3 Red Flags for American Capital Agency

As many investors start to move toward the seemingly attractive high dividend yield mortgage REIT space, Motley Fool financial analyst Matt Koppenheffer offers some words of caution. He takes a look specifically at one of the more popular mREIT agencies to invest in, American Capital Agency (NASDAQ: AGNC  ) , and gives investors three things that he sees as potential red flags with this company. 

One company often compared to American Capital is Annaly. Annaly Capital Management  (NYSE: NLY  ) has a history of paying huge dividends to shareholders. But there are some crucial issues investors have to understand about Annaly's business model before buying the stock. In this brand-new premium research report on the company, our analyst runs through these absolute must-know topics, as well as the future opportunities and pitfalls of their strategy. Click here now to claim your copy. 

Read/Post Comments (5) | Recommend This Article (7)

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  • Report this Comment On January 30, 2013, at 6:18 PM, Howard1ii wrote:

    Except for the lack of insider ownership by the exec's his arguments seem pretty weak to me.

    Especially trying to paint the execs as evil or incompetent because at one time they worked at Freddy Mac. Might be nice to hear a little proof that they did something wrong.

  • Report this Comment On January 30, 2013, at 10:03 PM, TMFKopp wrote:

    No, no, certainly not evil. But when you have a company that's specifically a jockey play, you've got to consider where they came up. In this case, the history at Freddie is - to me at least - more concerning than it is encouraging considering the state that Freddie ended up in. Like I said, the bright side is they certainly understand the inner workings of the agencies...


  • Report this Comment On February 01, 2013, at 10:20 AM, dombridger wrote:

    Matt doesn't seem to see the whole picture.

    Caution with investing is always in order; however:

    1) Guilt by association is not logical - former Fannie and Freddie employees may have learned valuable lessons about mortgages, including how to spot undervalued ones.

    2) Insiders directly own $40 million of ACAS (parent co) and indirectly of $52 million of MTGE another subsidiary

    3) AGNCs balance sheet shows a net of $10 billion, unless that is a fabrication, that shows quite a measure of safety

  • Report this Comment On February 01, 2013, at 10:53 AM, HectorSector wrote:

    Hey, Matt, just some friendly advice: script your piece. Too much hemming and hawing.

  • Report this Comment On February 01, 2013, at 3:34 PM, TMFKopp wrote:

    Re: ACAS inside ownership:

    - five named ACAS execs in 2011 proxy were paid around $40m

    - that is a $4 billion company

    - Wilkus is a founder there

    With all that in perspective, $40m isn't terribly impressive. Though better than the near-zero at AGNC.

    Keep the feedback coming though - I'm always looking for ways that I'm wrong.


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