Anworth Urges Stockholders To Protect Their Investment By Voting The WHITE
Proxy Card Today
Mails Letter to Stockholders in Connection with 2014 Annual Meeting
SANTA MONICA, Calif., May 8, 2014
SANTA MONICA, Calif., May 8, 2014 /PRNewswire/ --Anworth Mortgage Asset
Corporation (NYSE: ANH) today announced that it has mailed and filed with the
Securities and Exchange Commission a letter to stockholders in connection with
the 2014 Annual Meeting of Stockholders scheduled for May 22, 2014.
The Anworth Board of Directors unanimously recommends that stockholders sign,
date and return the WHITE proxy card and discard any materials they may
receive from Western Investment, LLC.
The full text of the letter follows:
WESTERN INVESTMENT LLC, AN ACTIVIST HEDGE FUND, IS TRYING TO TAKE CONTROL OF
YOUR BOARD WITHOUT ANY LONG-TERM PLAN
WESTERN AND ITS HAND-PICKED NOMINEES HAVE ZERO EXPERIENCE MANAGING PUBLIC
PROTECT YOUR INVESTMENT AND VOTE THE WHITE PROXY CARD TODAY
May 8, 2014
Western Investment LLC is waging an opportunistic and aggressive campaign to
replace five of your proven, highly-qualified directors with its hand-picked
nominees who have zero experience overseeing and running public mortgage
REITs. Not only is Western trying to take over your Board without any
specific plan to enhance stockholder value and by using flamboyant rhetoric
and self-serving statements, but we believe Western is putting the Company
and your investment at significant risk.
Who do you trust to run your Company – a proven Board and management team
with over 80 years of experience as directors and managers of public
mortgage REITs, or, an activist hedge fund and its slate of nominees who
have no experience as directors, officers or managers of a publicly traded
REIT? We believe that handing the keys to your board room over to Western
and its nominees so they can learn "on the job" is a risk to your investment
that you should not take.
When Western acquired its entire 4.0% stake in your Company in just the past
five months it didn't even attempt to engage in a constructive or
substantive dialogue with your Board. Instead, Western introduced itself by
immediately telling Anworth that it wanted to take control of your Board and
that Anworth should delay its 2014 Annual Meeting. Western had nothing
specific to recommend because, to this day, it has no plan or strategy to
enhance long-term value and investment returns.
BECAUSE THEY HAVE NO EXPERIENCE AT THE HELM OF A PUBLIC MORTGAGE REIT, WESTERN
AND ITS NOMINEES APPEAR TO BE MAKING UP THEIR EVER-CHANGING "PLAN" FOR ANWORTH
ON THE FLY
Western's own public disclosures speak for themselves:
oFirst, Western's principal focus was on liquidating Anworth.
"…best thing that can be done for stockholders is to simply liquidate the
"…only way to provide fair value at this point is to liquidate the
oThen, when Western recognized that liquidation was an expensive,
protracted and uncertain process, it stated it would "consider" a
"[our] nominees would consider liquidating Anworth"^2
oAnd now, in its recent investor presentation, Western lays out an "action
plan" that is all over the map and claims to be looking at liquidation as
a last resort.
"In the unlikely event there is a liquidation"
"Maximizing long-term value for stockholders preferably by engaging a new
"Open to continuing Anworth's existing relationship with Credit Suisse"
"Immediate priority is to evaluate strategic alternatives"
"We would consider a new manager for Anworth"^3
WHY ALL THE BACK-PEDALING? BECAUSE WESTERN BRINGS TO THE TABLE NO INVESTMENT
STRATEGY, NO BUSINESS MODEL AND NO SPECIFIC PROPOSAL TO BUILD LONG-TERM VALUE
AND INCREASE RETURNS
WE BELIEVE THIS ACTIVIST HEDGE FUND HAS PRESENTED NO LONG-TERM PLAN TO CREATE
VALUE BECAUSE IT IS FOCUSED ONLY ON OPPORTUNISTIC SHORT-TERM TRADING GAINS
Despite WESTERN'S EVER-CHANGING "PLAN" for Anworth, it hasn't proposed any
concrete ideas that are likely to add value above the current stock price to
In fact, the only specific recommendations that Western has disclosed are that
Anworth should aggressively pursue share repurchases and hire an investment
Anworth has been repurchasing shares of its stock from time to time since
2005. For the 12- months ended March 31, 2014, Anworth repurchased
approximately 13 million shares. Our buyback program continues to this day. In
fact, since March 31, 2014, we repurchased approximately 5 million shares.
Moreover, your Board's 100% independent Strategic Review Committee has already
engaged Credit Suisse to identify specific transactions to execute Anworth's
announced diversification strategy and to make recommendations regarding
potential capital markets transactions.
WESTERN'S STATEMENT THAT, IF ELECTED,
ITS NOMINEES WOULD CONSIDER TERMINATING
YOUR REIT MANAGER AND HIRING AN INTERIM MANAGER,
IS FLAWED AND COULD JEOPARDIZE ANWORTH, YOUR DIVIDEND INCOME AND THE LONG-TERM
VALUE OF YOUR INVESTMENT
What Western neglects to mention is that its replacement manager "plan"
excludes the cost of terminating your REIT manager, which Anworth would have
to pay, and that Western's suggested interim manager, Fisher Francis Trees &
Watts Inc. (FFTW), tried and failed to launch a publicly traded mortgage REIT.
In 2008 FFTW tried to take public its affiliate mortgage REIT, Galiot Capital
Corporation. In July, 2009 FFTW cancelled the IPO of Galiot.
DON'T BE MISLED BY WESTERN
The following claims by Western regarding your Company are disingenuous,
misleading, and in many instances, simply wrong:^4
WESTERN'S CLAIM: Anworth's 2014 performance is "primarily attributable to
Western Investment's activity."
THE FACTS: The total return on your investment in Anworth so far in 2014 has
been approximately 34%, with a 24% return prior to Western's public
WESTERN'S CLAIM: Anworth "failed to aggressively repurchase shares" until
"threatened with a proxy contest."
THE FACTS: Your Board authorized aggressive share repurchases well before
Western's filing. For the 12- months ended March 31, 2014, Anworth repurchased
approximately 13 million shares and our buyback program continues to this day.
WESTERN'S CLAIM: Anworth's total return performance "has been among the lowest
of comparable mortgage REITs."
THE FACTS: Anworth has substantially outperformed the NAREIT Mortgage REIT
index during the last 10 years, delivering a total return of 23% versus - 13%.
In evaluating Anworth's performance over the last decade, Western selectively
dismisses the NAREIT Mortgage REIT index and has cherry-picked a misleading
set of "peer companies" that includes REITs whose strategies are not
comparable to Anworth during this period. And since inception, Anworth has
delivered a total return on investment of approximately 267% compared to 66%
for the NAREIT Mortgage REIT index over the same time period.
YOUR BOARD CONSISTS OF PROVEN AND HIGHLY EXPERIENCED DIRECTORS
WE BELIEVE ANWORTH HAS THE RIGHT LEADERSHIP TO DELIVER SIGNIFICANT STOCKHOLDER
VALUE AND INCREASE YOUR INVESTMENT RETURNS NOW AND INTO THE FUTURE
Your Board is composed of directors who have extensive experience overseeing
and managing publicly traded REITs, have financial expertise, and are
committed to continuing to build long-term stockholder value and returns on
With a strong balance of mortgage REIT and large public company board
experience, we believe your Board is well-suited to help design and oversee
management's execution of Anworth's investment and growth strategy, and
position Anworth for continued long-term success.
We recently nominated Mark S. Maron, a new independent director for election
at the 2014 Annual Meeting. We believe the Board will be further strengthened
by the addition of Mr. Maron who brings a fresh perspective and extensive
experience in real estate finance and capital markets.
STICK WITH WHAT HAS WORKED WELL FOR ALL STOCKHOLDERS OVER THE LONG TERM
Anworth's strategy of investing in predominately adjustable rate assets funded
by hedged liabilities has provided above average long-term risk adjusted
returns - - with a total return on investment of approximately 267% since
Anworth's IPO 16+ years ago and approximately 34% so far in 2014 - - with
With a proven track record and intense focus on building long-term stockholder
value through strategic equity issuances and accretive buybacks, your
directors and management are positioning your Company for increased growth,
dividend income and steady investment returns.
In contrast, we believe Western is focused on short-term, opportunistic
trading gains and has failed to demonstrate that a change in the composition
of your Board is warranted. We believe Anworth's strong historical performance
and actions to enhance stockholder value and returns merits your continued
support of your entire Board.
PROTECT YOUR INVESTMENT INCOME AND
THE LONG-TERM VALUE OF YOUR ANWORTH STOCK
VOTE TO ELECT ALL SIX OF YOUR BOARD'S DIRECTOR NOMINEES
VOTE THE WHITE PROXY CARD TODAY!
We urge you to protect the value of your investment by affirmatively voting
"FOR" the election of all of your Board's six director nominees: Lloyd
McAdams, Lee A. Ault III, Joe E. Davis, Robert C. Davis, Joseph E. McAdams and
Mark S. Maron on the WHITE proxy card.
DISREGARD ANY GOLD PROXY CARD AND PROXY MATERIAL
YOU RECEIVE FROM OR ON BEHALF OF WESTERN
Your Board urges you not to sign or return any gold proxy card you may already
have received or that you will receive from or on behalf of Western. Instead,
your Board urges you to complete, sign, date and return only the WHITE proxy
card enclosed with this letter and return it in the pre-addressed envelope
provided. You may also refer to the instructions on your WHITE proxy card to
vote your shares via the Internet or by phone.
Your vote is extremely important, no matter how many or how few shares you
own. We urge you to vote today by telephone, online, or by signing and dating
the enclosed WHITE proxy card and returning it in the postage-paid envelope
provided. Please do not return the gold card, even to vote against Western's
nominees, as doing so will cancel out any previous vote you cast for the
Board's director nominees.
We thank you for your continued support.
Your Board of Directors
If you have questions or need assistance voting your WHITE proxy card, please
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Call Collect: (212) 929-5500
Toll-Free (800) 322-2885
About Anworth Mortgage Asset Corporation
Anworth is an externally-managed mortgage real estate investment trust. Our
principal business is to invest primarily in securities guaranteed by the U.S.
Government, such as Ginnie Mae, or guaranteed by federally sponsored
enterprises, such as Fannie Mae or Freddie Mac. We seek to generate income for
distribution to our shareholders primarily based on the difference between the
yield on our mortgage assets and the cost of our borrowings. We are managed by
Anworth Management, LLC, or the Manager, pursuant a management agreement. The
Manager is subject to the supervision and direction of our Board of Directors
and is responsible for (i) the selection, purchase and sale of our investment
portfolio; (ii) our financing and hedging activities; and (iii) providing us
with management services and other services and activities relating to our
assets and operations as may be appropriate. Our common stock is traded on the
New York Stock Exchange under the symbol "ANH." Anworth is a component of the
Russell 2000® Index.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
This news release may contain forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are based upon our current expectations
and speak only as of the date hereof.
Forward-looking statements, which are based on various assumptions (some of
which are beyond our control) may be identified by reference to a future
period or periods or by the use of forward-looking terminology, such as "may,"
"will," "believe," "expect," "anticipate," "assume," "estimate," "intend,"
"continue," or other similar terms or variations on those terms or the
negative of those terms. Our actual results may differ materially and
adversely from those expressed in any forward-looking statements as a result
of various factors and uncertainties, including but not limited to, changes in
interest rates; changes in the market value of our mortgage-backed securities;
changes in the yield curve; the availability of mortgage-backed securities for
purchase; increases in the prepayment rates on the mortgage loans securing our
mortgage-backed securities; our ability to use borrowings to finance our
assets and, if available, the terms of any financing; risks associated with
investing in mortgage-related assets; changes in business conditions and the
general economy, including the consequences of actions by the U.S. government
and other foreign governments to address the global financial crisis;
implementation of or changes in government regulations affecting our business;
our ability to maintain our qualification as a real estate investment trust
for federal income tax purposes; our ability to maintain an exemption from the
Investment Company Act of 1940, as amended; risks associated with our home
rental business; and the Manager's ability to manage our growth. Our Annual
Report on Form 10-K and other SEC filings discuss the most significant risk
factors that may affect our business, results of operations and financial
condition. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.
^1 Western's Preliminary Proxy Statement, April 4, 2014
^2 Western's Definitive Proxy Statement, filed with the SEC on April 25, 2014
^3 Western's Investor Presentation, filed with the SEC on May 2, 2014
^4 All of the quoted claims by Western are included in its Investor
Presentation filed with the SEC on May 2, 2014
Contact: John T. Hillman @ 310/255-4438 or 310/255-4493
SOURCE Anworth Mortgage Asset Corporation
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