Two Harbors Investment Corp. (TWO), a real estate investment trust, recently made a public offering of 35 million shares of its common stock. In a bid to cover over-allotments. The company will also provide a 30-day option to the underwriters for purchasing an additional 5.3 million shares.
Two Harbors intends to utilize the proceeds generated from the transaction for acquiring financial assets and residential mortgage-backed securities (RMBS) and for other general corporate purposes.
This public offering will enable the company to attain financial flexibility and seize investment opportunities and acquisitions, which in turn will enhance top-line growth. As of March 31, 2011, Two Harbor’s cash position stood at $302.3 million.
During the first quarter of 2011, the company reported core earnings of $14.8 million or 32 cents per share, compared with $9.9 million or 36 cents in the prior quarter.
Two Harbors Investment Corp. is a Maryland-based corporation focused on investing, financing and managing residential mortgage-backed securities (RMBS) and mortgage loans. The company’s portfolio includes Agency RMBS and non-Agency RMBS.
Agency RMBS are those whose interest and principal payments carry guarantees from federally chartered entities such as Freddie Mac or government agencie while non-Agency RMBS are those that are not issued or guaranteed by such government entities.
As of March 31, 2011, the total value of the company’s portfolio was $3.0 billion including $2.4 billion of Agency RMBS, $83.0 million of Agency derivatives, and $525.0 million of non-Agency RMBS.
Two Harbors currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Redwood Trust Inc. (RWT) currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating.
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