I’ll admit it. I was wrong about American Capital Agency Corp. (AGNC) share price direction in the last year. I thought that their shrinking interest rate spreads and dividend cuts would have hurt the share price, but they haven’t. There has been a sustained 10 month rally in AGNC stock since November 2011. Eventually this rally must end, but Keynesian investors don’t seem to care. They love the Federal Reserve’s QE3.
AGNC is a mortgage REIT. They make money by borrowing short term and then lend the money long term by buying agency mortgage backed securities.
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