Will Anworth Mortgage Asset Corporation (NYSE:ANH)’s worth be affected by Fed tapering?


Dallas, Texas 09/10/2013 (Financialstrend) – TheStreet downgraded Anworth Mortgage Asset Corporation (NYSE:ANH) stock from a “hold” to a “sell” rating on 26 august. On 29 July, the company reported its core earnings of $21.6M or $0.15/diluted share, which will be available to common stockholders. This is for the 2nd quarter that ended on 30 June 2013. The company’s core earnings were made up of $23M of net-income minus $1.4M of dividends that were paid to the preferred stockholders of the company. This compares to the company’s core earnings of $22.2M or $0.15/diluted share for the Q1 that ended 31 March 2013.

Fed Tapering

Another imminent issue and its impact is that of the Fed’s QE. Everyone is expecting the Fed announcement to come in post its 17-18 September Fed meeting. This news by itself is enough to make any serious investors hold off on any new positions. Alternatively, some may also lighten their holdings to reduce the risk of another plunge that is induced by a rate scare.

And how exactly will the Fed taper? It buys mortgage backed securities and treasury bonds. Taking the concerns over increasing mortgage-rates killing the demand for housing into consideration, there is a distinct possibility that the Fed will cut back their treasury bond buying more than its MBS buying. A larger Treasury bond supply means an increase in rates.

About the company

Anworth Mortgage Asset Corporation (NYSE:ANH) is a REIT. It engages in the business of investments that are largely in the U.S. or in U.S agency mortgage-backed securities and Non-Agency MBS. Close to 99.99 percent of ANH’s total portfolio is made up of Agency MBS.  At 31 December 2012, the company held mortgage-assets that had an amortized cost of around $9.02B. This consisted largely of $7.07B of adjustable rate Agency MBS and around $1.95B of fixed rate Agency MBS. The non-agency MBS were around $1.4M of 2012.

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