An 18% Dividend Yield I Don't Want to Earn

5 stocks hedge funds are selling This table contains five among the top 20 stocks in the Russell 1000 that have suffered the largest absolute declines in hedge fund ownership since the end of March: Company Hedge Fund Ownership: Latest vs. March 31 Forward Price-to-Earnings multiple* Alpha Natural Resources (NYSE: ANR) 9.6% / 18% 9.0 American Capital Agency (Nasdaq: AGNC) 6.8% / 9.4% 1.2[Price-to-book value] CIENA (Nasdaq: CIEN) 13.8% / 17.8% 50.2 Novellus Systems (Nasdaq: NVLS) 3.8% / 7.3% 10.8 Family Dollar 15.9% / 24.6% 15.8 Source: Capital IQ a division of Standard & Poor's. *As of July 7, based on next 12 months' forward earnings estimates. An old classic: Borrow short, lend long The stock I want to focus on today is American Capital Agency, a mortgage real estate investment trust (I'll refer to the company and its stock by its ticker from now on.) American Capital borrows money on a short-term basis and invests in mortgage-backed securities that are guaranteed by the U.S. government or nationalized housing agencies Fannie Mae and Freddie Mac. American Capital faces no credit risk (in theory) and collects the difference between its borrowing cost and the interest it receives on the securities in its portfolio.... Read more