Core Viewpoint - Invesco Mortgage Capital reported quarterly earnings of $0.58 per share, exceeding the Zacks Consensus Estimate of $0.56 per share, but down from $0.86 per share a year ago, indicating a mixed performance in earnings despite a positive surprise [1][2]. Earnings Performance - The company achieved an earnings surprise of +3.57% for the recent quarter and had a previous quarter surprise of +14.29% with earnings of $0.64 per share against an expectation of $0.56 [1][2]. - Over the last four quarters, Invesco Mortgage Capital has surpassed consensus EPS estimates two times [2]. Revenue Analysis - For the quarter ended June 2025, the company reported revenues of $17.73 million, which fell short of the Zacks Consensus Estimate by 11.31%, compared to $8.64 million in the same quarter last year [2]. - The company has only topped consensus revenue estimates once in the last four quarters [2]. Stock Performance - Invesco Mortgage Capital shares have declined approximately 5.5% since the beginning of the year, contrasting with the S&P 500's gain of 8.1% [3]. Future Outlook - The future performance of Invesco Mortgage Capital's stock will largely depend on management's commentary during the earnings call and the revisions in earnings estimates [3][4]. - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $21.44 million, and for the current fiscal year, it is $2.23 on revenues of $83.91 million [7]. Industry Context - The REIT and Equity Trust industry, to which Invesco Mortgage Capital belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable industry outlook [8]. - The performance of Invesco Mortgage Capital may also be influenced by the overall industry trends, as empirical research suggests a strong correlation between stock movements and earnings estimate revisions [5][8].

[Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) [Management Update and Performance Summary](index=1&type=section&id=Management%20Update%20and%20Performance%20Summary) Market pressures led to a **(4.8)%** economic return and reduced book value, prompting a defensive posture - Market volatility, driven by tariff announcements and fiscal policy concerns, negatively impacted valuations and resulted in a quarterly economic return of **(4.8)%**[4](index=4&type=chunk) - The company reduced its debt-to-equity ratio to **6.5x** from **7.1x** in the prior quarter, reflecting a more defensive posture due to market uncertainty[4](index=4&type=chunk) - As of July 18, 2025, post-quarter end, the estimated book value per common share recovered to a range of **$7.99** to **$8.31**[5](index=5&type=chunk) Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Income (Loss) per Common Share | ($0.40) | $0.26 | | Earnings Available for Distribution per Share (Non-GAAP) | $0.58 | $0.64 | | Common Stock Dividend per Share | $0.34 | $0.34 | | Book Value per Common Share (period-end) | $8.05 | $8.81 | | Economic Return | (4.8)% | 2.6% | [Key Performance Indicators](index=2&type=section&id=Key%20Performance%20Indicators) Q2 2025 reported a **$26.6 million** net loss and **$0.40** loss per share, with an improved non-GAAP effective interest rate margin Q2 2025 vs Q1 2025 Performance | Metric ($ in millions, except per share) | Q2 2025 | Q1 2025 | Variance | | :--- | :--- | :--- | :--- | | Net interest income | $17.7 | $18.8 | ($1.1) | | Net income (loss) to common stockholders | ($26.6) | $16.3 | ($42.9) | | Earnings (loss) per common share (basic) | ($0.40) | $0.26 | ($0.66) | | Earnings available for distribution (Non-GAAP) | $38.2 | $40.0 | ($1.8) | | EAD per common share (Non-GAAP) | $0.58 | $0.64 | ($0.06) | Key Ratios and Margins | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Average net interest rate margin (GAAP) | 0.94% | 0.99% | (0.05)% | | Effective interest rate margin (Non-GAAP) | 3.44% | 3.27% | 0.17% | | Debt-to-equity ratio | 6.5x | 7.1x | (0.6x) | [Portfolio and Hedging Activities](index=3&type=section&id=Portfolio%20and%20Hedging%20Activities) The MBS portfolio decreased to **$5.2 billion**, with borrowings reduced to **$4.6 billion**, while hedging utilized swaps and Treasury futures [Investment Portfolio Composition](index=3&type=section&id=Investment%20Portfolio%20Composition) The MBS portfolio decreased to **$5.19 billion**, primarily 30-year fixed-rate Agency RMBS, with Non-Agency RMBS fully divested MBS Portfolio Breakdown by Fair Value ($ in thousands) | Security Type | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | 30 year fixed-rate pass through | $4,222,203 | $4,974,663 | | Agency-CMO | $71,835 | $73,539 | | Agency CMBS | $891,521 | $890,372 | | Non-Agency RMBS | $— | $7,215 | | **Total MBS portfolio** | **$5,185,559** | **$5,945,789** | [Borrowings](index=3&type=section&id=Borrowings) Total borrowings decreased to **$4.64 billion**, maintaining a stable **4.48%** weighted average interest rate and **24-day** maturity Borrowings Summary ($ in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Amount Outstanding | $4,635,881 | $5,354,561 | | Weighted Average Interest Rate | 4.48% | 4.47% | | Weighted Average Remaining Maturity (days) | 24 | 25 | [Hedging Instruments](index=3&type=section&id=Hedging%20Instruments) Hedging included **$3.5 billion** in interest rate swaps and **$830 million** in short U.S. Treasury futures, with no TBA contracts - The company did not have any **To-Be-Announced (TBA)** contracts outstanding as of June 30, 2025[16](index=16&type=chunk) - The total notional amount of interest rate swaps was **$3.5 billion**, with a weighted average fixed pay rate of **1.19%** and a weighted average maturity of **6.3 years**[19](index=19&type=chunk) - The company held short positions in U.S. Treasury futures with a total notional amount of **$830 million**, a decrease from **$902.5 million** in the prior quarter[21](index=21&type=chunk) [Capital Activities](index=4&type=section&id=Capital%20Activities) The company declared a **$0.34** per share dividend, issued **$2.2 million** in common stock, and repurchased **$2.3 million** of preferred stock - A common stock dividend of **$0.34** per share was declared on June 24, 2025[22](index=22&type=chunk) - The company sold 282,750 shares of common stock, generating net cash proceeds of **$2.2 million**[23](index=23&type=chunk) - The company repurchased and retired 96,803 shares of its Series C Preferred Stock for a total cost of **$2.3 million**[24](index=24&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) Consolidated statements show a **$23.3 million** net loss from derivative losses, with total assets and equity decreasing [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) Q2 2025 reported a **$23.3 million** net loss, driven by **$30.9 million** in derivative losses, resulting in a **($0.40)** loss per common share Q2 2025 Statement of Operations Highlights ($ in thousands) | Line Item | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net interest income | $17,729 | $18,821 | | Gain (loss) on derivative instruments, net | ($30,916) | ($76,679) | | Total other income (loss) | ($36,184) | $5,479 | | Net income (loss) | ($23,327) | $19,641 | | Net income (loss) to common stockholders | ($26,567) | $16,289 | | Basic earnings (loss) per share | ($0.40) | $0.26 | [Statements of Comprehensive Income (Loss)](index=7&type=section&id=Statements%20of%20Comprehensive%20Income%20(Loss)) Q2 2025 resulted in a **$24.1 million** comprehensive loss, with **$27.4 million** attributable to common stockholders, reversing Q1 income - Comprehensive loss attributable to common stockholders for Q2 2025 was **$27.4 million**, compared to a comprehensive income of **$16.9 million** in Q1 2025[33](index=33&type=chunk) [Balance Sheets](index=8&type=section&id=Balance%20Sheets) Total assets decreased to **$5.40 billion** and liabilities to **$4.69 billion**, with equity contracting to **$709.4 million** Balance Sheet Summary ($ in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $5,400,370 | $5,688,034 | | Repurchase agreements | $4,635,881 | $4,893,958 | | Total Liabilities | $4,690,994 | $4,957,305 | | Total Stockholders' Equity | $709,376 | $730,729 | [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like EAD, Effective Interest Metrics, and Economic Debt-to-Equity Ratio offer additional insights into performance - The company uses **non-GAAP** measures such as Earnings available for distribution, Effective interest expense/income, and Economic debt-to-equity ratio to supplement its GAAP results[38](index=38&type=chunk)[39](index=39&type=chunk) [Earnings Available for Distribution (EAD)](index=9&type=section&id=Earnings%20Available%20for%20Distribution%20(EAD)) Q2 2025 EAD decreased to **$38.2 million** or **$0.58** per share, a non-GAAP metric for assessing distributable income capacity Reconciliation of Net Income to EAD ($ in thousands) | Line Item | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net income (loss) to common stockholders | ($26,567) | $16,289 | | Adjustments (Gains/Losses on Investments & Derivatives, etc.) | $64,758 | $23,758 | | **Earnings available for distribution** | **$38,191** | **$40,047** | - EAD per common share was **$0.58** in Q2 2025, compared to **$0.64** in Q1 2025[45](index=45&type=chunk) [Effective Interest Metrics](index=11&type=section&id=Effective%20Interest%20Metrics) Non-GAAP effective interest expense was **$24.3 million** (2.12% cost of funds), yielding **$46.4 million** effective net interest income and a **3.44%** margin GAAP vs. Effective Interest Metrics (Q2 2025) | Metric ($ in thousands) | GAAP | Non-GAAP (Effective) | | :--- | :--- | :--- | | Total interest expense | $52,895 | $24,264 | | Cost of funds | 4.62% | 2.12% | | Net interest income | $17,729 | $46,360 | | Net interest rate margin | 0.94% | 3.44% | [Economic Debt-to-Equity Ratio](index=12&type=section&id=Economic%20Debt-to-Equity%20Ratio) The economic debt-to-equity ratio decreased to **6.5x**, matching GAAP due to no TBA positions, reflecting at-risk leverage - The economic debt-to-equity ratio is a **non-GAAP** measure that includes the implied cost basis of TBA derivatives to provide a view of at-risk leverage[56](index=56&type=chunk) - As of June 30, 2025, both the GAAP debt-to-equity ratio and the economic debt-to-equity ratio were **6.5x**[57](index=57&type=chunk)[58](index=58&type=chunk) [Supplemental Information](index=5&type=section&id=Supplemental%20Information) This section provides corporate details, including REIT status, earnings call information, and average balances of assets and borrowings - The company is a **real estate investment trust (REIT)** externally managed and advised by Invesco Advisers, Inc[25](index=25&type=chunk) - The earnings conference call is scheduled for Friday, **July 25, 2025**, at **9:00 a.m. ET**[26](index=26&type=chunk) Average Balances (Q2 2025) | Metric ($ in thousands) | Amount | | :--- | :--- | | Average earning assets | $5,078,921 | | Average borrowings | $4,577,566 |

Core Viewpoint - Invesco Mortgage Capital Inc. reported a challenging second quarter in 2025, with a significant economic return of (4.8)%, driven by market volatility and a decline in book value per share, despite maintaining a consistent dividend payout. Financial Performance - The company experienced a net loss attributable to common stockholders of $26.6 million, translating to a loss per share of $0.40, compared to a net income of $16.3 million and earnings per share of $0.26 in Q1 2025 [10][11]. - Total interest income decreased to $70.6 million from $73.8 million in Q1 2025, while total interest expense also fell to $52.9 million from $55.0 million, resulting in a net interest income of $17.7 million, down from $18.8 million [9][10]. - The average earning assets at amortized cost decreased to $5,078.9 million from $5,422.6 million, and average borrowings also declined to $4,577.6 million from $4,930.2 million [9]. Portfolio and Valuation - As of June 30, 2025, the company’s investment portfolio was valued at $5.2 billion, comprising $4.3 billion in Agency RMBS and $0.9 billion in Agency CMBS, with a debt-to-equity ratio of 6.5x, down from 7.1x at the end of Q1 2025 [3][10]. - The estimated book value per common share as of July 18, 2025, is projected to be between $7.99 and $8.31, reflecting a cautious near-term outlook for Agency RMBS but a favorable long-term outlook due to expected investor demand [4][10]. Dividends and Capital Activities - The company declared a common stock dividend of $0.34 per share, consistent with the previous quarter, to be paid on July 25, 2025 [22]. - During the quarter, the company sold 282,750 shares of common stock for net cash proceeds of $2.2 million and repurchased 96,803 shares of Series C Preferred Stock for $2.3 million [23][24]. Economic Return and Non-GAAP Measures - The economic return for the quarter was calculated as the change in book value per common share of ($0.76) plus dividends declared of $0.34, resulting in an economic return of (4.8)%, compared to a positive return of 2.6% in Q1 2025 [6][10]. - Earnings available for distribution per common share decreased to $0.58 from $0.64 in Q1 2025, indicating a decline in the company’s ability to generate income for distribution [10][43].

Summary of Investigator Resources (IVR) Conference Call - July 23, 2025 Industry Overview - **Precious Metals Market Dynamics**: Investors tend to favor gold during global uncertainty, but silver historically outperforms gold in bull markets. In the 1970s, gold increased from $35 to $850, a 24 times return, while silver rose 35% during the same period [1][2]. - **Demand Drivers for Silver**: Silver serves dual purposes as a store of wealth and an industrial commodity, utilized in electronics, electric vehicles (EVs), and green energy technologies. The ongoing decarbonization trend is expected to drive demand for silver significantly [3][4]. - **Supply Constraints**: Approximately 75% of silver production comes from Latin America, Russia, and China, regions known for geopolitical instability. The Silver Institute reports deficits of 100 to 250 million ounces, which is about one-fourth of global production [5][6]. Company Overview: Investigator Resources - **Paris Silver Project**: Investigator Resources owns the Paris Silver Project, which contains 57 million ounces of high-grade silver. The project is positioned in a stable jurisdiction and has district-scale exploration potential [9][10]. - **Financial Position**: The company has a market cap of approximately $48 million and $5 million in cash, indicating strong funding for ongoing projects [11]. - **Definitive Feasibility Study (DFS)**: The DFS is underway, with previous studies indicating $480 million in free cash. The silver price has increased by 70% since the last study, suggesting potential upside of an additional $650 million [12][13]. Investment Opportunity - **Cost Optimization**: The company is focusing on reducing operational expenditures (OpEx) to lower cutoff grades, which would allow for more silver to be included in the mine plan. This includes transitioning to alternative power sources and optimizing tailings management [14][15]. - **Exploration Potential**: The Paris project is part of a 15-kilometer silver corridor with confirmed widespread mineralization. Recent acquisitions, such as the Athena project, present additional exploration opportunities [16][18]. - **Upcoming Drilling Programs**: Drilling is set to commence in September in a separate area near Broken Hill, which has historical gold and copper mines, highlighting further potential for discovery [19][20]. Market Context - **Macro Factors**: The current economic environment, characterized by massive money printing, rising U.S. debt, and declining confidence in fiat currencies, is driving investors towards precious metals as a hedge against inflation. The gold to silver ratio is currently at 86:1, significantly above the historical average of 65:1, indicating potential for silver price appreciation [6][7][8]. Conclusion - **Strategic Positioning**: Investigator Resources is well-positioned to capitalize on the rising demand for silver, with a low-cost, high-grade project and significant exploration potential. The current market conditions present a compelling investment opportunity in the silver sector [21].

Paris Silver Project Overview - The Paris Silver Project boasts a JORC (2012) Resource of 57 million ounces of silver and 99 thousand tonnes of lead[35] - A Pre-Feasibility Study (PFS) was completed in 2021, and a Definitive Feasibility Study (DFS) is currently underway[35] - The project is considered a high-grade, low-cost, high-margin silver project located in a Tier-1 jurisdiction[11] Silver Market Dynamics - Silver is described as having a dual role as both an industrial metal and a store of wealth, with rising demand and tight supply[11] - Only approximately 27.8% of silver comes from primary silver mines, with the rest being a by-product of other mining operations[19] - The silver market is forecast to continue experiencing a deficit[23] Investigator Resources Limited - The company's market capitalization is $48.5 million, with $5.1 million in cash as of June 30, 2025 (unaudited), resulting in an enterprise value of $43.4 million[38] - The top 20 shareholders hold 30% of the company's shares[38] - The PFS indicated a free cash flow of A$487 million, an NPV8 of A$202 million, a CAPEX of A$131 million, an IRR of 48%, and an ASIC of A$17.45/oz[40] Exploration and Expansion Potential - Investigator Resources is exploring a 15km mineralized corridor around the Paris Silver Project[11] - The company has a farm-in agreement on an adjacent high-grade silver prospect called Athena, where historical drilling terminated in silver mineralization[51, 52] - Drilling is scheduled to commence in September 2025 at Curnamona, a copper/gold prospect[55]

Core Viewpoint - Invesco Mortgage Capital Inc. is set to announce its second quarter 2025 results on July 24, 2025, with a subsequent conference call scheduled for July 25, 2025, at 9:00 a.m. ET [1] Company Information - Invesco Mortgage Capital Inc. is a real estate investment trust that focuses on investing in, financing, and managing mortgage-backed securities and other mortgage-related assets [3] - The company is externally managed and advised by Invesco Advisers, Inc., a wholly-owned subsidiary of Invesco Ltd., which is a leading independent global investment management firm [3] Conference Call Details - A presentation will be available on the company's website prior to the conference call [2] - Participants can join the call using the North America Toll-Free number 888-982-7409 or the International Toll number 1-212-287-1625, with the passcode "Invesco" [2] - An audio replay of the call will be available until August 8, 2025 [2]

Here are three stocks with buy rank and strong value characteristics for investors to consider today, May 27th:  JAKKS Pacific (JAKK) : This multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995, carries a Zacks Rank #1 (Strong Buy), and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 3.1% over the last 60 days.JAKKS Pacific has a price-to-earnings ratio (P/E) of 4.66 compared with 10.60 for the industry. The comp ...

Group 1: Invesco Mortgage Capital (IVR) - Invesco Mortgage Capital is a real estate investment trust focusing on financing and managing residential and commercial mortgage-backed securities and mortgage loans [1] - The Zacks Consensus Estimate for its current year earnings has increased by 6.1% over the last 60 days [1] - The company has a dividend yield of 18.5%, significantly higher than the industry average of 12.4% [2] Group 2: JAKKS Pacific (JAKK) - JAKKS Pacific is a multi-brand company that designs and markets a broad range of toys and consumer products [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 3.1% over the last 60 days [2] - The company has a dividend yield of 5%, compared to the industry average of 0.0% [2] Group 3: PCB Bancorp (PCB) - PCB Bancorp is a bank holding company offering various financial services including savings accounts, loans, and wealth management [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 10.4% over the last 60 days [3] - The company has a dividend yield of 4.1%, which is higher than the industry average of 1.3% [3]

Financial Data and Key Metrics Changes - The company reported a positive economic return of 2.6% for the quarter, consisting of a $0.34 dividend and a modest $0.11 decline in book value to $8.81 [9][10] - The estimated book value per common share as of April 30 is between $7.74 and $8.06, reflecting a decline in April due to market volatility [10][26] - The leverage ratio was reduced from 7.1x to the mid-6s, indicating a cautious approach in response to market conditions [24][26] Business Line Data and Key Metrics Changes - The agency RMBS portfolio increased by 9.5% quarter over quarter, with investments focused on higher coupon securities [19] - The company rotated its allocations from lower coupons to higher coupons, capitalizing on attractive valuations [20] - Agency CMBS exposure remained at approximately 15% of the total investment portfolio, with new purchases yielding low double-digit ROEs [21] Market Data and Key Metrics Changes - U.S. Treasury yields declined by 20 to 40 basis points across the yield curve during the first quarter, driven by concerns over economic growth [12][13] - The Fed funds futures market is now pricing in deeper cuts, with expectations for the target rate to be reduced three to four times in 2025 [14] - Agency mortgages underperformed treasuries in April due to increased interest rate volatility and market sell-offs [9][23] Company Strategy and Development Direction - The company remains focused on higher coupon Agency RMBS, anticipating improved demand from banks and overseas investors as interest rate volatility declines [20][26] - The strategy includes increasing allocations to specified pools with predictable prepayment characteristics, particularly those with low credit score borrowers [20] - The company is cautious on agency mortgages in the near term but maintains a favorable long-term outlook due to expected improvements in investor demand [10][26] Management's Comments on Operating Environment and Future Outlook - Management noted tightening financial conditions and increased uncertainty regarding monetary and fiscal policies, impacting market sentiment [6][10] - The outlook for the second half of the year is cautiously optimistic, with expectations for improved demand for Agency RMBS as the economic environment stabilizes [16][26] - Management emphasized the importance of maintaining liquidity and reducing leverage to navigate current market volatility [24][26] Other Important Information - The company has been disciplined in adding exposure to Agency CMBS, focusing on relative value and risk diversification [21] - The funding market for assets has remained stable, with repo spreads consistent and haircuts unchanged [15] - The company has sold remaining credit investments, focusing entirely on agency assets [65] Q&A Session Summary Question: Can you discuss the decision to take down leverage? - The company reduced leverage by about 0.5 turns due to increased uncertainty regarding monetary, fiscal, and trade policy, which could impact mortgage demand [29][30] Question: What are the current returns on an incremental basis? - Levered ROEs are in the low 20s on higher coupons, indicating attractive spreads [32] Question: Can you comment on changes to the hedge portfolio in April? - The hedge ratio was increased due to uncertainty about near-term monetary policy, maintaining a mix of swaps and treasuries [35][36] Question: How does the smaller portfolio size impact the dividend level? - The company is comfortably covering the dividend despite the portfolio size reduction, with supportive ROEs from reinvestments [38] Question: How do current opportunities in agency compare to previous peaks? - The opportunity in mortgages is attractive, but there is caution regarding potential inflation and its impact on monetary policy adjustments [41][42] Question: What is the outlook for forward rates and the hedge portfolio? - There is uncertainty about future cuts, with a conservative approach to managing the hedge portfolio and leverage [50][52] Question: Are there opportunities in commercial credit? - The company has been hesitant to add credit exposure and has sold remaining credit investments, focusing solely on agency assets [64][65]

Financial Data and Key Metrics Changes - The company reported a positive economic return of 2.6% for the quarter, consisting of a $0.34 dividend and a modest $0.11 decline in book value to $8.81 [7][22] - The estimated book value per common share as of April 30 is between $7.74 and $8.06, reflecting a decline in April due to market volatility [8][21] - The leverage ratio was reduced from 7.1x to the mid-6s during the quarter, indicating a cautious approach in response to market conditions [21][23] Business Line Data and Key Metrics Changes - The agency RMBS portfolio increased by 9.5% quarter over quarter, with investments focused on higher coupon securities [17] - The company rotated its allocations from lower coupons to higher coupons, capitalizing on attractive valuations [18] - Agency CMBS exposure remained at approximately 15% of the total investment portfolio, with new purchases yielding low double-digit ROEs [19] Market Data and Key Metrics Changes - U.S. Treasury yields declined by 20 to 40 basis points across the yield curve during the first quarter, driven by concerns over economic growth [10][11] - The Fed funds futures market is now pricing in deeper cuts, with expectations for the target rate to be reduced three to four times in 2025 [12] - Agency mortgages underperformed treasuries in April due to increased interest rate volatility and market sell-offs [21][23] Company Strategy and Development Direction - The company remains focused on higher coupon Agency RMBS, anticipating improved demand as interest rate volatility declines [18][23] - The strategy includes increasing allocations to specified pools with predictable prepayment characteristics, particularly in a slowing economic environment [18] - The company is cautious about agency mortgages in the near term but maintains a favorable long-term outlook due to expected improvements in investor demand [8][23] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about tightening financial conditions and the potential impact of U.S. trade policies on economic growth [5][6] - The outlook remains cautious due to elevated interest rate volatility and policy uncertainty, but there is optimism for a steeper yield curve and improved demand in the long term [23] - Management highlighted the importance of maintaining liquidity to navigate potential market stress while capitalizing on investment opportunities as conditions improve [23] Other Important Information - The company noted that prepayment speeds remained low due to limited purchase and refinancing activity, but a decline in mortgage rates is expected to increase prepayment speeds in the coming months [6][7] - The funding market for the company's assets has been stable, with repo spreads remaining attractive [14] Q&A Session Summary Question: Discussion on leverage management during volatile periods - Management indicated that leverage was reduced by about 0.5 turns in April due to increased uncertainty regarding monetary and fiscal policy [26][28] Question: Comments on returns and spreads - Management noted that levered ROEs are in the low 20s on higher coupons, indicating attractive spreads [30] Question: Changes to the hedge portfolio - The hedge ratio was increased in response to uncertainty about near-term monetary policy, maintaining a mix of swaps and treasuries [34] Question: Impact of portfolio size on dividend levels - Management confirmed that the recent dividend reduction is still comfortably covered by current earnings [36] Question: Opportunity set in agency compared to previous peaks - Management expressed that the current opportunity in mortgages is attractive, but there is caution due to potential inflation and its impact on monetary policy [40][41] Question: Relative value of loan balance pools - Management discussed the rotation from low loan balance pools to more credit-constrained pools, driven by economic uncertainty and pricing dynamics [42][44] Question: Forward rate outlook and hedge portfolio development - Management emphasized a conservative approach to hedging and leverage, given the uncertainty in interest rate cuts [50][52] Question: Opportunities in commercial credit - Management stated that they are currently not looking to add credit exposure and have sold remaining credit investments, focusing solely on agency assets [61][62]