Javelin Mortgage Investment Corp: A Review of the Mortgage Investment Corporation
Javelin Mortgage Investment Corp (Javelin) was a mortgage investment corporation (MIC) that operated in the United States. The company was founded in 2012 and went public on the New York Stock Exchange under the symbol JMI. The company’s main business was to invest in fixed-rate and hybrid adjustable-rate mortgage-backed securities (MBS), collateralized commercial mortgage-backed securities (CMBS), and other mortgage-related investments, such as mortgage loans, mortgage-related derivatives, and mortgage servicing rights. The company aimed to provide its shareholders with a steady stream of dividends, capital appreciation, and diversification. However, in 2016, the company was acquired by Armour Residential REIT, another MIC, for $85.2 million. We will review the history, performance, and prospects of Javelin Mortgage Investment Corp.
History of Javelin Mortgage Investment Corp
Javelin Mortgage Investment Corp was established in 2012 by Marc Bell, a former CEO of FriendFinder Networks, an online dating and entertainment company. Bell had experience in the real estate industry, as he had previously founded Marc Bell Capital Partners, a private equity firm that invested in distressed real estate assets. Bell also served as the chairman and CEO of Javelin.
Javelin’s initial public offering (IPO) took place on October 3, 2012, when the company raised $200 million by selling 10 million shares at $20 per share. The company used the proceeds to acquire a portfolio of MBS and CMBS from various sellers, including Armour Residential REIT. Armour Residential REIT was also a strategic partner of Javelin, as it provided Javelin with access to its credit facilities, management services, and operational support.
Javelin’s strategy was to invest in high-quality MBS and CMBS that offered attractive yields and capital appreciation potential. The company also used leverage to enhance its returns and hedged its interest rate risk with derivatives. The company aimed to distribute at least 90% of its taxable income to its shareholders as dividends.
Read more about How Many Jobs Are Available in Investment Managers and How to Find One
Performance of Javelin Mortgage Investment Corp
Javelin Mortgage Investment Corp had a mixed performance during its four years of operation. The company faced several challenges, such as rising interest rates, declining MBS prices, increasing prepayment risk, and tightening credit spreads. The company also had to compete with other MICs and institutional investors for MBS and CMBS opportunities.
The company’s financial results fluctuated over time. The company’s net income ranged from $9.4 million in 2013 to -$18.8 million in 2015. The company’s book value per share ranged from $20.17 in 2012 to $12.13 in 2016. The company’s dividend per share ranged from $1.80 in 2013 to $0.60 in 2016.
The company’s stock price also reflected its volatility. The company’s stock price peaked at $23.34 in May 2013 and bottomed at $5.61 in February 2016. The company’s stock price traded below its book value for most of its existence.
Prospects of Javelin Mortgage Investment Corp
Javelin Mortgage Investment Corp did not have a bright future ahead of it. The company faced several headwinds, such as rising interest rates, declining MBS prices, increasing prepayment risk, and tightening credit spreads. The company also faced regulatory uncertainty, as the Dodd-Frank Act and other reforms affected the MBS and CMBS markets.
The company’s management realized that it was not sustainable to continue operating as an independent entity. The company explored various strategic alternatives, such as selling some or all of its assets, merging with another entity, or liquidating itself.
On March 2, 2016, the company announced that it had entered into a definitive agreement to be acquired by Armour Residential REIT for $85.2 million. The deal valued Javelin at $7 per share, which represented a premium of 18% over its closing price on March 1, 2016. The deal was completed on April 29, 2016.
Conclusion
Javelin Mortgage Investment Corp was a mortgage investment corporation that operated in the United States from 2012 to 2016. The company invested in fixed rate and hybrid adjustable rate mortgage backed securities, collateralized commercial mortgage backed securities, and other mortgage related investments. The company aimed to provide its shareholders with a steady stream of dividends, capital appreciation, and diversification. However, the company faced several challenges, such as rising interest rates, declining MBS prices, increasing prepayment risk, and tightening credit spreads. The company also faced regulatory uncertainty, as the Dodd-Frank Act and other reforms affected the MBS and CMBS markets.
