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Analyst Blog

Apollo Residential Mortgage, Inc. (AMTG - Snapshot Report) recently announced a public offering of 13.9 million shares of common stock. The company also plans to grant the underwriters a 30-day option to purchase up to 2,085,000 additional common shares

The net proceeds from this offering will be utilized to acquire Agency residential mortgage-backed securities (RMBS), non-Agency RMBS, other residential mortgage assets 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, which go a long way in enhancing top-line growth.  Apollo Residential’s strategic approach of investing proceeds from share offering on structuring financings bodes well for the company and enables it to generate attractive returns with minimum risk.

Apollo Residential reported fourth quarter 2011 net income of $6.3 million or 62 cents per share. As of December 31, 2011, Apollo Residential had Agency residential mortgage-backed securities of $1.1 billion and non-Agency RMBS of   $112.3 million.

Apollo Residential is a real estate investment trust that invests in, finances and manages residential mortgage-backed securities, residential mortgage loans and other residential mortgage assets in the United States. The   company is externally managed by ARM Manager, LLC, an indirect subsidiary of Apollo Global Management, LLC, a leading global alternative asset manager in private equity, credit-oriented capital markets, and real estate.

Apollo Residential currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, MFA Financial, Inc (MFA - Snapshot Report) holds a Zacks #4 Rank, which  implies a short-term Sell rating.

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