INVESCO MORTGAGE CAPITAL INC (NYSE: IVR), (HOOD) – If you had invested $ 1,000 in Invesco Mortgage Capital a year ago, this is how much you would have now

Investors who have held stocks in the past year have generally seen large gains. In fact, the SPDR S&P 500 ETF Trust (NYSE: SPY) Total return over the past 12 months is 28.8%. But there is no doubt that some big name stocks have performed better than others along the way.

The bumpy ride of Invesco Mortgage: One company that has been a disappointing investment over the past year has been Mortgage REIT Invesco Mortgage Capital Inc (NYSE: IVR).

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Shares of Invesco and other mortgage REITs were crushed in March 2020 as the pandemic created incredibly difficult financial conditions for businesses.

Fears of a recession have caused the value of Invesco’s Mortgage Backed Securities (MBS) to fall. The company had used those assets as collateral to borrow, so this decline in value prompted company executives to demand additional cash as collateral instead. When Invesco Mortgage attempted to sell some of its assets to raise this liquidity, the MBS market was so illiquid at the time that it could not find buyers.

Invesco eventually entered into a forbearance agreement with its creditors, which gave the REIT time to sell assets at more reasonable prices. In the aftermath of the crisis, the company changed its business model to focus on state-guaranteed mortgages.

Invesco Mortgage was a hot stock action on Robinhood Markets Inc (NASDAQ: HOOD) after the stock price collapsed in 2020. But hopes of a long-term rebound to get closer to the stock’s pre-pandemic highs seem unlikely at this point.

At the start of 2020, Invesco Mortgage shares were trading at $ 16.64. By early March, the stock had fallen to $ 16.33, with news of the coronavirus spreading in China raising fears of a pandemic in the United States.

When the market collapsed during the COVID-19 outbreak in the United States in March, shares of Invesco Mortgage fell to $ 1.82 at the height of pandemic fears.

When the market rebounded from the pandemic lows, Invesco Mortgage also began to rebound. The stock hit $ 8.40 per share in June before the recovery faltered.

Invesco Mortgage failed to maintain broad market momentum in the second half of 2020. In fact, the stock had fallen below $ 3 by the end of July.

Invesco mortgage in 2021, beyond: Invesco Mortgage stock hit its 2021 highs at $ 4.60 in June before a disappointing earnings report pushed the stock down again. Today, stocks are hovering around $ 2.90.

Investors in Invesco Mortgage who bought the 2020 low a year ago and were hoping for a recovery in 2021 have delivered poor ROI at this point. In fact, $ 1,000 of Invesco Mortgage shares purchased on December 15, 2020 would be worth around $ 987 today, assuming reinvested dividends.

Looking forward: Analysts expect little price action on Invesco Mortgage over the next 12 months. The average price target among the two analysts covering the stock is $ 3, suggesting a rise of 4.1% from current levels.

Photo: Ralph Kelly via Unsplash

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Sallie R. Loera