SimonSkafar/iStock via Getty Images Invesco Mortgage Capital's ( IVR ) preferred stock ( IVR.PR.C ) is currently trading below par. For an investor with a horizon through the end of 2027, this represents an interesting entry point and potential for capital gains if long-term interest rates normalize. But before we get to the investment thesis, let's talk a little about the company, and then we'll ...
SimonSkafar/iStock via Getty Images Invesco Mortgage Capital's ( IVR ) preferred stock ( IVR.PR.C ) is currently trading below par. For an investor with a horizon through the end of 2027, this represents an interesting entry point and potential for capital gains if long-term interest rates normalize. But before we get to the investment thesis, let's talk a little about the company, and then we'll explain the methodology for how such a stock is actually valued. IVR's basic details Before evaluating the preferred stock, we need to understand what’s behind it. Q1 2026 results confirm that the company’s operating performance remains solid. The current market capitalization of IVR is close to $714 million. The total assets of the company are close to $6.27 billion, and the total debt is around $5.37 billion. Earnings available for distribution are $0.55 (close number to $0.56 in Q4 2025). IVR's Q1 (invescomortgagecapital.com) The largest part of the portfolio is the Agency RMBS, close to 70.2% (the average-weighted coupon is close to 5.24%), followed by 11.9% Agency CMBS, 16.9% Agency TBA, and 1% Agency CMO. These assets have an implicit government guarantee, making them some of the safest securities on the market. What makes IVR particularly interesting is its hedging structure. The company has hedged "96% of its borrowing costs" through interest rate swaps and U.S. Treasury futures, with an exceptionally low-interest rate swap pay rate of just 1.66%. Debt-to-equity improved to 6.1x from 7.0x in the previous quarter. IVR.PR.C IVR.PR.C is a fixed-to-floating preferred stock. It pays a fixed quarterly dividend of $0.46875 per share (7.5% annualized - or $1.875 per annum) through 09/27/2027. After that date, the coupon converts to a floating rate, calculated as the 3-month SOFR plus a spread of 5.29%+0.26% (5.55%). More details can be seen in the snapshot below. IVR.PR.C's basic metrics (quantumonline.com) This conversion to floating makes the valuation more complicated an...
SHENZHEN, CHINA - APRIL 12: A Chinese national flag is seen in the foreground with container ships, cranes, and stacked shipping containers at the Yantian International Container Terminal under cloudy skies, on April 12, 2025 in Shenzhen, China. (Photo by Cheng Xin/Getty Images) Cheng Xin | Getty Images News | Getty Images China's export growth gathered pace in April as factories raced to meet a w...
SHENZHEN, CHINA - APRIL 12: A Chinese national flag is seen in the foreground with container ships, cranes, and stacked shipping containers at the Yantian International Container Terminal under cloudy skies, on April 12, 2025 in Shenzhen, China. (Photo by Cheng Xin/Getty Images) Cheng Xin | Getty Images News | Getty Images China's export growth gathered pace in April as factories raced to meet a wave of overseas orders from buyers seeking to stockpile components amid fears the Iran war could push global input costs even higher. Exports expanded 14.1% from a year earlier in U.S. dollar value terms, customs data showed on Saturday, outpacing the 2.5% gain in March and a 7.9% rise tipped by economists. Chinese exporters have so far weathered the fallout from the Middle East conflict, buoyed by overseas buyers scrambling to secure supplies, but economists warn that the longer the war drags on and energy prices rise, the greater the risk that external demand fades away -- leaving sluggish domestic consumption unable to plug the gap. New export orders rose to their highest level in two years, separate factory activity data for April showed last month. Imports notched another strong month in April, climbing 25.3% versus 27.8% in March. Economists had forecasted growth of 15.2%. That boosted China's trade surplus last month to $84.8 billion, from $51.13 billion in March. Momentum was solid in the first quarter, with China's GDP growth hitting 5% year-on-year, the top of the government's full-year target range, and lessening the need for immediate stimulus. But even China, long criticised by trading partners for subsidy-backed, cut-price manufacturing, is not insulated from the hit to buyers' purchasing power as fuel and transport costs rise. The factory data published last month showed input prices remained elevated, particularly for refined goods and petroleum, coal and chemicals. Unemployment rates also edged higher and retail sales - a gauge of consumption - continued to...
Goldman Sachs said it pushed back expectations for the US Federal Reserve’s next two rate cuts by one quarter to December 2026 and March 2027 as inflation proves stickier than anticipated. Energy cost passthrough is likely to keep the core PCE inflation closer to 3% than the Fed’s 2% target through the year, delaying the conditions needed for policy easing, Goldman’s US economists wrote in the May...
Goldman Sachs said it pushed back expectations for the US Federal Reserve’s next two rate cuts by one quarter to December 2026 and March 2027 as inflation proves stickier than anticipated. Energy cost passthrough is likely to keep the core PCE inflation closer to 3% than the Fed’s 2% target through the year, delaying the conditions needed for policy easing, Goldman’s US economists wrote in the May 8 report. “A combination of lower monthly inflation prints after the oil shock fades and further labor market softening will likely be needed” for the Federal Open Market Committee to cut rates this year, the economists wrote. The Fed kept interest rates unchanged in its latest decision late last month. The meeting revealed a deepening division over the outlook for policy amid increased uncertainty caused by the conflict in the Middle East that has upended the global energy market. Read: Fed’s Collins Agreed With FOMC Dissenters Over Statement Goldman said it kept the terminal rate forecast of 3%-3.25% unchanged as FOMC participants’ projections of the neutral rate have been fairly stable. Most still envision at least a couple more cuts eventually, the economists wrote. The bank lowered the probability of a US recession over the next 12 months to 25%, down 5 percentage points. That’s still above its 20% estimate before the start of the Iran war.
Grafissimo/E+ via Getty Images AGNC vs. RITM stock: FQ1 earnings recap My last analysis on AGNC Investment Corp. ( AGNC ) on Mar 3 was under a title of "AGNC Investment: Unusually Low MOVE Index Is A Ticking Time Bomb.” The article focused on the unusually low-interest rate volatility at that time and rated the stock as a hold. As for Rithm Capital (NYSE: RITM ) , my last article was published on ...
Grafissimo/E+ via Getty Images AGNC vs. RITM stock: FQ1 earnings recap My last analysis on AGNC Investment Corp. ( AGNC ) on Mar 3 was under a title of "AGNC Investment: Unusually Low MOVE Index Is A Ticking Time Bomb.” The article focused on the unusually low-interest rate volatility at that time and rated the stock as a hold. As for Rithm Capital (NYSE: RITM ) , my last article was published on Mar 6 under a title of "Rithm: This Time, I Agree With Wall Street.” It focused on the EAD changes (Earnings Available for Distribution) and rated the stock as a buy. Overall, these articles expressed my improved outlook towards the broader mREIT sector given the sharpening yield curve. Since those publications, there have been a few new catalysts both in terms of operation specifics for both stocks and also macroscopic parameters. For company specifics, both companies have recently released their FQ1 2026 earnings report (ER). For macroeconomics, the most notable change on my list is the outlook for future interest rates since the breakout of the Iran war. These developments have made me feel it's timely to revisit these stocks with caution to mREIT investors: don’t chase yield. In the rest of the article, I will explain why these developments have led me to conclude RITM is the better investment despite its lower yield than AGNC (10.2% vs. 13.4% as of this writing). I will elaborate on the implications of their different interest rate sensitivity and leverage under the current outlook to argue why RITM is a better-rounded package. Let me start with a brief recap of the FQ1 earnings for both companies to better contextualize the rest of the discussion. Overall, as anticipated in our earlier articles, both companies reported a drastic topline growth due to the past quarter and more favorable rate environments. RITM’s revenue rose to $1.39 billion and grew more than 79% YOY. AGNC’s revenue grew even more, by more than 100% on a YOY basis, although it fell short of consensus ...