Dynex Capital(US:DX)2025-07-21 15:00Financial Data and Key Metrics Changes - The company's market capitalization as of June 30 is over $1.5 billion, representing nearly 50% growth since June 2024 [8] - Net interest income continues to trend upwards as new investments with attractive yields are added to the portfolio [10] - The portfolio has grown to $14 billion, a 25% increase since the end of the first quarter and over 50% larger than the same time last year [12] Business Line Data and Key Metrics Changes - The company raised $560 million of new capital this year, allowing it to continue raising capital at a premium to book value [11] - The investment portfolio grew by over $3 billion in the quarter, reflecting a strategic increase in leverage from 7.4% to 8.3% [16] Market Data and Key Metrics Changes - Agency mortgage-backed securities (MBS) continue to offer attractive liquidity, credit quality, and return potential, with ROEs on newly acquired positions ranging from the mid-teens to low 20% [18] - Mortgage spreads remain wide, and the net supply of Agency RMBS is low by historical standards, creating a medium-term headwind for spread tightening [19] Company Strategy and Development Direction - The company is focused on raising capital, deploying it into historically cheap investments, and managing its portfolio through volatile periods [7] - A long-term strategy to build a world-class operating platform includes bringing several functions in-house to enhance scale and organizational resilience [13] - The company aims to be the manager of choice for the agency mortgage market, leveraging its position as a significant player in the mortgage REIT community [42] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current environment as highly favorable for long-term capital deployment, with wide agency MBS spreads supported by a technical backdrop [22] - The company is well-prepared to capitalize on market dynamics and generate strong risk-adjusted returns despite potential volatility [22] Other Important Information - The company has appointed Michael Angelo as the chief legal officer and corporate secretary, bringing relevant experience from various financial institutions [5] Q&A Session Summary Question: Can you talk about the leverage range you're targeting? - Management indicated that leverage has been flexed down when the risk environment does not warrant incremental risk, and they are currently at a level that reflects a return to normal [29][30] Question: What conditions might require other investors to be more active in the mortgage-backed space? - Management noted that banks would likely return when they see actual Fed rate cuts, while money managers have been active due to attractive mortgage valuations relative to corporates [38][40] Question: What is the current thinking behind the coupon allocation between pools versus TBAs? - Management explained that they are favoring a larger pool position due to the stable economic return profile and the ability to hedge effectively with interest rate swaps [56][62] Question: Any thoughts on adding longer duration as you go down in coupon on the hedge side? - Management confirmed that their hedges remain focused on the longer part of the curve, targeting a duration that is generally flat with the overall portfolio [72][74] Question: Any one-time items in the G&A expense line item? - Management indicated that the first half of the year tends to be higher due to annual meetings and compensation increases, but they expect expenses to trend down in the latter half of the year [76]