American Capital Agency Corp. (AGNC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


American Capital Agency is scheduled to release its first-quarter 2014 results on Apr 28, after the market close. The company reported encouraging fourth-quarter 2013 results with its net spread income per share significantly exceeding the Zacks Consensus Estimate. Results also compared favorably with the prior-quarter figure. The company had shifted its focus on shorter maturity securities and controlled leverage in mid 2013 amid volatility in the interest rate. Towards the end of the year, the volatility reduced and with increasing yields on MBS and a steeper yield curve, the current return environment looks promising according to the company. However, the anticipated rise in rates in the long term is a concern. Also, the dividend cut lowered investors' appetite for this stock.


American Capital Agency Corp. is a real estate investment trust (REIT) that focuses on investments in residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity. The company purchases single-family residential pass-through securities, which are interests in pooled loans of principal and interest including pre-paid principal that are made to the holders of the notes.

Collateralized mortgage obligations consist of multiple classes with payments of principal and interest being made to note holders based on the maturity date of the class of security. The mortgages underlying these agency securities are fixed rate, adjustable rate or hybrid (fixed and adjustable) securities. Agency securities differ from traditional fixed-income investments as principal and interest are paid on a regular schedule and there is a possibility that the principal will be prepaid by mortgage holders if interest rates fall.

American Capital Agency borrows against its investment portfolio pursuant to a master repurchase agreement, which provides short-term financing, typically 30-90 days. The company expects to make a profit and pay dividend from net interest income, which is the difference between interest earned on investments and its cost of borrowing. American Capital Agency is externally managed and advised by American Capital AGNC Management, LLC, an affiliate of American Capital Ltd.

American Capital Agency Corp. (AGNC): Read the Full Research Report

AMER CAP AGENCY (AGNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: AGNC

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