Shares in Anworth Mortgage Asset Corp. dropped more than 21 percent in early trading Thursday after shares in the firm were downgraded.


Bose George at investment firm Keefe Bruyette downgraded the Santa Monica-based real estate investment trust, as well as nearly every other company in the sector, saying the downgrades reflect concerns that the company will have to carry more excess capital to cope with potential uncertainties in the market, hurting its ability to invest and grow.


However, George added that he still feels Anworth, and the rest of the sector, "should be able to generate strong growth in earnings and dividends in 2008."


The downgrade comes after the REIT announced a common stock offering of 11 million shares at the end of January in an effort to raise about $90 million to invest in securities guaranteed by Freddie Mac and Fannie Mae.


Anworth invests heavily in residential mortgages backed by Freddie Mac and Fannie Mae. Since the government insures those loans if borrowers default, Anworth has been considered a conservative investment.


Shares in Anworth plunged more than 21 percent, or $1.88 per share, to $6.97, just two weeks after hitting a 52 week high of $10.29 on Feb. 21.

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