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B.Wain

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  • Assessing American Capital Agency's Dividend Sustainability: 2Q13 Update [View article]
    Earnings/dividend sustainability
    1. Unrealized capital losses occur on ly when mtgs. held for sale are
    written down. If held to maturity, no losses will be taken. By shifting assets from,say, 30 yr. mortgage securities to 15 or 10 yrs, (not counting the effect of hedges), losses can be mitigated. And cash flow is not affected anyway.
    2. So long as the Fed keeps short-term interest rates low, the carry should increase as mortgage rates rise.
    3. All this depends on how adept management is. I submit that Gary Kain and his team is the best in the business.
    4. A return of 18% is not so shabby! In fact, I would be happy with less
    if total return holds up. In the end, that is a matter of investor sentiment.
    Aug 23 01:31 PM | 4 Likes Like |Link to Comment
  • Gary Kain-led American Capital Agency (AGNC -2.8%) and American Capital Mortgage (MTGE -2%) lead the decline in an all-red mREIT sector (MORT -1%) today, with AGNC taking out its post-earnings low from last week. On the earnings call, Kain said upward pressure on rates had cooled to start Q2 and book value was headed higher, but markets may not be cooperating. The 10-year yield is up 8 bps today to a near 2-month high. Others: Annaly (NLY -1.2%), Invesco (IVR -1.2%), MFA (MFA -1.8%), Western Asset (WMC -1.3%). [View news story]
    Bernanke hasn't put in his order for the 10yr MBSs yet.
    May 11 01:22 AM | Likes Like |Link to Comment
  • The upward pressure on rates that caused Q1's losses has reversed, says AGNC CIO Gary Kain on the earnings call, and the decline in book value partly reversed in April (don't speak too soon Mr. Kain, the 10-year yield is up 10 bps today). Kain has taken advantage of lower MBS prices to add to the company's portfolio. Prepayments and dollar rolls remained benign in Q1, and Kain expects them to remain so. (slides[View news story]
    The key criterion in the interest rate spread between costs and revenues (namely, 1 yr and 10 yr treasuries). Mr. Kain has been
    navigating that spread very well and with rates at present levels
    he should produce ample earning. Further, so long as the Fed
    continues to buy $40B of mortgage securities monthly, the
    MBS market should be stable at least for another year or two. The
    reported losses are non-cash mark-to-market adjustments that
    should have just a one quarter effect.
    May 3 01:35 PM | Likes Like |Link to Comment
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