On Monday, AGNC Investment decision (NASDAQ:AGNC) unveiled its newest quarterly report, exhibiting a superior-than-envisioned result on the bottom line.
For the mortgage actual estate investment decision trust’s (mREIT) fourth quarter of 2020, its whole income rose by 23% to $459 million. Non-GAAP (modified) internet spread and greenback roll cash flow — fundamentally, its base line — rose 27% to $409 million, or $.75 for every share.
Both figures defeat the regular analyst estimates. On common, prognosticators adhering to the inventory ended up expecting revenue that was almost 20% lessen than the true determine, and a per-share base line of only $.65.
As an mREIT, AGNC invests in the home finance loan-backed securities (MBSs) that assistance offer the financing for homes somewhat than the qualities on their own, as is the scenario with the significantly much more a lot of equity REITs. Further, AGNC chiefly invests in agency MBSs, this means all those backed by government-sponsored enterprises this sort of as Freddie Mac and Fannie Mae.
AGNC attributed its gains to continued restoration from the economic devastation of the coronavirus pandemic to “the special value of a predominately agency MBS portfolio.” The enterprise extra that the Federal Reserve acquired $1.5 trillion in such securities very last calendar year, properly supporting the business’s basis.
Administration thinks the Fed is not about to abandon this policy.
“While company MBS have appreciated together with the extensive vast majority of fiscal property around the earlier several quarters, significant Fed purchases, the prospective for slower prepayments, and attractive funding ranges that will probable continue being for an extended period of time of time must keep on to assistance the hazard/return equation for levered buyers in company MBS,” AGNC CEO Gary Kain reported.