Yahoo Finanzen Dynex Capital Inc (DX) (Q1 2024) Earnings Call Transcript Highlights: Strategic Moves and ...
Total Economic Return: 2.1% for the quarter
Book Value: $13.20 per common share at quarter end
Capital Raised: $87 million in new capital deployed in February and March
Dividend: Continued payment of a steady, above-average dividend
Stock Buyback Program: Renewal announced, up to $100 million of common stock and $50 million of preferred stock
Hedge Portfolio: Realized a hedge loss this quarter, impacting earnings negatively
Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can we get an estimate of where your book value is currently? A: Smriti Popenoe, President and Co-Chief Investment Officer, mentioned that the book value as of the last Friday was $12.26 per share, which is down about 7%.
Q: What are the current returns on equity (ROEs) and how do they compare to your cost of capital? A: Smriti Popenoe explained that the marginal returns on agency MBS range from 9% to 18%. The cost of capital considers the dividend yield for common shareholders and a blend of costs from preferred shares and other financing vehicles.
Q: How does the April dividend affect the updated book value? A: Smriti Popenoe confirmed that the book value update is net of the April dividend.
Q: Can you elaborate on the tail risks in the market and conditions that could lead to a material tightening of spreads? A: Smriti Popenoe discussed potential risks including unexpected inflation increases or economic downturns that could prompt the Fed to adjust rates. She also noted that lower macroeconomic volatility would support tighter mortgage spreads.
Q: How do you view the impact of issuing shares below book value on short-term trading and your goal of trading at or above book value? A: Smriti Popenoe acknowledged the challenges but emphasized the long-term perspective, expecting that tightening spreads will eventually reflect the strategic decisions' value.
Q: Could you discuss your capital allocation strategy and thoughts on rotating into TBAs? A: Smriti Popenoe highlighted the strategy of maintaining a balanced coupon profile and adjusting allocations based on performance and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
