Core Viewpoint - AGNC Investment's recent earnings report indicates a decline in key financial metrics, raising concerns about future performance and potential pullback in stock value leading up to the next earnings release [1]. Financial Performance - The second-quarter 2025 net spread and dollar roll income per common share was 38 cents, missing the Zacks Consensus Estimate of 42 cents, and down from 53 cents in the same quarter last year [2]. - Adjusted net interest and dollar roll income was $457 million, a decrease of 5.2% year-over-year [2]. - The company reported a comprehensive loss per common share of 13 cents, remaining relatively flat compared to the previous year [3]. Key Metrics - Net interest income (NII) was $162 million, significantly missing the Zacks Consensus Estimate by 36.2%, while net interest expenses were $3 million in the prior-year quarter [4]. - The average asset yield on the portfolio increased to 4.87% from 4.69% year-over-year [4]. - The average net interest spread decreased to 2.01% from 2.69% in the year-ago quarter [5]. Balance Sheet and Portfolio - As of June 30, 2025, the tangible net book value per share (BVPS) was $7.81, down 7% year-over-year [6]. - The company's investment portfolio totaled $82.3 billion, including $73.3 billion in Agency mortgage-backed securities [7]. - Cash and cash equivalents were $656 million, a decline of 44.2% from the prior quarter [8]. Market Outlook - The stock has a poor Growth Score of F and a Momentum Score of D, with an aggregate VGM Score of F, indicating weak overall performance [11]. - AGNC Investment holds a Zacks Rank 4 (Sell), suggesting expectations of below-average returns in the coming months [12].

Group 1 - The Federal Reserve's control is primarily over the effective Federal funds rate, which influences short-term rates, while long-term rates are driven by the 10-year Treasury yield [3][4] - Recent history shows that when the Fed cut rates, long-term Treasury rates increased, indicating a disconnect between Fed actions and market responses [4][5] - Inflation remains above target, but recent CPI reports suggest potential for lower Fed rates, which could lead to higher long-term Treasury rates [5][6] Group 2 - Mortgage REITs (mREITs) operate by borrowing at short-term rates and lending at long-term rates, profiting from the spread between these rates [8][9] - The current market conditions favor mREITs, as lower short-term rates and steady long-term rates enhance their profitability [10][12] - AGNC Investment Corp. is highlighted as a strong mREIT candidate, currently yielding 15%, with potential for increased profits as short-term rates decline [14][16] Group 3 - AGNC's financial performance shows an average asset yield of 4.87% against a repo cost of 4.44%, indicating a healthy spread that could widen with falling short-term rates [14][16] - The company has maintained its dividend despite market fluctuations, suggesting resilience and potential for future increases if conditions remain favorable [16][17] - AGNC trades at 1.1 times book value and six times forward earnings, with expectations that a wider gap between Fed rates and 10-year Treasury yields could positively impact its share price [17]

Group 1 - The focus is on growth and dividend income as a strategy for retirement planning [1] - The portfolio is structured to generate monthly dividend income that grows through reinvestment and annual increases [1] Group 2 - The article expresses personal opinions and is not intended as investment advice [2][3] - It emphasizes the importance of conducting individual research before making investment decisions [2]

Core Insights - AGNC Investment Inc.'s performance is heavily influenced by mortgage rates, which are currently declining but remain high compared to previous years [1][3] - The company's tangible book value (TBV) has decreased by 7% year over year, indicating financial pressure [3][8] - AGNC's dividend yield stands at 15.2%, significantly higher than the industry average of 12.5%, attracting income-focused investors [6][21] Mortgage Rates and Market Conditions - Mortgage rates are impacting the origination volume and refinancing index, leading to operational challenges for mREITs like AGNC [2][8] - The average rate on a 30-year fixed mortgage was reported at 6.63% as of August 7, 2025, down from 6.72% the previous week but up from 6.47% a year ago [1] Financial Performance - AGNC's TBV fell to $7.81, and the average net interest spread narrowed to 2.01% from 2.69% year over year, reflecting increased costs and reduced profitability [3][8] - The company has a liquidity position of $6.4 billion as of June 30, 2025, indicating a decent financial standing [12] Dividend and Share Repurchase - AGNC has a payout ratio of 89% and has not increased its dividends over the past five years, raising concerns about sustainability [6][21] - A new share repurchase plan allows AGNC to buy back up to $1 billion of common stock through December 31, 2026 [11] Market Outlook - AGNC focuses on agency MBS, which are guaranteed by U.S. government entities, positioning it favorably in the market [13][14] - Despite a competitive environment, management maintains a positive outlook for agency MBS investments, citing favorable mortgage spreads [14] Valuation and Price Performance - Year-to-date, AGNC shares have gained 12.1%, outperforming the industry average of 8.2% [15] - The company trades at a forward price-to-tangible book (P/TB) multiple of 1.17X, above the industry average of 1.01X, indicating a premium valuation [18][21]

Core Insights - AGNC Investment Corp. (AGNC) is experiencing a decline in its book value per share (BVPS), reflecting challenges in its underlying portfolios [1][2] Financial Performance - AGNC's tangible net book value per share fell by 7% year-over-year to $7.81 in Q2 2025, primarily due to market volatility and increased debt servicing costs [2][8] - The economic return on tangible common equity for AGNC was negative 1% in Q2 2025, influenced by unrealized losses from mortgage-backed securities (MBS) [3][8] - AGNC's peers, Arbor Realty Trust (ABR) and Orchid Island Capital (ORC), are also facing declines in their book values, with ABR's BVPS at $18.45 and Orchid Island's at $7.21 as of June 30, 2025 [4][5] Market Conditions - The performance of mREITs like AGNC is closely linked to macroeconomic trends, including interest rate fluctuations and the yield curve, which have negatively impacted investment returns [2] - The widening of mortgage spreads relative to U.S. Treasuries has significantly contributed to the decline in AGNC's book value [3] Valuation Metrics - AGNC shares have increased by 11.9% over the past year, outperforming the industry growth of 6.9% [6] - The forward price-to-tangible book (P/TB) ratio for AGNC is 1.24X, higher than the industry average of 0.97X [10] Earnings Estimates - The Zacks Consensus Estimate for AGNC's earnings indicates year-over-year declines of 15.4% for 2025 and 0.9% for 2026, with estimates remaining unchanged over the past week [13] - Current earnings estimates for AGNC are $1.59 for 2025 and $1.57 for 2026, reflecting a significant decrease from the previous year's earnings [15]

By Scott Kennedy, Produced with Colorado Wealth Management Fund Introduction AGNC (NASDAQ:AGNC) had a pretty average quarter with results coming in a little weaker than I hoped. They raised a lot of money earlier this year but didn't put it to work as aggressively as some peers. The dividend still looks safe for now, but the stock is priced too high compared to the rest of the sector. I wouldn't be buying here. Even with a slightly disappointing quarter, I believe a risk/performance rating of 3.5 for AGNC r ...

Group 1 - The article provides a review of the preferred stock and baby bond market, highlighting both individual news and broader market trends [1] - It emphasizes the importance of yield and risk management in investment strategies, particularly in the context of income portfolios [1] - The content encourages the use of interactive tools for navigating various investment markets, including BDC, CEF, OEF, preferreds, and baby bonds [2] Group 2 - The article promotes investor guides specifically focused on CEFs, preferred stocks, and PIMCO CEFs, indicating a resource for investors seeking detailed information [2] - It offers a no-risk trial for potential investors, suggesting an approach to attract new clients to their investment services [2]

Group 1 - The article emphasizes the importance of creating a portfolio that generates income without the need for selling assets, aiming to alleviate the stress of retirement investing [1] - It highlights a service that offers a model portfolio with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and community support for investors [2] - The service philosophy is centered around community, education, and the belief that investing should not be done in isolation [2] Group 2 - The article mentions that the contributors and analysts involved in the service closely monitor positions and provide exclusive buy and sell alerts to members [4] - It is noted that past performance does not guarantee future results, and the views expressed may not reflect the overall stance of the platform [5]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's consolidated financial statements for the period ended June 30, 2025, show an increase in total assets to **$102.021 billion** from **$88.015 billion** at year-end 2024, primarily driven by an increase in Agency securities and repurchase agreements Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$102,021** | **$88,015** | | Agency securities, at fair value | $73,232 | $65,367 | | Repurchase agreements (liability) | $69,153 | $60,798 | | **Total Liabilities** | **$91,674** | **$78,253** | | **Total Stockholders' Equity** | **$10,347** | **$9,762** | Consolidated Comprehensive Income Highlights (in millions, except per share data) | Income Statement Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income (Expense) | $162 | $(3) | $321 | $(33) | | Net Income (Loss) | $(140) | $(48) | $(90) | $395 | | Comprehensive Income (Loss) | $(92) | $(66) | $51 | $300 | | Net Income (Loss) per common share - diluted | $(0.17) | $(0.11) | $(0.17) | $0.46 | Consolidated Cash Flow Highlights (in millions) | Cash Flow Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $372 | $0 | | Net cash provided by (used in) investing activities | $(9,171) | $(6,479) | | Net cash provided by (used in) financing activities | $8,900 | $6,614 | - The company operates as a single reportable segment, with the Chief Operating Decision Maker (CODM) evaluating performance based on comprehensive income (loss) and managing the portfolio as a whole[117](index=117&type=chunk)[118](index=118&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported significant market volatility in Q2 2025, leading to wider Agency RMBS spreads and an economic loss of **-1.0%** on tangible common equity for the quarter, while maintaining a constructive outlook due to stabilizing spreads and anticipated regulatory reforms - Financial markets experienced significant volatility in Q2 2025, leading to underperformance in Agency RMBS and an economic loss for AGNC of **-1.0%** for the quarter[123](index=123&type=chunk)[128](index=128&type=chunk) - The company maintains a constructive outlook for Agency RMBS due to stabilizing spreads, expected increased bank demand from regulatory reforms, and reduced risk from potential GSE reform[124](index=124&type=chunk)[127](index=127&type=chunk) Key Performance Metrics (Q2 2025) | Metric | Value | | :--- | :--- | | Total Comprehensive Loss per Share | $(0.13) | | Economic Loss on Tangible Common Equity | -1.0% | | Dividends Declared per Common Share | $0.36 | | Decrease in Tangible Net Book Value per Share | $(0.44) | | Net Spread and Dollar Roll Income per Share (Non-GAAP) | $0.38 | Portfolio and Leverage (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Investment Portfolio | $82.3 billion | | Tangible 'at risk' Leverage | 7.6x | | Unencumbered Liquidity | $6.4 billion (65% of tangible equity) | | Hedge Ratio (vs. Repo/TBA) | 89% | [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate, prepayment, spread, liquidity, and credit risks, with an estimated duration gap of **0.2 years** as of June 30, 2025, and significant sensitivity to changes in interest rates and mortgage spreads - The company's primary market risks include interest rate, prepayment, spread, liquidity, extension, and credit risks[216](index=216&type=chunk) - The company's estimated duration gap, measuring the difference in interest rate sensitivity between assets and liabilities (including hedges), was **0.2 years** as of June 30, 2025[222](index=222&type=chunk) Interest Rate Sensitivity on Tangible Net Book Value per Share (June 30, 2025) | Change in Interest Rate | Estimated Change in Tangible Net Book Value Per Common Share | | :--- | :--- | | -50 Basis Points | -0.7% | | -25 Basis Points | +0.2% | | +25 Basis Points | -1.2% | | +50 Basis Points | -3.2% | Mortgage Spread Sensitivity on Tangible Net Book Value per Share (June 30, 2025) | Change in MBS Spread | Estimated Change in Tangible Net Book Value Per Common Share | | :--- | :--- | | -25 Basis Points | +13.1% | | -10 Basis Points | +5.2% | | +10 Basis Points | -5.2% | | +25 Basis Points | -13.1% | - As of June 30, 2025, the weighted average projected Constant Prepayment Rate (CPR) for the investment portfolio was **7.8%**, with a **50 basis point** decrease in interest rates projected to increase the CPR to **10.1%**[231](index=231&type=chunk)[232](index=232&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the last fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[244](index=244&type=chunk) - No changes occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[245](index=245&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material litigation, nor is any material litigation threatened against it, other than routine proceedings arising in the ordinary course of business - As of the report date, the company is not involved in any material legal proceedings[247](index=247&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors that were previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors have been identified since the last Annual Report on Form 10-K[248](index=248&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the reported quarter[249](index=249&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section discloses that on May 15, 2025, the company's President and CEO, Peter Federico, adopted a Rule 10b5-1 trading arrangement for the potential sale of up to **137,393 shares** of common stock - On May 15, 2025, President and CEO Peter Federico adopted a Rule 10b5-1 trading plan for the sale of up to **137,393 shares** of common stock[252](index=252&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with or furnished as part of the quarterly report, including certifications by the CEO and CFO, and documents related to the company's incorporation and bylaws - The report includes an index of exhibits, such as the CEO/CFO certifications required by the Sarbanes-Oxley Act and various corporate governance documents[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)

Core Insights - AGNC Investment's preferred shares are favored by income investors due to their high yields and strong profile [1] - The recent Q2 financial results were not favorable for common shareholders but were very positive for preferred shareholders [1] Group 1 - AGNC Investment reported Q2 numbers that indicate a disparity in performance between common and preferred shares [1] - The company remains a popular choice among income investors, highlighting the attractiveness of its preferred shares [1] Group 2 - The article suggests exploring additional resources such as income portfolios and investor tools for better navigation of investment options [2]