Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
Please consider a small donation if you think this website provides you with relevant information
| Statement |
|---|
| Our management team is extremely skilled at earning his returns and our portfolio is well positioned to earn outsized returns going forward |
| But for now, I think we feel really good about what we've disclosed |
| That's a very positive outcome when you go back and see what happened to mortgage spreads this year, okay? That can definitely happen again |
| So we're going to risk manage the position, Bose, and I think our shareholders have come to expect us to be very good at that |
| It's the asset class that every astute investor should be looking at, because the forward returns are extremely compelling |
| The opportunity to earn a compelling return only mortgages on a hedge basis is as attractive as I've ever seen in my 40-plus year career |
| But, you know, we've done a very good job of managing rate risk really from early 2020 to now and you can expect us to continue to do that |
| There's more spread available to earn today than in the last 20-years, and the team here at Dynex is one of the best in the business to be able to accomplish this |
| In that regard, our past performance provides a strong foundation to work from as we navigate what is clearly an unpredictable and evolving environment |
| I see a compelling business opportunity in agency mortgage-backed securities to earn above average returns adjusted for the risk |
| We have positioned our shareholders to benefit from this in the long-term |
| It's very positive in terms of just sitting here and keeping on owning the asset, right? Another point, the net supply picture for the first time is actually starting to look positive |
| They report that their customers' liquidity profiles remain solid |
| We've got a great opportunity |
| I'm delighted to join them in steering our company's growth in the coming years |
| These are very positive, sort of, inherent things in the way the market is structured today |
| What we have done at Dynex is to keep our shareholders in the game by investing in the most liquid asset that is yielding an above average long-term return |
| The returns here are very accretive for our shareholders |
| I know I've mentioned this on previous calls, but I continue to believe experience and skill are the key elements for success in this environment |
| Agency RMBS return projections look about as robust as I've seen them in my 10-plus years at Dynex and nearly 30-years as a fixed income investor |
| So I'm giving you the framework with which we use to think about risk versus return and how we've thought about whether it's good or not good to take the organic risk that's within our balance sheet, right? We have a very high conviction that the forward return on these assets is outstanding relative to our cost of capital |
| We have the skill to manage this asset class, and that's the premise on which we go raise capital, right? So our current position, our track record, all of that are nice things to have on the side |
| While volatility and spread widening has caused pockets of stress, the best managed mortgage rates like Dynex remain a source of stability for the U.S |
| And we expect that returns from owning hedged agency mortgages will be sustainably higher for some time |
| We believe that having a mixture of TBAs and pools is a very smart thing to do here in this, kind of, an environment |
| His addition greatly broadens our decision-making capabilities and I'm thrilled to have him as part of our team |
| So what does this mean for Dynex shareholders? We are invested in money good assets trading at historically low prices that offer accretive forward returns |
| That our money good |
| These hedge gains help to offset increase in financing costs |
| I feel humbled and grateful for the responsibility and will continue to work diligently to fulfill it |
| Statement |
|---|
| And then, you know, you guys talked about the technical picture for MBS, which seems, kind of, weak, at least in the near-term |
| The book value performance plus the dividend delivered an economic loss of 11% for the quarter |
| And with mortgage rates around 8%, supply is really going to start to taper off here, especially in the winter, right? And then the last piece of this is that you are starting to see credit trends deteriorate, right? There's headlines about auto loan delinquencies rising, corporate bond delinquencies rising, percentage of bonds that could be downgraded rising, all of those things eventually, right, make it, make your money good asset worth more |
| And wider spreads is an inherent risk that we take |
| The company's actual results and timing of certain events could differ considerably from those projected and/or contemplated by those forward-looking statements as a result of unforeseen external factors or risks |
| While the need for more financing is also increasing due to human conflict and demographics among other factors |
| As the global economy transitioned from central banks to private capital, agency mortgage-backed securities have faced the earliest and steepest price correction |
| For the third quarter, the company reported book value of $12.25 and a comprehensive loss of $1.59 |
| Book value declined by $1.95 or 13.7% on the quarter, driven equally by rates and spreads, and as a result adjusted leverage also increased from 7.7 times to 8.5 times |
| Number one, human conflict |
| It's a native risk to our balance sheet and I think that's something that we evaluate every day to be able to say, is this risk a risk that we want to cut or is this risk -- a risk that we want to continue to take? All right |
| I know that's not a clear answer |
| You know, our shareholders have become very accustomed to us doing the right thing in these circumstances |
| At the intersection of these factors, the probability of accidents increases exponentially |
| Look, I wish, I could say, hey, these are there -- these are -- if this happens, they're going tighter, right? One of the things that's happened right now is that you've got a technical situation where money managers have become net sellers |
| But you've got to get through this technical pressure first |
| And then, actually, just given the declining book value since quarter end, obviously your leverage is higher, all else equal |
Please consider a small donation if you think this website provides you with relevant information