American Capital Agency Corp. recently announced that it has issued a public offering of 62 million shares for estimated proceeds of approximately $1.8 billion. To cover any over-allotments, American Capital also plans to offer a 30-day option to the underwriters of the offering for purchasing an additional 9,150,000 shares.
The net proceeds from this offering will be utilized for the acquisition of additional agency securities keeping in mind the prevailing market conditions and for other general corporate purposes.
This public offering will enable the company to attain financial flexibility and position it favorably to pursue investment opportunities and acquisitions, which go a long way in enhancing top-line growth. As of December 31, 2011, American Capital’s cash position stood at $1.4 billion.
American Capital Agency Corp. is a real estate investment trust (REIT) that invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency.
American Capital Agency is one of only a few companies to have increased its dividend during the economic downturn. The company declared a fourth quarter dividend of $1.40 per share, which equates to a total of $1.3 billion in dividends or $18.86 per share since its initial public offering in May 2008.
American Capital currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, MFA Financial, Inc holds a Zacks #4 Rank, which translates into a short-term Sell rating.