The mortgage REITs are lit up bright red (MORT -1.9%), again led by American Capital Agency (AGNC -3.5%) and American Capital Mortgage (MTGE -3%), with Annaly (NLY -3.1%) not far behind. Yes, the 10-year Treasury yield is a 3 bps higher, but there's also rare action in Fed Funds futures, now pricing in a whopping 50 bps in rate hikes by this time 2016. AGNC presents at the JMP Conference at 2 ET. [View news story]
"O" is up 40% since I bought in Nov. 2012. Think I may stick with the equity REITs and look for another entry point on another one of them.
On the other hand, maybe not. Decisions, decisions. :)
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Well, it would seem to me, with that type of thinking, i.e. material distortions of economic reality should not be corrected, but used to the advantage of the investor, that we should do the same for all public companies and distort all the earnings, if I am understanding correctly.
Financials need to present a fair picture of the economic reality of the transactions that have been entered into, and present that picture as accurately as possible. When a company reports an $.88/share loss for a quarter, but the actual results are a positive $1.30/share income, something is very wrong with the picture being presented. I don't see any justification for wanting to keep the distortions and throw out reality, except greed perhaps. Many investors are being mislead and probably selling their shares at that point, potentially at a loss. They are relying upon totally worthless information and it is injuring them financially as a result. Seems reasonable to me that the company and auditors could be sued for putting out false financial information, and causing the losses of net worth.
I really don't understand the thinking behind not wanting to change material distortions.
Use Linn Energy To Build Income Now [View article]
I think this is a good article, making some good points. But, each year, as LINE makes acquisitions, a portion of those reserves acquired are being used to "replace" and maintain current production in the future. Not all of it is for an increase in production, is it?
So, my question is: does LINE's $110 maintenance cap ex include those acquisition costs which are simply to replace current production?
See the link. It states on page 20, under "E&P Companies" : "EBITDA also needs to be assessed in the context of reserve life on proven developed reserves and adjusted for CAPEX needed to sustain production."
Is LINE allocating a portion of the cost of each year's acquisitions to maintenance cap ex for the portion of the acquisition which will merely replace existing production?
Intel: Haswell Release On June 3rd Could Be Huge [View article]
What I can tell you is that the Turbotax software is bloated compared to the 2001 version. My screen goes black for 3 or 4 seconds each time I select something, then it comes back. grrrrrrr. The damn software is very, very bloated. The Turbotax was faster on my old HP pc I bought in 1998. No joke. Leave it to MS and its compatible software to screw things up and make things run slower.
If you want to serve your customers, ask what they want, don't choose for them, i.e. bloated software as I have described. We want easy to use, stable, no hesitation software to work with. Not software that stalls for a few seconds as the squirrel is running around the cage trying to catch up, and what you type or click doesn't register. grrrrrrr
Linn Energy: Don't Believe The (Negative) Hype [View article]
Got it figured out rlp2451. Thanks alot. Very much appreciated. Didn't have to open up the form. Haven't figured out how to do that yet. Just started working with the software today. But got it figured out from the interview. Thanks.
Linn Energy: Don't Believe The (Negative) Hype [View article]
" TT should be able to do it, but I am not that familiar with it, But you could enter the info manually on the respective forms if you have to (look at the "Additional Guidance" page to see where each line item goes. For example, 13I goes to Form 1040, Schedule E, Line 19."
I figured it out. It's working now. Thanks for the help. I just had to type in Box 13, code T and enter nothing. It then took me to the next screen where it asked me for the specific info.
Linn Energy: Don't Believe The (Negative) Hype [View article]
You're saying it can walk you through the boxes I mentioned, multiple entries? Turbotax was walking me through it, but the letter "T" for box 13 has multiple codes and amount, for example, Box 13, code T1 for $89, Box 13, code T2 for $85, Box 13, code T3 for $29, etc.
If it were just one number for Box 13, letter T, turbotax could handle it. You're saying TaxAct can handle the multiple T codes and amounts?
There's no place in turbotax to put code "T1", or "T2" etc. All it can handle is the letter "T".
I'll call Turbotax tomorrow, but I'm not expecting any help.
From what I've read on the SA forum, I thought and hoped I could do it with tax software. Doesn't appear that way to me. Not as easy as everyone said it was.
So, I'm not making enough money from PTPs at this point to make it profitable to be in one, due to the tax prep. expense it's gonna run me.
Linn Energy: Don't Believe The (Negative) Hype [View article]
I think I'll have to take my taxes to a CPA. Box 13 of my K-1 for VNR has numerous letter codes with amounts, as does Box 17, and Box 20. Turbotax Premier can't handle it or explain how to enter them. Have looked at the Turbotax help forum, but see no solutions. Drat! $75 down the tubes for nothing.
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
"they lost money"
RS, on a GAAP Net Income basis, AGNC had a positive $231 million versus Annaly's $870.278 million. Adjust GAAP for the junk and AGNC had $258 million versus Annaly's $464.417 million. Neither lost money for the quarter.
On a comprehensive income basis, AGNC lost ($557) million and Annaly lost ($179.716) million. Both lost money on that basis, however these are unrealized losses based on loss in value of MBS they both still hold. Annaly's MBS lost more fair value during the quarter than AGNC's did. [( $865.15) vs. ($837)]
To me, you are still comparing apples to oranges, AGNC's comprehensive net loss to Annaly's Net Income. You simply can't do that.
Linn Energy: Don't Believe The (Negative) Hype [View article]
Zeus, I don't follow you. Capitalizing the puts is required by GAAP, as is marking to market the value of them after they have been purchased. The fair value of a put on the day it is purchased is the purchase price. That cost should be capitalized if it has future value to the company. Capitalization and amortization are accrual and GAAP accounting terms. As Hedgeye has stated, they don't have a problem with LINE's GAAP accounting or its SEC reports.
"Ellis: “Our accounting is in strict adherence to GAAP measures.”
Hedgeye: We agree."
My understanding is that the problem is with how LINE calculates distributable cash flow, or DCF. LINE doesn't include the cost of the puts in that calculation, and some think that it is an annual and repetitive cash outlay which should be included in maintenance capital expenditures, instead of included in growth capital expenditures.
I don't see how capitalization and amortization relate to that. http://bit.ly/19dvog9
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Thanks for the support. I'm sure FASB has reasons for the way FAS 133 is written, but it really distorts the numbers when derivatives are used for hedging but not designated as such. Inspite of the writes up I've done about this, I am a fervent supporter of FASB and GAAP. But I really feel the profession is losing some credibility when the numbers are so far off. I was shocked to see the general sentiment among investors on this forum towards GAAP when I first arrived. It's still disheartening, but some of it is very understandable.
Intel: Haswell Release On June 3rd Could Be Huge [View article]
I like what I hear about Haswell and Intel. But, I hate the MS updates every day or two that take 30 minutes sometimes to install. Bloatware? Seems like it to me. I quit the auto updates. Have never had a problem over 4.5 years with viruses etc. without all the updates.
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
For 2012, GAAP distorts each quarters results for AGNC, overstating Net Income in the 1st and 4th quarters, and very materially understating it for 2nd and 3rd quarters. Under GAAP, 2nd quarter, 2012 is a Net Loss of ($.88)/share. But, there were ($655) million in unrealized losses on derivatives that quarter. Adding that back yields a positive $1.30/share for the quarter. 3rd quarter was similar, though not quite as distorted.
Most SA authors don't seem to understand that GAAP, under these circumstances, gets it very materially wrong. And it's not just the mREITs, it's the MLPs also. Someone at FASB needs to take the bull by the horns and make some changes. This is highly material, and highly confusing and misleading to the layman.
A CPA has certain ethical responsibilities, as a CPA. I don't see how they can sign off on this junk and be faithful to those responsibilities. When the GAAP guidelines create an unfair picture of a company's operations, it is the CPA's/auditors responsibility to break from GAAP in order for the results to fairly present economic reality. They need to stand up and disagree with the GAAP reported results in these circumstances, but they don't.
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Non taken. I have a high regard for your opinion and analysis. I'm mostly talking about AGNC here. The one line about NLY is in its defense, not against it. For 2011, NLY had ($1.815) billion in unrealized losses from derivatives used as hedges, which was required to be deducted from revenue, under GAAP. The GAAP Net Income number was only $344.461 million or $.37/share.
Yet Annaly paid out $2.44/share in dividends. To the degree the hedging is effective, the ($1.815) billion in unrealized losses won't ever be realized. Adding that back yields $2.143 billion in Net Income, or $2.45/share.
Annaly does the same thing in their 1st qtr, 2013 earnings release, takes out the impact of derivatives gains/losses. Their GAAP number was $.90/share, but after taking out the unrealized gains on derivatives, plus the unrealized gains on interest only MBS, they reported $.47/share. (NLY is using the fair value option on the agency interest only MBS, so the change in fair value is required to be reported in earnings under GAAP, rather than OCI. Nevertheless, these are unrealized amounts, the MBS hasn't been sold.)
I was simply trying to say that the GAAP numbers for AGNC were very materially distorted for 2012, and very wrong. Actual Net Income was very materially understated for AGNC under GAAP for 2012. As was Annaly's in 2011.
Not counting 1st qtr 2013, which admittedly was not a good one for AGNC, it seems to me Jonk is trying to argue that 2012 was bad for them also. I disagree. 2012 was a very good year for AGNC Net Income wise. Admittedly, a lot of the earnings came from sale of MBS, the Net Interest Income was just over half of the earnings. Nevertheless, the Net Income number was a good one.
AGNC will have to grow their Net spread income in order to maintain the dividend beyond 2013, IMO, due to the potential for rising interest rates. Still, it appears to me that management has made some good decisions over the years since going public. I would anticipate they will make adjustments to keep AGNC on a sound fiscal course for the future. AT this juncture, I view NLY and AGNC as possible investments in the future.
BTW, AGNC made money in 1st qtr, they did not lose money. The comprehensive income includes changes in fair value of MBS, but those are unrealized losses. They have not yet been realized, as MoneymanCPA points out. Their net income was positive, not a Net loss. It's just not as much as is needed to keep funding the dividend.
To me, you were comparing comprehensive income of AGNC against Net Income of NLY. Can't do that, with all respect to you.
The mortgage REITs are lit up bright red (MORT -1.9%), again led by American Capital Agency (AGNC -3.5%) and American Capital Mortgage (MTGE -3%), with Annaly (NLY -3.1%) not far behind. Yes, the 10-year Treasury yield is a 3 bps higher, but there's also rare action in Fed Funds futures, now pricing in a whopping 50 bps in rate hikes by this time 2016. AGNC presents at the JMP Conference at 2 ET. [View news story]
On the other hand, maybe not. Decisions, decisions. :)
Use Linn Energy To Build Income Now [View article]
http://bit.ly/1668USd
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Financials need to present a fair picture of the economic reality of the transactions that have been entered into, and present that picture as accurately as possible. When a company reports an $.88/share loss for a quarter, but the actual results are a positive $1.30/share income, something is very wrong with the picture being presented. I don't see any justification for wanting to keep the distortions and throw out reality, except greed perhaps. Many investors are being mislead and probably selling their shares at that point, potentially at a loss. They are relying upon totally worthless information and it is injuring them financially as a result. Seems reasonable to me that the company and auditors could be sued for putting out false financial information, and causing the losses of net worth.
I really don't understand the thinking behind not wanting to change material distortions.
Use Linn Energy To Build Income Now [View article]
So, my question is: does LINE's $110 maintenance cap ex include those acquisition costs which are simply to replace current production?
See the link. It states on page 20, under "E&P Companies" : "EBITDA also needs to be assessed in the context of reserve life on proven developed reserves and adjusted for CAPEX needed to sustain production."
Is LINE allocating a portion of the cost of each year's acquisitions to maintenance cap ex for the portion of the acquisition which will merely replace existing production?
Intel: Haswell Release On June 3rd Could Be Huge [View article]
If you want to serve your customers, ask what they want, don't choose for them, i.e. bloated software as I have described. We want easy to use, stable, no hesitation software to work with. Not software that stalls for a few seconds as the squirrel is running around the cage trying to catch up, and what you type or click doesn't register. grrrrrrr
Linn Energy: Don't Believe The (Negative) Hype [View article]
Linn Energy: Don't Believe The (Negative) Hype [View article]
I figured it out. It's working now. Thanks for the help. I just had to type in Box 13, code T and enter nothing. It then took me to the next screen where it asked me for the specific info.
Linn Energy: Don't Believe The (Negative) Hype [View article]
If it were just one number for Box 13, letter T, turbotax could handle it. You're saying TaxAct can handle the multiple T codes and amounts?
There's no place in turbotax to put code "T1", or "T2" etc. All it can handle is the letter "T".
I'll call Turbotax tomorrow, but I'm not expecting any help.
From what I've read on the SA forum, I thought and hoped I could do it with tax software. Doesn't appear that way to me. Not as easy as everyone said it was.
So, I'm not making enough money from PTPs at this point to make it profitable to be in one, due to the tax prep. expense it's gonna run me.
Linn Energy: Don't Believe The (Negative) Hype [View article]
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
RS, on a GAAP Net Income basis, AGNC had a positive $231 million versus Annaly's $870.278 million. Adjust GAAP for the junk and AGNC had $258 million versus Annaly's $464.417 million. Neither lost money for the quarter.
On a comprehensive income basis, AGNC lost ($557) million and Annaly lost ($179.716) million. Both lost money on that basis, however these are unrealized losses based on loss in value of MBS they both still hold. Annaly's MBS lost more fair value during the quarter than AGNC's did. [( $865.15) vs. ($837)]
To me, you are still comparing apples to oranges, AGNC's comprehensive net loss to Annaly's Net Income. You simply can't do that.
Linn Energy: Don't Believe The (Negative) Hype [View article]
"Ellis: “Our accounting is in strict adherence to GAAP measures.”
Hedgeye: We agree."
My understanding is that the problem is with how LINE calculates distributable cash flow, or DCF. LINE doesn't include the cost of the puts in that calculation, and some think that it is an annual and repetitive cash outlay which should be included in maintenance capital expenditures, instead of included in growth capital expenditures.
I don't see how capitalization and amortization relate to that.
http://bit.ly/19dvog9
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Intel: Haswell Release On June 3rd Could Be Huge [View article]
As far as Windows 8, heck no, never.
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Most SA authors don't seem to understand that GAAP, under these circumstances, gets it very materially wrong. And it's not just the mREITs, it's the MLPs also. Someone at FASB needs to take the bull by the horns and make some changes. This is highly material, and highly confusing and misleading to the layman.
A CPA has certain ethical responsibilities, as a CPA. I don't see how they can sign off on this junk and be faithful to those responsibilities. When the GAAP guidelines create an unfair picture of a company's operations, it is the CPA's/auditors responsibility to break from GAAP in order for the results to fairly present economic reality. They need to stand up and disagree with the GAAP reported results in these circumstances, but they don't.
Forget About American Capital, Annaly Capital Is Still The Best Of Breed [View article]
Yet Annaly paid out $2.44/share in dividends. To the degree the hedging is effective, the ($1.815) billion in unrealized losses won't ever be realized. Adding that back yields $2.143 billion in Net Income, or $2.45/share.
Annaly does the same thing in their 1st qtr, 2013 earnings release, takes out the impact of derivatives gains/losses. Their GAAP number was $.90/share, but after taking out the unrealized gains on derivatives, plus the unrealized gains on interest only MBS, they reported $.47/share. (NLY is using the fair value option on the agency interest only MBS, so the change in fair value is required to be reported in earnings under GAAP, rather than OCI. Nevertheless, these are unrealized amounts, the MBS hasn't been sold.)
I was simply trying to say that the GAAP numbers for AGNC were very materially distorted for 2012, and very wrong. Actual Net Income was very materially understated for AGNC under GAAP for 2012. As was Annaly's in 2011.
Not counting 1st qtr 2013, which admittedly was not a good one for AGNC, it seems to me Jonk is trying to argue that 2012 was bad for them also. I disagree. 2012 was a very good year for AGNC Net Income wise. Admittedly, a lot of the earnings came from sale of MBS, the Net Interest Income was just over half of the earnings. Nevertheless, the Net Income number was a good one.
AGNC will have to grow their Net spread income in order to maintain the dividend beyond 2013, IMO, due to the potential for rising interest rates. Still, it appears to me that management has made some good decisions over the years since going public. I would anticipate they will make adjustments to keep AGNC on a sound fiscal course for the future. AT this juncture, I view NLY and AGNC as possible investments in the future.
BTW, AGNC made money in 1st qtr, they did not lose money. The comprehensive income includes changes in fair value of MBS, but those are unrealized losses. They have not yet been realized, as MoneymanCPA points out. Their net income was positive, not a Net loss. It's just not as much as is needed to keep funding the dividend.
To me, you were comparing comprehensive income of AGNC against Net Income of NLY. Can't do that, with all respect to you.