Tue, Feb. 3, 3:52 PM
- Unable to put any sort of positive move together even as interest rates tumbled this year, mREITs (REM +0.9%) are uniformly higher this session as the 10-year yield jumps 11 basis points to 1.78%.
- American Capital Agency (AGNC +1.3%) reported better-than-hoped Q4 results last night, but has altered its mix of portfolio holdings and hedges to brace for what it expects will be a wave of prepayments. If rates keep this up, those prepayments may not materialize.
- Annaly (NLY +1.1%), Chimera (CIM +1.5%), CYS Investments (CYS +1.3%), American Capital Mortgage (MTGE +1.8%), Hatteras (HTS +1.1%), MFA Financial (MFA +1.3%), Western Asset (WMC +1.8%), Dynex (DX +1.1%), Ellington Financial (EFC +1.2%).
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
Mon, Jan. 12, 10:03 AM
- The mortgage REIT space (REM -0.6%) is cut to Market Weight from Overweight at Wells Fargo, with Annaly Capital (NLY -0.4%), American Capital Agency (AGNC -0.2%), CYS Investments (CYS -0.7%), Capstead Mortgage (CMO -0.8%), American Capital Mortgage (MTGE -0.5%), AG Mortgage (MITT -1.3%), and MFA Financial (MFA -0.3%) - for now - individual names also being cut to Market Weight.
- It's an interesting move, especially in light of the significant discounts to book value nearly every stock in the sector trades at. The mortgage REITs have been especially notable of late for not being able to make any headway alongside the big rally in bond prices. Lower rates might do something for book values, but the sharply flatter yield curve (which could flatten even more once the Fed begins hiking) doesn't bode well for earnings power.
- Other ETFs: 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, 4:04 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)
Oct. 29, 2014, 4:20 PM
- Q3 net spread and dollar roll income of $0.68 per share vs. $0.72 in Q2. Dividend of $0.65.
- Book value per share of $22.24 down 2.2% from the end of Q2. Today's close of $19.75 is an 11.2% discount to book.
- Combining dividend with the decline in book value yields a 0.7% economic return on equity for quarter, or 2.8% annualized.
- $6.4B portfolio consists of $4.3B in agency securities, $900M net long TBA mortgage position, $1.1B non-agency securities, $100M in MSRs. CPR on agency paper of 8.9% up 60 basis points from Q2.
- Net interest spread of 2.34% up two basis points from Q2.
- No shares repurchased during quarter. $134.9M remains authorized and the timeline has been extended through the end of next year.
- Conference call tomorrow at 11 ET
- Previously: American Capital Mortgage EPS in-line, misses on revenue
- MTGE flat AH
Oct. 29, 2014, 4:04 PM
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
Oct. 1, 2014, 3:02 PM
- Despite a strong period for mortgage REITs ever since the financial crisis, most of the benefits from structural changes to the mortgage market have yet to be realized, says American Capital Agency (AGNC +1.8%) and American Capital Mortgage (MTGE +0.8%) CIO Gary Kain, wrapping up his company's Mortgage REIT day with a look at the future.
- Presentation slides
- Why is this? First, Fed MBS purchases have dwarfed the declines in GSE portfolios; second, the GSEs/FHA still account for the vast majority of new originations; third new non-agency securitization volumes are negligible; fourth GSE credit risk transfers are only beginning to ramp up.
- At some point, there's going to be greater reliance on private capital, says Kain, and he and his team believe it's going to provide significant opportunity in the mREIT (REM +0.6%) space in the intermediate to longer term in the agency, non-agency, and MSR sectors.
- Previous coverage
Oct. 1, 2014, 9:20 AM
- American Capital Agency (NASDAQ:AGNC) and American Capital Mortgage (NASDAQ:MTGE) CIO Gary Kain is set to launch the all-day proceedings in a few minutes.
- Link to webcast and presentations
- Noted in Kain's slides are the fast pace of share repurchases at the two companies amid the large discount between price and book value which opened up last year. AGNC bought back 10% of its stock in 2013, far more than the majority of its agency REIT peer group. MTGE repurchased 13% of its float in 2013, also several orders of magnitude larger than much of its non-agency REIT peer group.
Sep. 19, 2014, 3:32 PM
- Leading the mREIT sector (REM +0.2%) higher this session are American Capital Agency (AGNC +1.9%) and American Capital Mortgage (MTGE +1%) after the two maintained their $0.65 per share quarterly payout last night. Neither move should have been a surprise as both comfortably out-earned their dividend last quarter.
- Also maintaining its payout ($0.30 per shares) after the bell yesterday was Annaly Capital (NLY +0.8%).
- The sector is also getting a break from rising rates with the 10-year Treasury yield lower by four basis points to 2.58%
- ETFs: MORT, MORL
Sep. 18, 2014, 5:39 PM
Aug. 1, 2014, 11:40 AM
- "We think that MTGE's allocation of equity to agency MBS, non-agency MBS and mortgage servicing will prove capable of driving Y/Y earnings gains even as the FOMC engages in liftoff," says analyst Merrill Ross, lifting his price target by $1 to $22.50.
- MTGE's liquid portfolio can take advantage of mis-priced assets opportunistically, says Ross, and negative net supply of MBS will be supportive of its holdings.
- Previously: American Capital Mortgage still on sale after big quarter
Jul. 30, 2014, 4:28 PM
- Q2 net spread and dollar roll income of $0.72 vs. $0.62 in Q1. Dividend is $0.65.
- Book value per share of $22.73 up 4.4% from the end of Q1. Today's close of $19.85 is a 12.7% discount to book.
- Adding dividend and book value increase together yields a 7.3% economic return for the quarter.
- $6.8B investment portfolio includes $4.5B in agency MBS, $1.2B net long TBA mortgage position, and $1.1B in non-agency MBS. $68M investment in MSRs during Q2. $11M investment in common stock of other mREITs during Q2. Leverage slips to 5.2x from 5.6x.
- CPR for agency portfolio of 8.3% up from 5.7% in Q1.
- Average net interest spread during Q of 2.32% up 13 bps from Q1.
- Conference call tomorrow at 11 ET
- Previously: American Capital Mortgage EPS of $1.64
- MTGE flat AH
Jul. 30, 2014, 4:24 PM
MTGE vs. ETF Alternatives
American Capital Mortgage Investment Corp operates as a REIT. It invests in, finance and manage a leveraged portfolio of mortgage-related investment, non-agency mortgage investments and other mortgage-related investments.
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