American Capital Agency Corp. (AGNC), And How To ‘Fight The Fed’

Still, one advantage investors have with American Capital Agency is the expertise of CEO Gary Kain. As a former employee at Freddie Mac, Kain earned more than 20 years of experience with mortgages and mortgage-backed securities. With an understanding of likely Fed policy, Kain has positioned American Capital Agency to take advantage of current conditions, sporting a much lower prepayment rate and using esoteric strategies like the dollar-roll market to reap extra profits.

In American Capital Agency Corp. (NASDAQ:AGNC)’s quarterly report, look closely to see what measures the mortgage REIT has in place to hedge its exposure to interest rate risk. With an improving economy having pushed up the probability of interest rate hikes within the next couple of years, now’s the time for American Capital Agency to take steps to protect itself from the damage that higher rates could cause to its leveraged portfolio.

The article Can American Capital Agency Keep Fighting the Fed? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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