Dynex Book Value Slides to $10.91 as MBS Spreads Widen, Leverage Hits 9.0x
DX is trading near its 52-week low of $10.36 (4.2% above the low).
Summary
Book value per common share dropped to $10.91 in Q3 from $12.90 at the end of Q2, even after including $0.51 of dividends, as wider Agency MBS spreads drove mark-to-market losses that hedge gains only partly offset. The quarter produced a net loss of $(1.34) per common share and comprehensive loss of $(1.49) per share, with total economic return of $(1.48) per share, or (11.5)% of beginning book value. Management kept deploying anyway, adding $3.2B of Agency MBS to push the portfolio up about 3% to $28.3B, and leverage climbed to 9.0x equity. They also raised $384M of equity capital during the quarter, which supports liquidity but adds dilution on top of the book value hit. The stock trades near its 52-week low at $10.80, roughly a 1% discount to the new book value, so the market has already priced much of this pressure. The setup only improves if Agency MBS spreads tighten and financing costs stay stable.
Updated with an SEC 8-K filing · What changed
Updates
· SEC 8-K — Dynex posted a Q3 net loss of $(1.34) per common share and comprehensive loss of $(1.49) per share, with total economic return of $(1.48) per share, or (11.5)% of beginning book value.
At the time of this announcement, DX was trading at $10.80 on NYSE in the Finance sector, with a market capitalization of approximately $2.7B. The 52-week trading range was $10.36 to $14.93. This news item was assessed with negative market sentiment and an importance score of 7 out of 10. Source: Wiseek News.