Arlington Asset Investment Corp. (AIW)

Discounts to book value (or NAV) are the start of your mortgage REIT analysis, but not the end. In this series we’re providing readers with the discounts to trailing book values throughout the sector and a few notes on the current environment.

Discounts to book value are the start of your analysis, but not the end. In this series we’re providing readers with the discounts to trailing book values throughout the sector and a few notes on the current environment.

Price-to-book ratios dropped materially, creating new opportunities. Buying with a discount to book value doesn’t guarantee success, yet it does improve the odds dramatically.

Discounts to book value are the start of your analysis, but not the end. In this series, we’re providing readers with the discounts to trailing book values throughout the sector and a few notes on the current environment.

Analysis starts with discount to book, but it doesn't end there. Using current estimates for book value is far superior to using trailing book values, but the trailing values will still give investors a rough idea.

One topic that seems to come up regularly is investors wondering about using a buy-and-hold strategy for years on common shares.

Mortgage REIT earnings season wrapped up this week. As with their Equity REIT peers, earnings reports were generally better-than-expected.

On 7/27/2020, AGNC reported results for the second quarter of 2020. AGNC reported comprehensive income of $921 million and a non-tangible BV as of 6/30/2020 of $15.86 per common share.

Arlington Asset Investment Corp. (NYSE:AI) Q2 2020 Earnings Conference Call July 31, 2020 9:00 AM ET Company Participants Richard Konzmann – Chief Financial Officer Rock Tonkel – President and Chief Executive Officer Conference Call Participants Doug Harter – Credit Suisse Trevor Cranston – JMP Securities Jason Stewart – Jones Trading Christopher Nolan – Ladenburg Thalmann Presentation Operator Good morning.

Few asset classes have been slammed harder by the pandemic than Mortgage REITs, which have seen a dividend cut bloodbath with 33 of 42 mREITs suspending or reducing their dividends.

I am projecting AGNC will report a modest (at or greater than 5% but less than 10%) BV increase for the second quarter of 2020.

I am projecting AGNC will report a combined notable net unrealized gain on available-for-sale securities and investment securities measured at FMV for the second quarter of 2020.

A few mortgage REITs have outperformed by a bit too much. Shares are trading near estimated book value, or even above estimated book value.

Unlike the prior quarter, I'm projecting AGNC will report a notably less severe loss regarding the company’s derivative instruments and other securities for the second quarter of 2020.

Bargains still exist in the sector, but you’ve got to know where to look. Analysis on mortgage REITs should start with evaluating the price-to-book ratios.

This series projects AGNC’s income statement for the second quarter of 2020. These projections help readers understand how most of the fixed-rate agency mREIT sector performed (valuable insight).