Why Arlington Asset Investment (AI) Is Sinking After Hours

NEW YORK (TheStreet) -- Arlington Asset Investment (AI) is slipping in extended trading Monday after announcing a secondary offering.

After the bell, shares had taken off 3.6% to $27.37.

The mortgage-related investment firm said it had commenced an underwritten registered public offering of 2.75 million shares of its Class A common stock. Underwriters will also have a 30-day option to purchase up to an additional 412,500 shares.

The Virginia-based business currently has 16.6 million shares outstanding.

Arlington Asset said in a statement it expects to use net proceeds to acquire target assets, "including residential mortgage-backed securities (MBS) issued by U.S. government agencies or guaranteed as to principal and interest by U.S. government agencies or U.S. government-sponsored entities and MBS issued by private organizations."

Barclays  (BCS), Credit Suisse  (CS) and RBC Capital Markets will serve as joint bookrunning managers for the offering.

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TheStreet Ratings team rates ARLINGTON ASSET INVESTMENT as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ARLINGTON ASSET INVESTMENT (AI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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