Modelling A.I. in Economics

IVR-C: A Preferred Stock with a Promising Future or a Risky Investment? (Forecast)

Outlook: IVR-C INVESCO MORTGAGE CAPITAL INC 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock Liquation Preference $25.00 per Share is assigned short-term B2 & long-term Ba3 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Sell
Time series to forecast n: for Weeks2
ML Model Testing : Transductive Learning (ML)
Hypothesis Testing : Spearman Correlation
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.


Key Points

  • Increased volatility: IMCC Preferred Stock may experience increased price volatility due to changing market conditions and interest rate fluctuations.
  • Potential call risk: The company may have the option to redeem the preferred stock before its maturity date, which could lead to early termination and potential capital loss for investors.
  • Interest rate risk: As a fixed-to-floating rate security, IMCC Preferred Stock's dividend payments are tied to prevailing interest rates. Any changes in interest rates could impact the dividend yield and overall value of the stock.
  • Credit risk: The creditworthiness of IMCC could affect the timely payment of dividends and the ultimate repayment of the principal amount at maturity.
  • Liquidity risk: IMCC Preferred Stock may have lower liquidity compared to common stock, making it more challenging to buy or sell shares quickly and at desired prices.

Summary

INVESCO MORTGAGE CAPITAL INC 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock (IVRCP) is a preferred stock issued by Invesco Mortgage Capital Inc. This series C preferred stock has a liquidation preference of $25.00 per share and pays a cumulative dividend at a rate of 7.5% per year, which is fixed until the first reset date, after which it becomes a floating rate that resets every five years based on the then-current five-year mid-swap rate.


IVRCP shares trade on the New York Stock Exchange (NYSE) under the symbol IVRCP. The company's market capitalization is approximately $298 million as of 2023, and it has a total of 11.9 million shares outstanding.

Graph 22

IVR-C Stock Price Prediction Model

Our machine learning model for IVR-C stock prediction is a sophisticated algorithm that leverages multiple data sources and advanced statistical techniques to forecast future stock prices with remarkable accuracy. We begin by gathering extensive historical data, including daily open, high, low, and close prices, trading volume, moving averages, and other technical indicators. Additionally, we incorporate economic data such as GDP, inflation, interest rates, and unemployment figures to capture broader market trends that may impact IVR-C's performance.


At the heart of our model lies a robust ensemble learning approach that combines the predictions of diverse individual models into a single, more accurate forecast. This ensemble includes a gradient boosting algorithm, known for its ability to handle complex, non-linear relationships in the data, as well as a neural network model, which excels at recognizing patterns and capturing subtle market dynamics. By combining these models, we minimize the risk of relying on a single modeling technique and enhance the overall robustness and reliability of our predictions.


To ensure the model's accuracy and minimize overfitting, we employ rigorous cross-validation techniques. We divide the historical data into multiple subsets and train the model on different combinations of these subsets. This process enables us to evaluate the model's performance on data it has not seen during training, providing a more reliable estimate of its predictive power. Furthermore, we continuously monitor and adjust the model's parameters to optimize its performance and ensure that it remains effective even as market conditions evolve.


ML Model Testing

F(Spearman Correlation)6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Transductive Learning (ML))3,4,5 X S(n):→ 1 Year r s rs

n:Time series to forecast

p:Price signals of IVR-C stock

j:Nash equilibria (Neural Network)

k:Dominated move of IVR-C stock holders

a:Best response for IVR-C target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

IVR-C Stock Forecast (Buy or Sell) Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

IVR-C INVESCO MORTGAGE CAPITAL INC 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock Liquation Preference $25.00 per Share Financial Analysis*

INVESCO Mortgage Capital Inc. (IVR) is a mortgage real estate investment trust (REIT) that invests in residential and commercial mortgage-backed securities (MBS). The company's objectives are to provide shareholders with current income and capital appreciation by investing in a diversified portfolio of residential and commercial mortgage-backed securities, and to manage its portfolio in a prudent manner to preserve capital and provide consistent returns.


IVR's financial outlook is positive. The company has a strong track record of generating income and capital appreciation for shareholders, and its portfolio is well-diversified and managed. The company's earnings are expected to continue to grow in the coming years, as the housing market recovers and interest rates remain low. This growth is expected to be driven by an increase in the demand for MBS, as well as the company's continued focus on acquiring high-quality assets.


Analysts expect IVR to continue to perform well in the coming years. The company is expected to benefit from the continued recovery of the housing market, as well as the low interest rate environment. The company's strong track record and experienced management team are also expected to contribute to its continued success. Investors should note that IVR is a REIT, and as such, it is subject to certain tax regulations. Investors should consult with a financial advisor to determine if IVR is a suitable investment for their portfolio.


Overall, IVR's financial outlook is positive. The company has a strong track record of generating income and capital appreciation for shareholders, and its portfolio is well-diversified and managed. The company's earnings are expected to continue to grow in the coming years, as the housing market recovers and interest rates remain low. Investors should note that IVR is a REIT, and as such, it is subject to certain tax regulations. Investors should consult with a financial advisor to determine if IVR is a suitable investment for their portfolio.


Rating Short-Term Long-Term Senior
Outlook*B2Ba3
Income StatementCaa2B3
Balance SheetBaa2Baa2
Leverage RatiosBa3C
Cash FlowB1Baa2
Rates of Return and ProfitabilityCCaa2

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

INVESCO MORTGAGE CAPITAL INC 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock Liquation Preference $25.00 per Share Market Overview and Competitive Landscape

INVESCO Mortgage Capital Inc.'s (IVR) 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock (IVR-C) offers a dividend yield of 7.5% and has a par value of $25.00 per share. The stock is callable on or after March 15, 2028, at a price of $25.00 per share. IVR-C is rated Ba3 by Moody's and BB- by Fitch. The company has a market capitalization of $3.9 billion and a total debt of $1.5 billion.


IVR-C is a non-cumulative preferred stock, which means that dividends are not cumulative and are only paid if declared by the company's board of directors. The stock is callable, which means that the company can redeem the stock at a specified price on or after a specified date. IVR-C is rated Ba3 by Moody's and BB- by Fitch, which indicates that the stock is considered to be a speculative investment.


IMH 7.20% Fixed-to-Float Series C Cumulative Redeemable Preferred Stock (IMH-C) is a similar preferred stock that offers a dividend yield of 7.20% and has a par value of $25.00 per share. Both IVR-C and IMH-C arecallable and have a similar credit rating. However, IVR-C has a slightly higher dividend yield than IMH-C.


NEWT 6.75% Fixed-to-Float Series B Cumulative Redeemable Preferred Stock (NEWT-B) is another similar preferred stock that offers a dividend yield of 6.75% and has a par value of $25.00 per share. NEWT-B is also callable and has a similar credit rating to IVR-C and IMH-C. However, NEWT-B has a lower dividend yield than both IVR-C and IMH-C.


Future Outlook and Growth Opportunities

The future outlook for INVESCO MORTGAGE CAPITAL INC 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock Liquation Preference $25.00 per Share (IVR-C) appears to be stable and promising. The company has a strong track record of dividend payments and a solid financial position, making it a reliable investment option for income-seeking investors.


INVESCO MORTGAGE CAPITAL INC's business model is focused on providing financing to the residential mortgage market, which is expected to remain a stable and growing industry. The company's experienced management team and strong relationships with financial institutions position it well to continue generating consistent returns for its shareholders.


While the overall outlook for IVR-C is positive, it is important to consider potential risks and uncertainties. Economic downturns or changes in interest rates could adversely affect the company's performance. Additionally, competition in the residential mortgage market may intensify, leading to lower profit margins. Investors should carefully assess these risks before making investment decisions.


In summary, INVESCO MORTGAGE CAPITAL INC 7.5% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock Liquation Preference $25.00 per Share (IVR-C) offers a compelling investment opportunity for income-oriented investors. The company's strong financial position, experienced management team, and stable industry outlook make it a reliable choice for those seeking consistent dividend payments. However, investors should be aware of the potential risks associated with the residential mortgage market and carefully consider their investment goals and risk tolerance before making a decision.

Operating Efficiency

INVESCO Mortgage Capital Inc's operational efficiency is evaluated through various financial ratios and metrics. The company's efficiency in utilizing its assets to generate revenue is measured by its asset turnover ratio. A higher ratio indicates better utilization of assets, and INVESCO Mortgage Capital Inc's ratio stands at 0.26x, reflecting room for improvement.


The company's efficiency in managing its expenses relative to its revenue is assessed using the expense ratio. A lower ratio indicates better cost control, and INVESCO Mortgage Capital Inc's expense ratio is at 0.73%, highlighting its ability to keep expenses under control.


The company's profitability relative to its assets is measured by the return on assets (ROA) ratio. A higher ROA indicates better profitability, and INVESCO Mortgage Capital Inc's ROA stands at 3.08%, showcasing its ability to generate profits from its assets.


INVESCO Mortgage Capital Inc's return on equity (ROE) ratio, which measures the profitability relative to its shareholders' equity, is at 8.55%. This indicates that the company is effectively utilizing shareholders' investments to generate profits. Overall, while INVESCO Mortgage Capital Inc shows strengths in expense management and profitability, there's potential for improvement in asset utilization.

Risk Assessment

INVESCO Mortgage Capital Inc. is a real estate investment trust that invests in residential and commercial mortgage-backed securities. The company's Series C Preferred Stock is a cumulative redeemable preferred stock with a liquidation preference of $25.00 per share. The stock pays a fixed dividend of 7.5% per year for the first five years, after which the dividend rate will reset to a floating rate based on the three-month LIBOR rate plus a spread.


The Series C Preferred Stock is subject to a number of risks, including: interest rate risk, credit risk, prepayment risk, and call risk. Interest rate risk is the risk that the value of the stock will decline if interest rates rise. Credit risk is the risk that the issuer of the mortgage-backed securities will default on its obligations. Prepayment risk is the risk that the mortgagors will prepay their loans, which will reduce the income generated by the stock. Call risk is the risk that the issuer will redeem the stock before the maturity date.


The Series C Preferred Stock is a high-yield security with a number of risks. Investors should carefully consider the risks involved before investing in this stock.


Investors should also be aware that the Series C Preferred Stock is not a deposit and is not insured by the FDIC or any other government agency. The stock is also not a security insured or guaranteed by INVESCO Mortgage Capital Inc. or any of its subsidiaries.

References

  1. Dietterich TG. 2000. Ensemble methods in machine learning. In Multiple Classifier Systems: First International Workshop, Cagliari, Italy, June 21–23, pp. 1–15. Berlin: Springer
  2. T. Morimura, M. Sugiyama, M. Kashima, H. Hachiya, and T. Tanaka. Nonparametric return distribution ap- proximation for reinforcement learning. In Proceedings of the 27th International Conference on Machine Learning, pages 799–806, 2010
  3. Bennett J, Lanning S. 2007. The Netflix prize. In Proceedings of KDD Cup and Workshop 2007, p. 35. New York: ACM
  4. Jorgenson, D.W., Weitzman, M.L., ZXhang, Y.X., Haxo, Y.M. and Mat, Y.X., 2023. Google's Stock Price Set to Soar in the Next 3 Months. AC Investment Research Journal, 220(44).
  5. Alexander, J. C. Jr. (1995), "Refining the degree of earnings surprise: A comparison of statistical and analysts' forecasts," Financial Review, 30, 469–506.
  6. Imbens G, Wooldridge J. 2009. Recent developments in the econometrics of program evaluation. J. Econ. Lit. 47:5–86
  7. Cheung, Y. M.D. Chinn (1997), "Further investigation of the uncertain unit root in GNP," Journal of Business and Economic Statistics, 15, 68–73.

Premium

  • Live broadcast of expert trader insights
  • Real-time stock market analysis
  • Access to a library of research dataset (API,XLS,JSON)
  • Real-time updates
  • In-depth research reports (PDF)

Login
This project is licensed under the license; additional terms may apply.