AGNC Investment Corp (AGNC)

[big-yank]

First of all, mReits do not "buy at short term rates and sell at long term rates." They buy longterm mortgage paper and finance with borrowings at present market rates, making their money on the spread as their borrowing costs are generally better than the mortgagee's rates. As interests rates rise, the paper available for purchase is fixed but the mReits cost goes up. This shrinks the spread and compresses the income.

mReits and specifically AGNC also sell "rights" offerings to generate cash, equivalent in effect to issuing more stock which both dilutes the shareprice and the dividend. In a rising interest rate market, the income "spread" tends to be lower than the old inventory that eventually matures and drops out of the portfolio. Thus, rising interest cycles tend to have negative effect on rights-funded capital returns.

The Feds actions have been all over the business pages for days. You can either go to Yahoo Finance/AGNC and a half dozen links will confirm my comments on QE. Or you can go to Barrons.com for yesterday, May 13 and link to either "mReit Funds Getting Whacked Again, Fed Worry Trade is Back" or "Mortgage Reits Fall As Fed Weighs Tapering Bond Purchases".

I have owned this stock on and off for over 5 years and have made a ton of money on it (and other mReits, as well). However, I sold my position, will not be opening a new one anytime soon and I sleep well at night. If you want to call people out for commenting on widely circulated news items you missed, so be it.

Yank