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American Capital Buys its External Manager: Time to Hold?
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We updated our research report on American Capital Agency Corp. (AGNC - Free Report) on Aug 29, 2016. This Bethesda, MD-based mortgage real estate investment trust (“mREIT”) focuses on leveraged investments in agency mortgage backed securities (“MBS”), which includes residential mortgage pass-through securities and collateralized mortgage obligations.
In early July, American Capital Agency completed the acquisition of its external manager American Capital Mortgage Management, LLC (“ACMM”) from American Capital Asset Management, LLC, a wholly-owned company of American Capital, Ltd. This was indeed an important step as it promoted the company as the largest internally-managed mREIT in the country. Further, this transaction is expected to lower the operating cost, which is likely to strengthen the shareholders’ value.
Further, American Capital Agency made efforts to reposition its portfolio to offset risks related to interest rates and prepayment uncertainty. Also, its adequate financial flexibility and share buybacks are encouraging.
On Jul 27, American Capital reported second-quarter 2016 net spread and dollar roll income of 56 cents per share (excluding estimated "catch-up" premium amortization benefit) that beat the Zacks Consensus Estimate of 51 cents. The reported figure also came in higher than 52 cents earned in the prior quarter.
However, widespread volatility in the market as well as concerns over global economies acted as dampeners. Considering the current environment, we expect volatility to continue, thereby rendering the stock price susceptible to fluctuations.
Over the past seven days, the current-quarter earnings estimate remained unchanged at 55 cents per share.
The stock presently carries a Zacks Rank #3 (Hold).
Investors interested in the mREIT sector can consider other stocks like Chimera Investment Corporation (CIM - Free Report) , Invesco Mortgage Capital Inc. (IVR - Free Report) and Jernigan Capital, Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy).
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American Capital Buys its External Manager: Time to Hold?
We updated our research report on American Capital Agency Corp. (AGNC - Free Report) on Aug 29, 2016. This Bethesda, MD-based mortgage real estate investment trust (“mREIT”) focuses on leveraged investments in agency mortgage backed securities (“MBS”), which includes residential mortgage pass-through securities and collateralized mortgage obligations.
In early July, American Capital Agency completed the acquisition of its external manager American Capital Mortgage Management, LLC (“ACMM”) from American Capital Asset Management, LLC, a wholly-owned company of American Capital, Ltd. This was indeed an important step as it promoted the company as the largest internally-managed mREIT in the country. Further, this transaction is expected to lower the operating cost, which is likely to strengthen the shareholders’ value.
Further, American Capital Agency made efforts to reposition its portfolio to offset risks related to interest rates and prepayment uncertainty. Also, its adequate financial flexibility and share buybacks are encouraging.
On Jul 27, American Capital reported second-quarter 2016 net spread and dollar roll income of 56 cents per share (excluding estimated "catch-up" premium amortization benefit) that beat the Zacks Consensus Estimate of 51 cents. The reported figure also came in higher than 52 cents earned in the prior quarter.
However, widespread volatility in the market as well as concerns over global economies acted as dampeners. Considering the current environment, we expect volatility to continue, thereby rendering the stock price susceptible to fluctuations.
Over the past seven days, the current-quarter earnings estimate remained unchanged at 55 cents per share.
AMER CAP AGENCY Price
AMER CAP AGENCY Price | AMER CAP AGENCY Quote
The stock presently carries a Zacks Rank #3 (Hold).
Investors interested in the mREIT sector can consider other stocks like Chimera Investment Corporation (CIM - Free Report) , Invesco Mortgage Capital Inc. (IVR - Free Report) and Jernigan Capital, Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>