American Capital Buys Back Shares - Analyst Blog


American Capital Agency Corp. ( AGNC ) continued to repurchase its outstanding shares in the fourth quarter. In particular, the company bought back approximately 28.2 million shares of its common stock, representing 7% of its outstanding shares as of Sep 30, 2013, for around $586 million through open market purchases.

With this, around 43.0 million shares have been bought back for approximately $934 million, including expenses, since the beginning of the buyback program in the fourth quarter of 2012. In addition, American Capital Agency declared a dividend of 65 cents per share for fourth-quarter 2013. This dividend will be paid on Jan 28, 2014, to shareholders of record as of Dec 31, 2013.

This news of a continuation of the dividend at the prior rate and share repurchase comes at a time when a number of mortgage REITs (mREITs) are coming up with a dividend cut. Among these are Anworth Mortgage Asset Corp. ( ANH ) and Hatteras Financial Corp. ( HTS ), which slashed their dividend rates recently by 33.3% (to 8 cents) and 9.1% (to 50 cents per share), respectively.   

The volatility in the interest rates and mortgage spreads continued to affect the results of mortgage real estate investment trust (commonly known as mREIT) and their book values. Finally, the Federal Reserve has disclosed the tapering of its QE bond buying program following a consistent improvement in the economic activity and labor market conditions. 

Fed will now buy $75 billion in assets every month (MBS purchases of $35 billion and Treasury bonds at $40 billion), down from the current rate of $85 billion a month. However, a low rate is expected to continue for an extended period even if the tapering comes in full in 2014. 

American Capital Agency currently carries a Zacks Rank #5 (Strong Sell). However, investors interested in the mREIT industry may consider stocks like Apollo Commercial Real Estate Finance, Inc. ( ARI ) that currently has a Zacks Rank #2 (Buy).

AMER CAP AGENCY (AGNC): Free Stock Analysis Report

ANWORTH MTGE (ANH): Free Stock Analysis Report

APOLLO COMMERCL (ARI): Free Stock Analysis Report

HATTERAS FIN CP (HTS): 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 , Business , Stocks

Referenced Stocks: AGNC , ANH , ARI , HTS

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