ANH’s Management Agrees

They think their stock is trading too cheap, as well.

After the market closed today, Anworth announced a share buy-back of up to 5% (5.85 million) of their shares of common.

The third quarter’s report showed a book value around $7.30 a share (adjusted for dividend), and the prices for their MBS went up over the quarter.  Say $7.40 as a guess, with some potential upside.

The stock closed in the doldrums today, once again around $6.90 a share.  In after-market trading, it was $7.04 bid and $7.06 asked.

The buyback could take place over the next several months.  If I were running it, I’d limit my buying to prices at or under $7.25 a share, but that’s because I’m preternaturally cheap about stocks.

If you joined me loading the boat under $7 a share, you might want to sell some into the buying, but I would wait until we hear exactly where the book value landed at the end of Q4.  That report should be out in two weeks or less.

Here’s the meaningful (non boilerplate) section of their announcement:

SANTA MONICA, Calif., Feb 01, 2010 (BUSINESS WIRE) — Anworth Mortgage Asset Corporation (NYSE: ANH) announced today that its Board of Directors has authorized Anworth to acquire up to 5,850,000 shares of its common stock, or approximately 5% of its total shares of common stock outstanding. The shares are expected to be acquired at prevailing prices through open market transactions. The manner, price, number and timing of share repurchases will be subject to market conditions and applicable U.S. Securities and Exchange Commission rules.

Influencing the Board of Directors’ decision to authorize the share repurchase program were the expectations that the share repurchase would result in an increase in: portfolio leverage, ROE and book value per share.

I will probably continue to hold this as my largest position at least until April or May, but taking some profits will feel just fine.



3 Responses to ANH’s Management Agrees

  1. Tom D says:

    Shrinking the capitalization must be a novel concept for mortgage REITs. They must be pulling in their horns and seeing some tougher sledding ahead. At first sight it’s an extension of their more conservative belief in hedging risks which is admirable. But in the real world it’s also somewhat eyebrow-raising. Hmmmmmmmmm.

  2. Ron W says:

    Wondering your view of ANH after seeing the vulnerability of their holdings to GSE buyback. Book could take quite the hit.

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