Kinabalu

American Capital Agency: Making Money the Old-Fashioned Way

The reason this company did so well in the stub period is that it put its entire portfolio in place when GSE spreads are at their highest levels in history. They completed their IPO in May and immediately put all the money to work at an 8X leverage. It was the best of all possible worlds to start in. The spreads won't be so good after the just completed FNM/FRE bailout. They will do well until the portfolio runoff catches up with them. But after that they will have to prove their worth.