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PR Newswire (Jan 23, 2014)
PR Newswire (Dec 4, 2013)
at MarketWatch.com (Aug 5, 2011)
at MarketWatch.com (Aug 4, 2011)
MTGE vs. ETF Alternatives
American Capital Mortgage Investment Corp. invests in and manages a leveraged portfolio of agency mortgage investments, non-agency mortgage investments and other mortgage-related investments, which it refers to as its target assets.
Friday, Feb 79:58 AM
Friday, Feb 79:58 AM| Comment!
- Given this year's bond market trends, Q4's loss in book value has likely been restored, says analyst Merill Ross, upgrading to a Buy with $21.50 price target. He also notes the company's investment in mortgage servicing as a move likely to optimize future earnings (see management's discussion in yesterday's earnings call).
- The stock market, says Ross, is pricing American Capital (MTGE +1.7%) as if MBS prices are likely to repeat this year what they did in 2013 (go down). "It is difficult for anyone with a shred of fiduciary responsibility to invest in an asset class that, by and large, destroyed value in such an epic fashion. However, when we look at MTGE and others in its peer group (REM +0.4%), value creation was positive; yet, share price action was strongly negative."
- Related ETFs: MORT, MORL
- Trading at $19.47 at the moment, the stock is selling at a 9.3% discount to Dec. 31 book value of $21.47 (and book value is likely north of $22 by now).
Tuesday, Feb 411:51 AM
Tuesday, Feb 411:51 AM| 28 Comments
- Addressing an analyst cadre somewhat uncomfortable with American Capital's (AGNC +1.6%) new policy of purchasing the common stock of its agency mREIT competitors (Wells' Joel Houck: Do you know their hedging strategies? What happens when one blows up?), CIO Gary Kain says the discounts to asset value are so great as to mitigate much of the risk.
- Kain does acknowledge some risks though, and reminds that the purchase program is but a small slice of AGNC's overall portfolio ($400M of others' stock bought so far vs. nearly $600M of AGNC buybacks just in Q4).
- For now, there won't be any disclosure of which names American Capital is buying - a position also not sitting well with those on the call. Should the positions get large enough though, regulatory filings might be required.
- Kain also reminds that AGNC isn't just boosting risk with these purchases - instead it's selling MBS at 100 cents on the dollar to buy them back (via other mREITs) at somewhere in the area of 80 cents on the dollar.
- Most of the mREIT sector (REM +0.7%) is ahead again today - Armour (ARR +0.9%), CYS (CYS +2.8%), Hatteras (HTS +1.6%), American Capital Mortgage (MTGE +0.6%), PennyMac (PMT +1.2%) - but Annaly (NLY -0.6%) lags, perhaps as investors feel it was far more conservatively positioned going into 2014 than AGNC was.
- Earnings call is still ongoing
- Previous coverage
Monday, Feb 310:42 AM
Monday, Feb 310:42 AM| 8 Comments
- The poor ISM number and resultant drop in interest rates provides more manna to the rebounding mREITs (REM), with Annaly (NLY +1.7%), Western Asset (WMC +1.9%), CYS (CYS +0.9%), Capstead (CMO +1%), and Ellington (EFC +0.8%), (EARN +0.2%) among those leading the sector this morning.
- Capstead was the first of the mREITs to report Q4 results, but American Capital (AGNC +0.9%), (MTGE -0.1%) reports on Wednesday, and investors will want to see if Gary Kain and team - so worried about higher rates - hedged away any gains to be made from their fast decline thus far this year.
- Related ETFs: MORT, MORL
Wednesday, Jan 293:15 PM
Wednesday, Jan 293:15 PM| 11 Comments
- 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
Thursday, Jan 232:23 PM
Thursday, Jan 232:23 PM| 16 Comments
- 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
Monday, Jan 133:08 PM
Monday, Jan 133:08 PM| 7 Comments
- What might pull the mREIT sector out of its brutal slump? A slide in the broad equity market for one. An out of nowhere 1%-plus dive in the major averages is being felt in the bond market, where the 10-year yield is off another 3 basis points to 2.83%, and mortgage REITs (REM +0.4%) - whose book values have been savaged by the big jump in interest rates since last spring - are responding.
- Annaly (NLY +1.2%), American Capital (AGNC +1.4%), (MTGE +1.1%), Two Harbors (TWO +1.4%), CYS (CYS +1.9%), Western Asset (WMC +1.5%), AG Mortgage (MITT +1.1%), and Ellington Residential (EARN +0.8%) are leading. This just in: Sector giants American Capital Agency and Annaly are ahead 6% and 4% YTD, respectively.
- The iShares 20+ Year Treasury Bond ETF (TLT +0.6%) is up 3.2% for the year.
Friday, Jan 1011:18 AM
Friday, Jan 1011:18 AM| 9 Comments
- 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
Monday, Dec 162013, 3:35 PM
Monday, Dec 162013, 3:35 PM| 27 Comments
- 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
Monday, Dec 22013, 3:48 PM
Monday, Dec 22013, 3:48 PM| 48 Comments
- There's no mercy for the mREIT sector (REM -1.6%) as this morning's strong economic data sends the 10-year Treasury yield five basis points higher to 2.80%. Among the new 52-week lows today are sector giants Annaly (NLY -1.6%) and American Capital Agency (AGNC -1.8%).
- Also down sharply are Armour (ARR -2.4%), CYS Investments (CYS -2.4%), Dynex (DX -2.5%), American Capital Mortgage (MTGE -2.8%), AG Mortgage (MITT -2.4%), and Arlington Asset (AI -3.1%).
- Management matters, and investors have clearly lost some faith in the leadership of Annaly and American Capital - both of which trade at more than 20% discounts to book value. The newest favorite is that of Ellington Financial (EFC), where management has mostly been able to preserve book value this year. Company structure may have helped too - Ellington is a partnership, not a REIT and has somewhat more flexibility with its portfolio. The stock trades at just a 6% discount to October 31 reported book.
- ETFs: MORT, MORL
Friday, Nov 222013, 3:11 PM
Friday, Nov 222013, 3:11 PM| 12 Comments
- A nice backup in rates (the 10-year Treasury yield is off 4 bps to 2.75%) is of no help to the mortgage REITs (REM -0.3%), with sector kingpins Annaly (NLY -1.4%) and American Capital Agency (AGNC -1.2%) both hunkered down (NLY earnings call, AGNC earnings call) for the Fed taper, and both hitting 52-week lows today.
- Earlier this week, AGNC and MTGE CIO Gary Kain took his case all the way to Asia at the Citi financial services conference in Hong Kong (transcript). Yes, book value has been hit by higher rates, but also by how much the market is willing to pay for it. Whereas AGNC traded at an average of 110%-120% of book over the past 4-5 years, it's now at sub-90%.
- Discounts can last for awhile, he admits, but also reminds this isn't some opaque bank balance sheet, but instead an easily valued, highly liquid portfolio of assets trading at $0.85-$0.90 on the dollar. As long as it persists, American Capital will continue selling MBS for $1 and buying back stock at a discount.
- Previous: Kain makes a similar case
- Related ETFs: MORT, MORL
- Other sector stocks: Armour (ARR), Two Harbors (TWO -0.8%), CYS (CYS +0.1%), AG Mortgage (MITT -0.5%)
Tuesday, Oct 292013, 9:20 AM
Tuesday, Oct 292013, 9:20 AM| 3 Comments
- The first post-earnings downgrade for American Capital Agency (AGNC) comes from BAML, which removes its Buy rating. The quick take from the company's results (reported last night) shows CIO Gary Kain lightening up the portfolio and shortening duration just as the bond market was set to reverse course and move sharply higher. Today's 11 ET conference call should prove a worthy listen. AGNC -4.7% premarket.
- Armour Residential results show pretty much the same thing, with the book dropping to $16.7B from $22.6B a quarter earlier. ARR -4.1%.
- Other agency players premarket: Annaly (NLY) -1.9%, CYS Investments (CYS) -0.8%.
- Kain's non-agency vehicle: American Capital Mortgage (MTGE) -4.3%.
- ETFs: REM -0.6%. Also: MORT, MORL.
Friday, Sep 202013, 10:22 AM
Friday, Sep 202013, 10:22 AM| 17 Comments
- The mREIT (REM -1.7%) stocks sink under another wave of hefty dividend cuts overnight, with the sector gorillas Annaly (NLY -2.6%) and American Capital (AGNC -3%) slashing their payouts by 12.5% and 24% respectively. American Capital however, continues buying back its shares at a discount to book value at a fast pace.
- American Capital's non-agency cousin, American Capital Mortgage (MTGE -1.2%) cut its dividend 12.5%, and also continues to retire stock below book value. Western Asset Mortgage (WMC +0.7%) held the line on its dividend.
- Other movers include: Chimera (CIM -1.3%), Hatteras (HTS -1.9%), Capstead (CMO -2.2%), Javelin (JMI -3.3%).
- Relevant ETFs: MORT, MORL.
Wednesday, Sep 182013, 2:29 PM
Wednesday, Sep 182013, 2:29 PM| 24 Comments
- Most stocks are partying in wake of the Fed not commencing its QE taper today, but one sector of note is the beaten down mortgage REIT (REM +2.8%) group.
- Annaly (NLY +3.2%), American Capital (AGNC +3.5%), (MTGE +2.4%), Armour (ARR +3.4%), Two Harbors (TWO +3.4%), CYS Investments (CYS +3.7%), Anworth (ANH +2.8%), Western Asset (WMC +2.2%), Javelin (JMI +2%), AG Mortgage (MITT +2.1%), Arlington Asset (AI +1.6%).
- Yesterday, KBW called out CYS Investments as one of the more aggressive plays for those believing rates might head lower.
- ETFs of note: MORT, MORL.
Friday, Aug 232013, 11:43 AM
Friday, Aug 232013, 11:43 AM| 3 Comments
- CYS Investments (CYS +7.1%) leads the mortgage REITs (REM +2.5%) higher a day after its CEO Kevin Grant purchased 34K+ shares of company stock. Grant last purchased shares during the month of May (at far higher prices).
- It's been a busy season of insider buys at the beaten-down mREITs. Of note are a number of purchases at Annaly (NLY +3.2%).
- Among other movers today: American Capital (AGNC +4.1%), (MTGE +2.7%), Invesco (IVR +3.6%), New York Mortgage (NYMT +2.5%), Anworth (ANH +1.8%), Capstead (CMO +2.4%) (see new SA contributor MobilePreacher's take: Capstead, The 'Perfect' Security).
- Related ETFs: (MORT +0.2%), (MORL +5%).
Wednesday, Aug 212013, 12:05 PM
Wednesday, Aug 212013, 12:05 PM| 8 Comments
- The big picture view says better entry points are coming soon - perhaps after the taper actually begins (September?) and a new Fed chief is announced (October?).
- The team's favorite names are those associated with the sector that really aren't mREITs, but instead have more-specialized business models: Newcastle Investment (NCT +0.5%), its spinoff New Residential (NRZ +1.8%), and PennyMac Mortgage Investment Trust (PMT -0.1%).
- In the security-focused names, top picks are Two Harbors (TWO -0.8%) and Ellington Financial (EFC +0.1%), and American Capital Mortgage (MTGE).
- Thus far in Q3, CS sees sector book values off 4% amid a 40 bp increase in rates. The good news is credit spreads haven't continued to widen, but a coming taper announcement could blow them out again.
- Sector ETFs: REM, MORT, MORL.
- Earlier: Two Harbors gets an upgrade.
Monday, Aug 192013, 10:04 AM
Monday, Aug 192013, 10:04 AM| 35 Comments
- One trader takes note of Annaly Capital (NLY -2.1%) - it's fallen through the 2008 panic low all the back to 2005 levels hit amid a prolonged rate hike cycle and when the dividend had to be cut to $0.10 (it was $0.40 last quarter).
- Others of note: Armour (ARR -1.9%), CYS Investments (CYS -2.4%), AG Mortgage (MITT -2%), Capstead (CMO -1.3%), Javelin (JMI -2.3%), American Capital (MTGE -0.9%).
- Related ETFs: REM, MORT, MORL.
- View all 8 replies
Tucker Leppa:: Yea I decided to sell my ANH and picked up more cys at 7.77 today
- View all 7 replies
William Packer:: Bond market rallies on 10b taper news.
Cash King:: Yeah. It did. I was wrong as well. I'm loving today. mREITs good and other fire hot sales on good companies.
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Notarius:: 70000 !?
William Packer:: notarius, i am not long RSO anymore. I got out weeks ago and bought CHMI instead... but RSO is still a solid company in my opinion.
- View all 14 replies
Tucker Leppa:: It means they had such a great year they knocked the lights out :)
Tucker Leppa:: The proper grammar would probably be lights-out.