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ba419adv

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  • Punishment continues for income favorites [View news story]
    Current discount to BV of 20+ % already prices in higher rates. Ultimately higher rates should increase net interest spread. While this will cause a decline in BV, it should help keep dividends where they are.
    Jun 25, 2015. 04:31 PM | 3 Likes Like |Link to Comment
  • Annaly Capital: Why FBR Capital's Annaly Downgrade Is Misguided [View article]
    The book value per share of $13.10 at 12/31/14 for NLY does not include the preferred stock equity. There is not $1,826,118,000 of preferred stock equity at 12/31/14. the $913,059,000 listed twice in NLY's balance sheet includes a subtotal for preferred stock. You can check that out by adding up the individual componets of Stockholders' equity.

    Total Stockholders' Equity 12/31/14 - Total Preferred Stock = Total Common Stockholders' Equity 12/31/14. $13,328,491,000 - $913,059,000 = $12,415,432,000. Thus BV per Common Share at 12/31/14 is $12,415,432,000/ 94,768,000 common shares outstanding = $13.10

    By GAAP book value per common share does not include preferred stock equity.


    Apr 9, 2015. 01:54 PM | 5 Likes Like |Link to Comment
  • American Capital Agency's Dividend Sustainability Analysis (Post Q4 2014 Earnings) - Part 2 [View article]
    Scott this question may be a bit out there. Would it make sense for AGNC and NLY to close out all their asset and liability positions? Presumably there would be realized gains enough to pay out a special dividend of at least 15%. Then get back in when interest spreads and interest rate volatility were more favorable. Is there enough liquidity in the market to handle the closing out of these positions? Would the management companies ever consider doing this since it would cost them?
    Feb 26, 2015. 10:36 AM | 1 Like Like |Link to Comment
  • American Capital Agency's Dividend Sustainability Analysis (Post Q4 2014 Earnings) - Part 2 [View article]
    Scott magnificent as usual!

    Dividends (and book values) have remained fairly constant for AGNC and NLY for the past year and a half. During this period the interest rate on the 10 year Treasury has varied from 1.6% to 3% and both companies have coped with this varience. Yet both companies stubbernly continue to trade at a fairly large discount to book. As you and others have said, the market can't seem to get over the 2013 debacle that hit the mREITS.

    I agree with your conclusion that the positive and negatives affecting AGNC and NLY seemed fairly balanced for the short and medium term. In your opinion, how long will it take the market to reward AGNC and NLY and return their per share market prices close to their book values per share?
    Feb 25, 2015. 02:29 PM | 7 Likes Like |Link to Comment
  • American Capital Agency: Unloved, But Still Outperforming [View article]
    I think the market is still punishing AGNC and other mREITS for the severe decline in 2013. The price of mREIT's shares have gone down in reaction to both increases and decreases in the 10 year Treasury rate. There are always pundits to tell you why.

    AGNC's dividend rate has been stable for over a year with a slight increase when it went to monthly dividends recently. The BV has also been mostly increasing. AGNC has managed this stability while the 10 year Treasury rate has varied from 1.6% to 3% during this time period.
    Feb 17, 2015. 02:46 PM | 4 Likes Like |Link to Comment
  • Update: American Capital - Portfolio Positioning Stays Favorable [View article]
    XXA

    That was my point. That if taxable income got to the point where a dividend increase was required that would be good news.
    Feb 3, 2015. 02:42 PM | 1 Like Like |Link to Comment
  • American Capital Agency's Upcoming Q4 2014 Book Value Projection [View article]
    Scott do you know at what point AGNC's or NLY's earnings would force them to increase their dividend to meet the at least 90% dividend distribution requirement to maintain their tax status?
    Feb 3, 2015. 10:34 AM | 3 Likes Like |Link to Comment
  • Update: American Capital - Portfolio Positioning Stays Favorable [View article]
    My expectation is that the next dividend increase (when and if there is one) will be forced by the Federal tax code that requires mREITS to pay out at least 90% of their income as dividends to maintain their tax status. This would be a conservative approach by AGNC and an especially bullish event for AGNC's stock price should it occur.
    Feb 3, 2015. 10:26 AM | 2 Likes Like |Link to Comment
  • American Capital Agency's Upcoming Q4 2014 Book Value Projection [View article]
    Scott your estimates of income and BV continue to be spot on as AGNC just reported 4th quarter results in line with those estimates. AGNC is selling at less than 84% of BV. Do you still consider it a buy? Thanks again for your work. It is beyond excellent!
    Feb 2, 2015. 04:18 PM | 3 Likes Like |Link to Comment
  • Annaly: I Am Seeing More Reasons Not To Own This Stock Right Now [View article]
    RS do you have any answer for my question in the last sentence of my comment? It kind of ties in to SO's comment. I am having a difficult time analyzing what is so different this time then the 2001 to 2013 period I referred to. Thanks.
    Jan 3, 2015. 04:28 PM | Likes Like |Link to Comment
  • Annaly: I Am Seeing More Reasons Not To Own This Stock Right Now [View article]
    RS

    Good article. A great reminder that mREITS are generally not "sleep like a baby at night" stocks to own. It would be interesting to chart the volatility of their share prices, book values and dividends to get some idea of the amount of risk involved in owning them.

    I did a brief review of the share price of Annaly from May 2001 to June 2013. Except for October thru December 2005, the share price was at least $12, usually much higher. The quarterly dividend range was from $0.10 to $0.75 per share. What is so different today from that 12 year period? Is it all about the FED and ZIRP?

    I have owned NLY and AGNC since I started buying shares in July 2013. My cost basis is approximately the current market value. Of course, I have collected some very nice dividends along the way. I watch my position in these two stocks daily. You are not alone in your concern of an interest spread squeeze. Do you have any idea why the current environment for NLY is so much more dire than the 12 year period above?
    Jan 3, 2015. 10:13 AM | 3 Likes Like |Link to Comment
  • 12% Dividend American Capital Agency Already Has A $0.20 Book Value Gain In Q4 2014 [View article]
    Good article.

    Most recent AGNC and NLY articles and their comments on SA concentrate on the possibility of an interest spread squeeze and the effect it would have on dividends and BV. These are reasonable concerns. Neither AGNC or NLY have dividends or BV's close to where they were in early 2013. Just before the 2013 plunge in dividends and BV, both companies were selling at a premium to BV. Currently AGNC and NLY are selling at a 10% to 15% discount to BV. The dividends paid by both companies (AGNC has had an increase of $.01 in the current quarter) have been constant for the past 5 quarters.


    It would seem that investors and potential investors are still impacted by the plunge in dividends, BV and market value that occurred in 2013. And that they are concerned that further carnage may occur. I believe that it is this fear that explains in part why AGNC and NLY sell at moderate discounts to BV. Five quarters of stable dividends and slowly recovering BV's have not convinced the market that all is well. If investors believed that the dividends were safe at current levels both companies would be selling at a premium to BV.


    I am long on both AGNC and NLY. I bought in after July 2013. While I have a 1% decline in in my position since then I have enjoyed an 11% current return from the dividends. What will it take for AGNC and NLY to increase earnings and thus dividends? And is this likely to occur in the near future? All we know is that both companies have been unable to produce increases in dividends ( except AGNC's $.01 this quarter) for over a year. Until AGNC's or NLY's management or some SA pundit can convince investors how this can happen (or better yet have earnings and dividends increases actually occur), I like most investors will nervously watch and wait.
    Dec 22, 2014. 11:50 AM | 4 Likes Like |Link to Comment
  • Annaly Capital: The Old Squeeze Play Could Hurt This Stock [View article]
    Take out ZIRP what happens to long term interest rates?

    Somewhat unrelated to the topic at hand; can the governmental budgets of the US, Japan and Western Europe afford higher interest rates? Doesn't this budgetary consideration along with economic conditions worldwide and deflation fears in Japan and Europe mitigate against a rise in interest rates anytime soon?

    RSS I'm not trying to be argumentative. You have been generally right. It's just that I have a hard time seeing mREITs having the hard time that the market is pricing into their stock price. Most are selling at a 15%+ discount to book. And as you said in this article; their business model doesn't seem broken.
    Dec 18, 2014. 02:34 PM | 1 Like Like |Link to Comment
  • Annaly Capital: The Old Squeeze Play Could Hurt This Stock [View article]
    Short term rates are so much lower than the two year they would have to spike significantly to reach where the two year currently is.
    Dec 18, 2014. 01:58 PM | Likes Like |Link to Comment
  • Annaly Capital: The Old Squeeze Play Could Hurt This Stock [View article]
    Great article as always,

    As long rates have dropped and possibly may continue to do so, NLY (and other Mreits) have unrealized MBS portfolio gains. If some of this MBS portfolio is refinanced the unrealized gains become realized gains. This is positive for comprehensive income and book value.


    Now a shrink in net interest spreads, as the author points out, is not positive to NLY or other Merits. The author has focused on the increase in the two year rates. Why couldn't NLY move to shorter term repo agreements to maintain interest rate spreads?


    Doesn't a flat or inverted yield curve generally mean that borrowers think long term rates are too high temporarily? Thus they prefer to borrow short term and wait for long rates to come down. That doesn't seem to be the case now. A better question might be why has the 2 year treasury rate come down less than almost all other term rates and it that relationship likely to persist?


    Most Mreits are selling at a significant discount to book. If one looks at the international economic situation, a sustained rise in interest rates seems unlikely.
    Dec 18, 2014. 12:10 PM | 1 Like Like |Link to Comment
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