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Arlington Asset Investment Corp. (NYSE: AAIC) is a principal investment firm specializing in acquiring and holding a leveraged portfolio of residential mortgage-backed securities (MBS). These MBS include agency MBS, guaranteed by U.S. government agencies or government-sponsored enterprises such as Fannie Mae or Freddie Mac, and private-label MBS that are not guaranteed by any government entity.
The company leverages its investment portfolio to enhance potential returns for shareholders, funding these investments primarily through short-term financing arrangements like repurchase agreements. Arlington Asset also engages in various hedging transactions to mitigate the interest rate sensitivity of its borrowing costs and the value of its MBS portfolio.
Headquartered in the Washington, D.C. metropolitan area, Arlington Asset operates primarily in the mortgage and residential real estate sectors. The company has elected to be taxed as a Real Estate Investment Trust (REIT), focusing on generating long-term returns for its shareholders.
Recent achievements include consistent positive economic returns over challenging market conditions and the successful completion of significant transactions like the sale of single-family residential properties. The company has also repurchased a notable portion of its outstanding shares, delivering substantial value to its shareholders.
In May 2023, Arlington Asset announced a definitive merger agreement with Ellington Financial Inc. (NYSE: EFC). This merger is expected to provide increased scale, enhanced access to capital markets, and drive earnings accretion and sustained long-term growth.
Arlington Asset's investment portfolio as of June 30, 2023, includes MSR financing receivables, credit investments, and agency MBS, with a total invested capital allocation of $298.7 million and an 'at risk' leverage ratio of 0.5 to 1. The company's current focus is on preserving capital, managing liquidity, and capitalizing on new opportunities in the evolving market conditions.
Arlington Asset Investment Corp. (NYSE: AAIC) reported its fourth quarter 2022 and full-year financial results, showing a 2.2% increase in book value to $6.59 per share. The company achieved a net income of $0.13 per diluted common share and non-GAAP earnings of $0.09 per diluted share. The firm successfully completed the sale of its remaining single-family residential portfolio, enhancing its book value by $0.02. Total invested capital stood at $391.6 million, with a 0.3:1 leverage ratio. The company repurchased 1.3% of its outstanding shares, and the weighted average yield on MSR financing receivables was 14.98% for the quarter, down from 15.95%.
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