American Capital Agency Corp. (NASDAQ:AGNC) is the second largest mortgage REIT that invests in Fannie and Freddie mortgage backed securities. It announced the repositioning of its assets recently. The company recognized that its book value has already plunged 8% since the start of the current quarter. However, now the management decided to get rid of the 30-year fixed rate residential MBS, which is the main cause of the book value depreciation under rising interest rates. Further, active management of its assets will cause more attractive investment opportunities for American Capital Agency Corp. (NASDAQ:AGNC) to outperform its peers.
A safer option
This storm in the mortgage REIT industry might not end soon. However, Annaly Capital Management, Inc. (NYSE:NLY), American Capital Agency Corp. (NASDAQ:AGNC) and Capstead Mortgage Corporation (NYSE:CMO) have already secured their book values from further erosion. Besides, Annaly Capital Management, Inc. (NYSE:NLY) and Capstead Mortgage Corporation (NYSE:CMO) can also expect higher asset yields. Therefore, I am bullish on the three stocks.
The article Mortgage REITs Are on the Rebound originally appeared on Fool.com is written by Red Chip.
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