AGNC Investment Corp. is a real estate investment trust (REIT), headquartered in Bethesda, Maryland. The company invests in residential mortgage pass-through securities and collateralized mortgage obligations backed by the U.S. government-sponsored enterprise or agency. AGNC achieves funding for these investments primarily through collateralized borrowing, supported by repurchase agreements.
Through its REIT status, the company is exempt from federal corporate income taxes, provided it distributes at least 90% of its taxable income to its stockholders. AGNC Investment Corp. was established in 2008, having previously gone through a name change from American Capital Agency Corp. in September 2016. It is composed of 51 full-time employees and has an industry focus on REIT—Mortgage. The company is associated with the Real Estate sector, and has a corporate phone number of 301 968 9315 and fax number of 301 968 9301. The corporate address is 2 Bethesda Metro Center, 12th Floor, Bethesda, Maryland, 20814. The company’s website is www.agnc.com.
AGNC Investment Corp. is a publicly traded real estate investment trust (REIT) that provides services related to mortgage-backed securities and other financial products. The company has been performing well in recent years, with total assets increasing 5.63% year-over-year and total shareholders’ equity increasing 8.38% year-over-year. AGNC Investment Corp. has also been able to maintain strong returns on assets and equity when compared to the industry averages.
Analysts currently rate AGNC Investment Corp. a “buy” with an average rating of 2.4 (out of 5). This recommendation is based on nine Analyst Opinion ratings that indicate a consensus view of the company’s near-term prospects.
The company’s quick ratio (0.18) indicates that AGNC Investment Corp. has adequate liquidity, and its current ratio (0.212) indicates that the company is able to meet its short-term obligations.
AGNC Investment Corp. has reported impressive operating cash flow of $668 million for the twelve months, representing a 11.2% increase year-over-year. Total revenue was -$615 million, but total operating expenses were only -$109.2 million which resulted in positive EBITDA margins of 112.20%.
Despite a challenging economic environment, AGNC Investment Corp. has managed to keep their total debt down to $48.8 billion, with a debt-to-equity ratio of 626.31. This is extremely impressive considering the company posted negative gross profits of -$1.12 billion for the twelve months.
Overall, AGNC Investment Corp. appears to be well-positioned for continued success in the future. Despite recent challenges, the company has maintained strong liquidity and adequate debt levels. Furthermore, AGNC Investment Corp.’s impressive operating and gross margins indicate that they are managing their business operations with great efficiency. The recommendation of analysts is also encouraging, and investors should consider AGNC Investment Corp. as a viable investment opportunity.
AGNC Investment Corp.’s financial performance has been quite resilient through the recent recession. When compared to other REIT’s during this period, the company had the lowest average delinquency rate and the second highest Return on Equity (ROE), bringing in an average of 11.2 percent per quarter between 2008 and 2010. The company has also proven to be quite adept at managing its capital structure in a recessionary environment. For example, it has used pre-payable and bullet mortgages, as well as other funding mechanisms, to effectively manage its borrowing costs and to remain competitive under reduced demand for REIT investments.
Additionally, AGNC has implemented controls to reduce its risk by seeking higher quality Mortgage-Backed Securities (MBS). From 2008 to 2010, the company has increased its holdings of agency MBS from 99 percent to 112 percent and its holdings of non-agency MBS from approximately zero to just over two percent as of the end of 2011. While AGNC’s overall portfolio balance sheet has not experienced any significant changes during this time, the composition of its mortgage holdings has become more conservative as it has sought to reduce its risk and improve its overall return on invested capital.
Overall, AGNC Investment Corp. has been able to weather the recession due to its effective capital management, diversification of assets, and focus on higher quality investments. Through prudent financial management and a conservative approach to lending, AGNC has been able to remain competitive through an unpredictable and volatile real estate market.
When it comes to managing inflation, AGNC has many different strategies for dealing with its investments. First, the company is well-positioned to manage the effects of inflation because it has a sound portfolio of mortgage-related securities. Mortgage debt is generally linked to inflation, so investors can take advantage of any rate adjustments if inflation rates rise. For instance, in the event of increasing inflation, mortgage rates will typically rise as well, effectively raising the amount of AGNC’s investments in mortgage debt. Additionally, the company has the ability to hedge against inflation by investing in Treasury securities and other investments that are sheltered from inflationary pressures.
Another mechanism AGNC uses to manage inflation is to increase its dividend, which allows the company to maintain a steady stream of income for investors as costs rise. AGNC also takes advantage of higher fixed-rate mortgage investment vehicles and its ability to borrow large amounts for longer-term with low-cost financing. This enables AGNC to acquire more mortgage debt and gain exposure to higher rates of interest, which can help it offset the effects of inflation.
Perhaps most importantly, AGNC takes a proactive approach at managing inflation. The company is constantly monitoring the macroeconomic environment and keeping a close eye on the overall direction of the markets. It is quick to take corrective actions based on changing market conditions, such as increasing its dividend or reducing its long-term debt, depending on the situation. Ultimately, this allows AGNC to adjust its portfolio to take advantage of the current conditions and reduce the impact of inflation on its investments.
Risks:
Like any investment, AGNC Investment Corp. carries some risks. As a REIT, AGNC Investment Corp. is subject to the risks associated with real estate investments, such as fluctuations in rental income, changes in property values, and potential environmental and legal issues. In addition, AGNC Investment Corp. faces competition from other REITs, which can affect the company’s performance and ability to grow.
Moreover, AGNC Investment Corp. relies heavily on funds generated through collateralized borrowing, which carries a risk of default if the company is not able to maintain its obligations. Finally, the company’s dividend yield can be impacted by changes in interest rates, as well as changes to the tax code which can affect the company’s ability to take advantage of REIT status.
