AGNC Investment (AGNC) short, mcap=$6.6bn, price $12.61 vs $10.75

Short pitch:
– Third largest mortgage REIT behind $NLY and $STWD.
– Bet on rising interest rates and widening MBS spreads with subsequent reduction in book values of mortgage REITs.
– This is expected to lead to a capital raise or dividend cut for AGNC.

Valuation: 75bps interest rate hike and MBS spreads expanding to 1.5% are expected to lead to a 35% decline in book value and a 25% downside in the stock.

Exp. gain: 25% to $8/share.

Full $AGNC write-up (free guest account required):

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