American Capital Fights Fed Concern as Investors Flee: Mortgages

Gary Kain built American Capital Agency Corp. into the fastest growing real estate investment trust as the Federal Reserve pushed borrowing costs to record lows. Now he’s trying to persuade investors to stay with him as he navigates the central bank’s retreat.

American Capital has slumped 10 percent since May 2, the worst performance in a Bloomberg index of 34 companies that invest in mortgage bonds, after reporting an 8.6 percent drop in book value from the prior quarter. Annaly Capital Management Inc., the only mortgage REIT bigger than American Capital, said its book value, a measure of its assets minus its liabilities, fell 4 percent.