Anworth Mortgage Asset Corp. Viewed Through The Eyes Of A Preferred Investor: An Update

| About: Anworth Mortgage (ANH)

Summary

ANH performed well over the past quarter.

Accordingly, its preferreds either basically maintained for increased their high value.

However, this time I chose the A as the best buy, although some might disagree.

This review updates my initial look at Anworth Mortgage (NYSE:ANH) from my October 7, 2016, article, "Anworth Mortgage Asset Corp. Viewed Through The Eyes Of A Preferred Investor."

Though I hope you will read the original linked article in full, my bottom-line assessment and buy recommendation at the time were as follow

Because as a long-term cumulative preferred investor, I am little concerned about quarterly financial reports and their attendant conference calls, which are liberally spun, I don't bother paying much attention to them unless the particular company is at risk of suffering some existential threat. Anworth is no such company, as illustrated by the price of its preferreds and its common price performance these past three months. Furthermore, like cockroaches, these REIT's barely go bankrupt and seemingly remain viable forever.

Let's see how ANH's commons have performed over the past quarter since I wrote the previous articles. Because of the greater volume of common shares traded as opposed to the limited liquidity of most preferreds, I find the commons to be a better indicator of a company's overall performance.

It appears that over the past three months, ANH's share price movement had been on an upward trajectory. On October 6, 2016, it traded at $4.76, now it's priced at $5.32. That's an $0.56 increase.

Now let's compare ANH's share price performance over the past three months in relation to a number of its peers. Chart provided by Yahoo Finance:

According to the chart above, ANH performed close to the top of its peer group and outperformed the S&P. The peer comparisons charted above are: AG Mortgage Investment Trust (NYSE:MITT), PennyMac Mortgage Investment Trust (NYSE:PMT), Arbor Realty Trust (NYSE:ABR), Resource Capital Corp. (NYSE:RSO) and American Capital Mortgage Investment Corp. (NASDAQ:MTGE).

Before we discuss ANH's future prospects, let's see how its preferreds have fared during the past three months. The following charts are provided by MarketWatch:

According to the performance of its commons, ANH's preferreds performed okay mostly maintaining their value, except for the B, which continued to rise.

The following report and recommendation concerning ANH's preferreds was taken from my October 6, article:

ANH Preferreds 10-6-16

Symbol Yearly Dividend Price Dividend/Price Yield Best
ANH-A 2.15625 25.46 2.15625/25.46 8.47%
ANH-B 1.5625 24.44 1.5625/22.44 6.39%
ANH-C 1.90625 24.65 1.90625/24.65 7.73% Best

Let's see where they are now:

ANH Preferreds 1-5-16

Symbol Yearly Dividend Price Dividend/Price Yield Best
ANH-A 2.15625 25.32 2.15625/25.32 8.52% Best
ANH-B 1.5625 26.04 1.5625/26.04 6.00%
ANH-C 1.90625 24.85 1.90625/24.85 7.67%

This is one worth some thought. The A offers the best yield %, but it is likely the next to be called because per share it costs the company the most, and it has been callable since last year. Meaning if and when it is called, had you purchased it at this price, you'd lose 0.32/share. Therefore the C Series might be the best deal even though its effective yield at this price is only 7.67%. This time I'm going with the A as the best buy because you really can't lose if it's called considering the 0.54 you'd probably receive until the call is closed. And if not called you'll receive the higher % yield until it is.

Now for a little forward guidance, I'm reporting verbatim as I stated three months before:

Because as a long-term cumulative preferred investor, I am little concerned about quarterly financial reports and their attendant conference calls, which are liberally spun, I don't bother paying much attention to them unless the particular company is at risk of suffering some existential threat. Anworth is no such company, as illustrated by the price of its preferreds and its common price performance these past three months. Furthermore, like cockroaches, these REIT's barely go bankrupt and seemingly remain viable forever.

Disclosure: I am/we are long MITT-B, RSO-B,RSO-C.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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