Dynex Capital, Inc. (NYSE:DX) closed at $10.85 on October 13. The stock has returned -18.2% over the last six months, compared to a 21.5% return for the Insider Monkey Billionaire Index and 14.0% for the State Street SPDR S&P 500 ETF Trust.
Dynex Capital is the smallest company in this corner of the market that billionaires have crowded into. It is worth about $2.91 billion. It does much of what the giants do, which is buy government-backed mortgage bonds and borrow against them.
What makes it interesting is a disagreement sitting inside its own valuation. Measured against last year, the stock looks remarkably cheap. Measured against next year, it looks ordinary. The two figures are telling different stories.
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The Case Behind the Low Number:
On trailing earnings, Dynex trades at 3.93 times profit. That is the lowest reading of any mortgage company on our list, and low enough to be worth a second look rather than a quick dismissal.
Return on equity is 18.23%, which puts a company this small alongside trusts many times its size. Being small may be less of a disadvantage here than elsewhere, because buying bonds does not demand the scale that lending does.
That may be part of why as many billionaires hold it as hold names four times larger. It earned its place in our 10 Best Mortgage Finance Stocks To Buy According to Billionaires that way. To see who else made it, click HERE.
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The Case Behind the Higher One:
The forward multiple is 7.88. Taken at face value, that implies analysts expect earnings to fall by roughly half. For a company whose profit comes mostly from the gap between borrowing costs and bond income, a forecast like that is mostly about interest rates rather than about management.
Trailing profit for these trusts also includes gains and losses on the portfolio itself. A good year in bond prices flatters the figure, and a bad one wrecks it. That is why a cheap-looking trailing multiple here should be treated with care.
Which Number to Trust:
Price-to-book is 0.99, so you buy the assets at close to their stated value. For a portfolio of government-backed bonds, that stated value tends to be more reliable than it would be for property loans, because the bonds are priced in a liquid market every day.
That makes book value the more useful anchor here. The trailing multiple is flattered by a good year and the forward one depends on a rate forecast. Paying roughly the asset value for a portfolio you can see is the least speculative way to frame the decision.
Conclusion:
The two earnings multiples are not in conflict because one of them is wrong. They are measuring different things, and for a company like this neither deserves much weight on its own. What you can check is the portfolio, and you are paying roughly what it is carried at. The real question is whether you want exposure to the gap between short-term borrowing and long-term mortgage rates at all, because that gap is most of the business.
Market Sentiment:
Dynex Capital, Inc. was held by 29 hedge funds with a combined stake value of about $310 million at the end of Q2 2026 in the Insider Monkey database. This is up from 25 hedge fund holders with a cumulative investment value of around $150 million in the previous quarter.
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This article is originally published at Insider Monkey.
