Invesco Mortgage Capital Inc (NYSE:IVR) investing in stronger future


Dallas, Texas 09/11/2013 (Financialstrend) – In Tuesday’s trading session, Invesco Mortgage Capital Inc (NYSE:IVR) stock dipped by 1.72%. The opening price of the shares was $15.70 which trended to an intraday high of $15.71 and dipped to close at $15.42. Around 1.25 million shares were traded on Tuesday while the average volume of shares traded over a 30 day period was 1.52 million. The company has a market capitalization of $2.17 billion

The company

IVR is an REIT. It is involved in acquiring, financing and managing commercial and residential mortgage backed securities and well as mortgage loans. Its primary objective is to offer good returns to its customers. It does this via capital appreciation and through paying out dividends. Its portfolio has non-agency RMBS, Agency RMBS, commercial and residential mortgage loans and CMBS. An Invesco Ltd subsidiary, Invesco Advisors, manages and advises the company. Invesco Ltd is a front-running independent global-investment management company.

The Q2 loss

Like a large number of its peers, Invesco Mortgage Capital Inc (NYSE:IVR) has a massive -$2.54 book-value loss in the 2013 Q2. This amounted to 12.4% of its book-value and left the 30 June 2013 book-value at $17.88/common share. IVR has attributed this to the close to 100bps increase in the United States Treasury mortgage and long-bond rates. The company was singed very severely in the 2013 Q2. However the damage could have been worse if it had not attended to some issues that had cropped up in the first quarter of this year.

Provisioning for the future

Very notably, IVR added $1.85 billion in notional-value in the interest rate swaps. In addition, it added $1.4 billion in various swaptions positions. All of these had been struck on longer-term swaps, of 10-year duration and most of them were between 25-75 bps out of the cash. Simply put, the company is setting up a strong foundation for any potential rises in interest rates.