We published our investment research evaluating American Capital Mortgage (MTGE) after it went ex-dividend on June 19th. We wrote about how we liked the fact that the company had a lower Constant Prepayment Rate than its larger, more recognized mREIT sibling American Capital Agency (AGNC). American Capital Mortgage and American Capital Agency are both subadvised by affiliates of American Capital Ltd (ACAS). On August 3nd, American Capital reported its Q2 2012 results. We can understand why the market price premium to book value has increased by over 5% since we began covering it, especially in this yield starved environment which has been exacerbated by rumors of another quantitative easing program by the Federal Reserve.

While we have moderated our enthusiasm on MTGE a bit, it is still one of our three favorite mREITs. MTGE began trading on August 4th 2011 and it can celebrate its 1st birthday as a public company in style due to its strong performance. In fact, our thesis on MTGE is that it is an even better performing than AGNC due to the fact that it is smaller and more nimble than big brother AGNC. AGNC is no longer a $7B company taking on the financial establishment like MTGE. With nearly $85B in agency MBS securities, cash and security sales proceeds receivable, AGNC has taken its seat amongst the financial establishment.

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