David Einhorn (Trades, Portfolio) tripled his stake in American Capital Agency Corp. (AGNC, Financial) with the purchase of 3,250,000 shares in the first quarter.
American Capital Agency is a real estate investment trust (REIT) that invests exclusively in residential mortgage pass-through securities and collateralized mortgage obligations on a leveraged basis. The firm primarily invests in U.S. government agency securities for which the principal and interest payments are guaranteed by a U.S. government agency such as the Government National Mortgage Association (GNMA) or a U.S. government-sponsored enterprise such as the Federal National Mortgage Association (FNMA, Financial) and the Federal Home Loan Mortgage Corporation (FMCC, Financial).
American Capital Agency has a market cap of $6.25 billion, an enterprise value of $9.08 billion, a P/B ratio of 0.85 and a dividend yield of 12.69.
American Capital Agency has a 5/10 financial strength rating with a 0.31 cash-to-debt ratio according to GuruFocus. The company also has a 6/10 profitability and growth rating with an operating margin of 180.47% ranking it above 93% of the 839 companies in the Global REIT residential industry.
American Capital Agency is also traded in Germany and Mexico.
Einhorn may have decided to triple his stake for the following reasons:
- American Capital Agency is in expansion. Since its August 1997 IPO, American Capital and the funds it manages have invested approximately $37 billion in over 730 portfolio companies. The company portfolio is invested in virtually every industry sector. The company has over 100 investment professionals in six offices in the U.S. and Europe.
- American Capital Agency is paying a dividend yield of 12.69% which ranks it higher than 95% of the companies in the Global REIT residential industry.
Einhorn tripled his stake American Capital Agency at an average price of $17.73 during the first quarter. The company was trading at $36.49 on Sept. 10, 2012. It is likely that Einhorn believes the company is undervalued while expanding and also paying a healthy dividend yield. All of these signs may have influenced Einhorn to nearly triple his stake in American Capital Agency.
Below is a Peter Lynch Chart for American Capital Agency.
Einhorn founded Greenlight Capital in 1996 with $900,000 after his wife gave him the “green light” to go ahead with his idea to found his own hedge fund. Today, Greenlight Capital owns 43 stocks with a total value of $5.90 billion.
Cheers to your investment success.
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