Anworth Mortgage Asset Corporation
Anworth Mortgage Asset — Proxy Contest (May 2014)
21 slides from Anworth Mortgage Asset's proxy contest presentation, May 8, 2014
Slide 1: Anworth Mortgage Asset Corporation Supplemental Investor Presentation
Western Investment LLC _____________________________________________ Anworth Mortgage Asset Corporation Supplemental Investor Presentation 1 2622745-1
Slide 2: Anworth has Very Poor Performance vs. Both Newer and Older Mortgage REITs
Anworth has Very Poor Performance vs. Both Newer and Older Mortgage REITs • The following chart adds returns from issue dates of newer high quality REITs Cumulative return for period indicated including reinvestment of dividends Start Date 12/31/2007 4/25/2008 5/16/2008 6/12/2009 End Date 3/31/2014
Slide 3: Many Analysts Negatively Review Anworth's 4/30 Earnings Call
Many Analysts Negatively Review Anworth’s 4/30 Earnings Call • 6 of the 7 current analysts have hold ratings. • Only 1 (RBC) has an outperform and that firm has an active business relationship with Anworth. 3 2622745-1
Slide 4: Many Analysts Negatively Review Anworth's 4/30 Earnings Call (continued)
Many Analysts Negatively Review Anworth’s 4/30 Earnings Call (continued) • FBR: April 30, 2014 “While may make sense for agency REITs to diversify business models, “this one is a little more out of the box, particularly as property management and achieving scale efficiency are critical success facto
Slide 5: Many Analysts Negatively Review Anworth's 4/30 Earnings Call (continued)
Many Analysts Negatively Review Anworth’s 4/30 Earnings Call (continued) • From RBC ANH report dated 4/30/14 "The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including total revenues of the member companies of RBC Capital Market
Slide 6: Western Investment's Selected Comparable Companies Are More Accurate
Western Investment’s Selected Comparable Companies Are More Accurate • Despite a massive effort by the people Anworth hired in an attempt to hide Anworth’s horrible performance by bringing in many unrelated issues and irrelevant arguments, we stand by our original statement that Anworth’s most relev
Slide 7: Western Investment's Selected Comparable Companies Are More Accurate (continued)
Western Investment’s Selected Comparable Companies Are More Accurate (continued) • It is totally appropriate to compare Anworth’s returns to other REITs which had similar investment, but not identical, guidelines. • MFA is primarily invested in high grade adjustable rate agency securities but has in
Slide 8: Western Has a Consistent Plan
Western Has a Consistent Plan • Western Investment has been consistent in its message that we are concerned with the Board’s failure to take action regarding Anworth’s over decade long history of abysmally poor performance, and believe NOW is the time to take action that is in the best interests of
Slide 9: Anworth Has Tried to Mislead Investors by Taking Western Investment's Statements Out of Context
Anworth Has Tried to Mislead Investors by Taking Western Investment’s Statements Out of Context • Compare Anworth’s quotes lifted out of context with the complete language. – 4/4/2014 ANH “…best thing that can be done for stockholders is to simply liquidate the REIT” Western Investment: “Our goal is
Slide 10: Anworth Has Tried to Mislead Investors by Taking Western Investment's Statements Out of Context
Anworth Has Tried to Mislead Investors by Taking Western Investment’s Statements Out of Context • Compare Anworth’s quotes lifted out of context with the complete language. 4/25/2014 ANH: “(our) nominees would consider liquidating Anworth” Western Investment: “We want to maximize long term value to
Slide 11: Anworth Tries to Mask its Failures by Attacking FFTW
Anworth Tries to Mask its Failures by Attacking FFTW • Anworth has attempted to deflect statements made about its poor performance by attempting to disparage Western Investment’s recommendation for a new manager. FFTW is a highly respected fixed income specialist, which has been managing fixed incom
Slide 12: Anworth Failed to Aggressively Repurchase Shares until Threatened with a Proxy Contest
Anworth Failed to Aggressively Repurchase Shares until Threatened with a Proxy Contest • Anworth claims that its board authorized aggressive share repurchases well before Western Investment’s filing. • Western Investment first met with Anworth on March 13, 2014 at which time Anworth stated its inten
Slide 13: Western Investment's Nominees are Significantly More Qualified Than Anworth's Proposed Board
Western Investment’s Nominees are Significantly More Qualified Than Anworth’s Proposed Board • A mortgage REIT by definition primarily invests in mortgage securities which are fixed income securities. It follows that the types of experience that are most relevant and most valuable to being on the bo
Slide 14: Western Investment's Nominees are Significantly More Qualified Than Anworth's Proposed Board
Western Investment’s Nominees are Significantly More Qualified Than Anworth’s Proposed Board • While 3 of Anworth’s nominees have served on the board of Anworth Mortgage Asset, Western believes that the performance of the assets they supervised was so poor that they should be given no credit for thi
Slide 15: Western Investment Interests are Aligned with All Stockholders
Western Investment Interests are Aligned with All Stockholders. Can Anworth Management Say the Same Thing? • Western Investment, together with its fellow participants in this solicitation, own stock valued at over $28.7 million as of May 6, 2014. • By contrast, Anworth management and directors only
Slide 16: Western Investment Has Previously Predicted Disaster
Western Investment Has Previously Predicted Disaster • Western Investments is good at reading the market and knowing when to avoid a bad transaction. • In 2006, Alesco Financial Trust proposed a merger with Sunset Financial Resources (SFO). • Western Investment was a large shareholder in Sunset and
Slide 17: Western Investment Again Senses Flaws and Recommends Change
Western Investment Again Senses Flaws and Recommends Change • Anworth needs to diversify but has made a poor choice in going into single family rentals at this point in the housing cycle. The majors in this space see limited opportunity and are cutting back sharply on purchases. Further, Anworth doe
Slide 18: Stockholders Cannot Afford More Losses
Stockholders Cannot Afford More Losses • Anworth shares have traded at a persistent discount to book value over the past three years. • The discount was a shocking 29.6% on December 31, 2013. • The Board has failed to adequately address the decade of Anworth’s failed performance and resulting deep d
Slide 19: Stockholders Deserve:
Stockholders Deserve: • First rate management, not management with a decade of failure. • A Board that represents them, not management. • Directors whose interests are aligned with stockholders. • Effective, engaged oversight of management. • An amelioration of the persistent and overly deep discoun
Slide 20: Our interests are aligned with all Stockholders
Our interests are aligned with all Stockholders What we bring to the Board: • Commitment to Good Governance. • Ownership Representation in the Boardroom. • Active, Engaged Advocacy. • Talent, Expertise and Experience. • Focus on Improving Performance. – Will explore replacing Anworth’s current manag
Slide 21: VOTE THE GOLD PROXY
VOTE THE GOLD PROXY HOW MUCH WORSE COULD THIS BE? CONTINUOUS UNDERPERFORMANCE PLUS A BOARD WHO HAS FAILED TO EXERCISE ITS FIDUCIARY RESPONSIBILITY TO STOCKHOLDERS. THESE NOMINEES, IF ELECTED, WOULD CONSTITUTE ONE OF THE STRONGEST AND MOST EXPERIENCED BOARDS OF ANY ASSET MANAGER IN THE WORLD. VOTE FO