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Housing

Apollo Residential Mortgage More Than Doubles Size In Offering (AMTG)

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By Jon C. Ogg Updated Published
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Apollo Residential Mortgage, Inc. (NYSE: AMTG) is using some recent strength to sell more shares.  The problem is the size of the offering at 13.9 million shares.  At Monday’s closing price the gross proceeds would be more than $260 million.  Both Yahoo! Finance and Google Finance list the current market capitalization of the common stock at only about $196 million.

AMTG plans to use the funds to acquire more agency residential mortgage-backed securities, non-Agency paper and other residential mortgage assets.  It of course also has the hallmark “for general corporate purposes.”  Still, more than a doubling in size?  This is oone of those offerings which feels like the real intent may be a high-yield dividend buffer.  AMTG has only been around long enough to pay two quarterly dividends and its last $0.75 payout would generate a yield of 15.7% if the last $0.75 rate remains static going forward.

This offering listed Morgan Stanley, Credit Suisse Securities, and J.P. Morgan Securities as joint book-runners; co-managers are listed as JMP Securities, Nomura Securities, Stifel Nicolaus & Company, and RBS Securities Inc.  AMTG expects to grant the underwriters a 30-day option to purchase up to 2,085,000 additional shares of common stock.

The REIT has been around only since last summer and its post-offering range has been from $14.02 to $19.59.  Shares are indicated down 6% right around $18.00 due to the sharp dilution that this offering appears to bring.

JON C. OGG

Photo of Jon C. Ogg
About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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