Earlier: Interest margins on the rise at Hatteras as prepayments slide.
MTGE vs. ETF Alternatives
Company Description
American Capital Mortgage Investment Corp. invests and manages a leveraged portfolio of agency mortgage-related investments, non-agency mortgage investments and other mortgage-related investments, which it refers to as its target assets.
Sector: Financial
Country: United States