American Capital Mortgage (NASDAQ:MTGE)

CAPS Rating: 4 out of 5

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Player Avatar unkownuser (98.10) Submitted: 10/16/2011 11:12:55 AM : Outperform Start Price: $16.26 MTGE Score: +5.62

Brought to you by the same people who brought you AGNC... the difference being that AGNC is an agency-backed mREIT, and MTGE has the additional flexibility of being able to invest in agency or non-agency backed mortgages.

So if you've got a good and profitable track record with a company like AGNC, and the principals come to the public trough with an offering like MTGE that basically provides them with more freedom and flexibility to invest, would you want to support that? I am thinking an unqualified YES! I think the managers of AGNC have already proven themselves capable of profiting in a post-financial crisis mortgage market. With MTGE, they can diversify and look for opportunities across a broader range of mortgage investments. Just because the design of the mREIT allows them to invest in non-agency backed paper does not necessarily mean they will do so exclusively and therefore become a high-risk mREIT, it just provides them with the option to take advantage of opportunities outside of the agency-backed mortgage market.

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