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AGNC Investment Announces Public Offering of 24.5M Shares


AGNC Investment Corp. AGNC has announced a public offering of 24.5 million shares of common stock. The company expects to raise $510.8 million of gross proceeds before making adjustments for underwriting commissions, and discounts and other estimated expenses.

The underwriters will get a 30-day option to purchase up to an additional 3,675,000 common shares. The offering, subject to customary closing conditions, is expected to close on or around Sep 15, 2017.

AGNC plans to spend the proceeds for targeted acquisition of various securities. This consists of both agency securities and non-agency securities, including credit risk transfer securities. The company will also allocate funds for general corporate purposes. Further, it plans to increase its investment in mortgage-related assets by using funds raised through this offering.

In addition, AGNC plans to invest in hedging instruments, in order to expand its hedge portfolio. Amid a challenging interest rate and volatile global economic environment, the company’s portfolio repositioning efforts to hedge interest rate uncertainty augur well. It provides the company more protection against net asset value fluctuations due to interest-rate changes.

However, as the company prioritizes risk management over incremental returns, robust returns are expected to remain elusive in the short run.

Shares of AGNC have outperformed the industry it belongs to, year to date. The company’s shares have gained 18.6%, while the industry registered growth of 11.3%, during this time period.

AGNC currently carries a Zacks Rank #2 (Buy). Moreover, the Zacks Consensus Estimate for funds from operation (FFO) per share estimates for full-year 2017 moved 2.4% upward to $2.56 in a month’s time.

Other Key Picks

Other stocks worth considering in the REIT space include Hannon Armstrong Sustainable Infrastructure Capital, Inc. HASI, New Residential Investment Corp. NRZ and Altisource Portfolio Solutions S.A. ASPS. All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

While Hannon Armstrong has an expected long-term FFO per share growth rate of 12.5%, New Residential and Altisource Portfolio have expected long-term growth rates of 1% and 20%, respectively.

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