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
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
AMER CAP AGENCY (AGNC): Free Stock Analysis
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