Zacks_Analysts' Blog : Two Harbors Issues Public Offering - Analyst Blog

Two Harbors Investment Corp. (TWO), a real estate investment trust, recently issued a public offering of 25 million shares. In a bid to cover over allotments, the company will also provide a 30-day option to the underwriters for purchasing an additional 3.8 million shares.

Two Harbors intends to utilize the proceeds generated from the transaction to purchase 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 pursue accretive acquisitions, which go a long way in enhancing top-line growth. As of September 30, 2011, Two Harbors' cash position stood at $409.9 million.

During the third quarter of 2011, the company reported core earnings of 40 cents per share compared with 35 cents per share in the year-earlier 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 or government agencies while non-Agency RMBS are those that are not issued or guaranteed by such government entities.

As of September 30, 2011, the total value of the company’s portfolio was $6.6 billion, of which approximately $5.3 billion was Agency RMBS and derivatives and $1.3 billion 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). also holds a Zacks #3 Rank.