Dynex Capital enters the final day of April with short sellers in notable retreat — a sharp reversal from where the stock was just a week ago, and a setup that deserves closer attention heading into May earnings.
The most telling move is in short positioning. Short interest has dropped nearly 15% over the past week, falling from around 6.3% of the free float on April 23 to 5.2% now — the lowest reading in nearly six weeks. That's a material unwind. The ORTEX short score has followed suit, sliding from 54.4 last Wednesday to 45.3 today, pulling it well back from the mid-50s territory that had characterised the first three weeks of April. Bears are not abandoning the stock entirely, but the pace of covering since mid-week has been striking.
The lending market reinforces that picture. Borrow costs, which briefly spiked to 2.72% on April 21, have retreated sharply to just 0.80% — a 71% drop on the week. Availability has moved in the same direction, with borrow becoming materially less constrained as shorts cover. The 52-week peak on utilization was 54.9%; it's now running at 22.5%, well below that ceiling. Options positioning is close to neutral, with the put/call ratio at 0.57, barely half a standard deviation above its 20-day mean. There is no sign of hedging pressure building in derivatives.
The Street is mildly constructive but selective. UBS raised its target to $14.50 from $14.00 last week, maintaining a Neutral rating — the move was directionally positive but kept the stock on the sideline. Jones Trading and Keefe, Bruyette & Woods both hold positive ratings with targets above current levels, the mean sitting at $15.10, which implies roughly 12% upside to the $13.50 close. The bull case centres on the $19.4 billion agency portfolio, a widening economic net interest spread, and return-on-equity running in the high-teens under a steepening curve. Bears counter with the risk of Fed MBS purchases compressing spreads and driving prepayments higher, which would squeeze margins and pressure the dividend. The price-to-book multiple has expanded about 8.7% over the past 30 days to 1.04x — a modest re-rating that suggests the market has already priced in some of the optimism. The dividend score ranks in the 90th percentile, reflecting the consistency of income distributions, though the most recent dividend data in the snapshot dates to mid-2022 and cannot be relied upon for current yield figures.
On the ownership side, the institutional story is incrementally positive. BlackRock added roughly 1.16 million shares in the quarter to March 31, bringing its position to 6.1% of the company. Vanguard added 1.56 million shares in the same period. Both are passive-driven flows, but the aggregate direction is constructive. Insider activity is mixed in a way worth noting: the CEO Smriti Popenoe sold shares in late February at $14.03 alongside other executives — typical post-award trimming — but bought a modest 2,000 shares at $12.19 on March 27, a small but directionally notable purchase near the recent low. The net 90-day insider position is a modest positive at roughly 128,900 shares.
The next scheduled catalyst is Q1 earnings on May 21. The most recent print, on April 20, produced a muted 1.1% one-day move and a 1.3% five-day drift, suggesting the stock does not tend to gap dramatically on results. What investors are watching heading into that print is whether the spread environment — and the interplay between agency MBS supply, Fed policy signals, and the shape of the yield curve — has sustained the improvement that drove the 11% monthly price gain through April.
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