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To: KaiserSosze who wrote (109051)	7/10/2012 8:08:28 AM
From: Elroy	Read Replies (1) \| Respond to of 118717

Sure, I can explain. When an SPO is announced the shares fall by about 3%. The mREITs are only supposed to return 12% to 18% per year, so 3% is a lot. It's 2 to 3 months worth of expected return. If you can sell the stock before the SPO and buy back after, you increase your yearly expected return by about 3%. In AGNC's case they had done 80% of their secondaries in the three days immediately after the ex dividend date. So it seems obvious one would rather not be long on those three days. A 3% dip in share price isn't much for a tech stock, but it's a huge amount for these stocks. So it makes sense to not own AGNC in the days immediately following the ex div date in order to avoid that dip. I posted elsewhere that ARR was probably going to do a secondary Monday. If I had sold Monday for 7.45, I could have bought back today for 7.20 or so, saving 3.5%. ARR announces its secondaries two 2 to 3 days before ex div date, then does them on the ex div date so the new shares don't pay the dividend. ARR's ex div date is Thursday. I'm kicking myself because my attempt to avoid SPOs from AGNC and NLY bombed, making me miss nice (albeit unexpected) upward runs, so I didn't sell ARR and then they DO do an SPO. Oh well, but crappola! I think the reason you don't think it worthwhile is 3% doesn't seem like much to you, but for a stock that will likely return less than 20% per year, getting an extra 3% two or three times per year is a huge increase in return.