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Proof ARMOUR Residential REIT Is A Positive Investment
- Combined stock price and dividend payouts, the stock is increased value 8.25% this year.
- Fourth quarter’s financial report should reflect similar profits, but we do not expect any catch-up dividend this year.
- 2015 will be different, and after the interest rate hikes, should be more profitable.
ARMOUR At Risk Of Losing Shareholder Interest If Strategy Not Changed
- ARMOUR’s third quarter earnings failed to meet analyst expectations.
- Management continues defensive approach in third quarter as well.
- Interest rates expected to remain stable; management needs to take advantage of low interest rates.
- End of quantitative easing program is not a concern for RMBS companies.
ARMOUR Residential REIT: Don't Be Fooled By The 15% Yield
- ARR sees both its core income and book value per share drop in Q3 2014.
- This was despite the leverage ratio ticking higher.
- ARR remains a high-risk play in an already high-risk sector.
15.1% Dividend ARMOUR Residential REIT Performed Poorly In Q3 2014
- ARMOUR Residential REIT pays a great 15.1% dividend. However, this may be in jeopardy with Core Income of only $0.13 in Q2 and Q3 2014, but dividends of $0.15 each quarter.
- ARR lost book value from $4.90 as of June 30, 2014 to $4.58 on September 30, 2014. This was -6.5% for Q3 (-26.1% annualized). It was terrible.
- Many other metrics were negative as well, such as a rise in the CPR from 5.12% to 7.46%. ARR just looked ugly.
Breaking Down The Quarterly Report Of Armour Residential REIT
- Company's own large hedge fund to offset interest rate hike dragging profitability.
- Armour reported taxable income of $49 million, $0.13 per share, for the quarter.
- Company’s $15.5 billion investment portfolio with leverage ratio at 8.42 to 1.
Update: Armour Residential REIT Reports Q3 Earnings - My Take
- Armour Residential REIT just reported Q3 earnings of $49.0 million, or $0.13 per share.
- I predicted key metric improvement, but the key metrics I follow all declined quarter-over-quarter.
- I won't let one bad quarter change my thesis, and thus I remain bullish on the stock under $4.00 per share.
Oversold, 15.4% Dividend Payer Armour Residential REIT Looks Attractive
- ARR pays a fantastic 15.4% annual dividend.
- The dividend appears to be stable, although the Core Income of $0.13 per share in Q2 did not fully cover the $0.15 dividend.
- ARR has already declared the same $0.15 per share dividend ($0.05 per month) for Q4 2014.
- Interest rates have been relatively stable for Q3 with the 10 year US Treasury Note yield ending Q2 at 2.53% and ending Q3 at 2.49% (a 4 bps difference).
- The Q2E 2014 book value of $4.90 probably decreased to roughly $4.86 per share. This is almost 25% higher than the $3.90 stock price on October 6, 2014.
- Armour Residential REIT has been under extreme selling pressure in the last month.
- I have avoided this stock for years.
- The stock has stabilized in 2014.
- Despite not covering dividends entirely in Q2, the company is maintaining its dividend through 2014 suggesting upcoming earnings will be strong.
- Read why I recommend this stock for the first time.
- Armour is seeing its core income come under pressure.
- The company failed to cover its dividend during Q2.
- At current prices, Armour yields 15% and trades at a 18% discount to book value.
ARMOUR Residential REIT's Staggering Yield May Be A Risk Worth Taking
- ARMOUR's weighted average maturity is increasing in recent quarters.
- ARR is trading substantially below its book value of $2 billion.
- ARR's dividends have gone down year after year, but are at an appealing 14.35%.
- ARMOUR has been taking the right steps by repositioning its investment portfolio and adjusting its hedge positions to protect book value.
- Core EPS will benefit in the future from ARR's measures to reposition its portfolio.
- ARR has the option to undertake share repurchases.
Continuation Of Defensive Approach In 2Q Forces Change Of Thesis On ARMOUR From Bullish To Neutral
- Core EPS pressurized by high hedging costs and lower asset yield.
- Company should give up defensive approach and take advantage of lower interest rates.
- Company offers exciting double-digit dividend yield with potential for modest price appreciation.
- The quarter was profitable and provides more opportunities in the future.
- Book value increased from $4.67 to $4.90 this quarter.
- Over 14% yield to take the cash or reinvest the dividends monthly.
14%+ Dividend Payer ARMOUR Residential REIT May Be A Bargain
- ARR grew its book value from $4.67 to $4.90 per common share in Q2 2014. This is a large discount to its stock price of $4.20 as of August 1.
- ARR pays a monthly $0.05 per common share dividend (about 14% annualized). The dividend appears to be stable.
- ARR has eliminated its longest dated fixed rate Agency RMBS. This makes it less susceptible to interest rate increases -- a more stable stock.
- Read the rest of the article for more details, if you are interested so far.
Investment In Armour Residential REIT Nets Profitable Double-Digit Gains
- ARR confirms $0.05 for third quarter dividends.
- Dividend over 14% and reinvesting dividends goes higher.
- Core Income was strong in first quarter and positive through second quarter.
- ARR expected to release second quarter financial report in August.
ARMOUR Stands Out With Significant Price Appreciation Potential And Attractive Dividend Yield
- Company has been taking the right measures in the ongoing industry environment.
- ARR has been repositioning its portfolio by favoring 15-year MBS to protect its book value.
- Portfolio repositioning should reduce rate sensitivity moving forward.
- Stock offers impressive total return of 23%.
14% Dividend, Likely Book Value Gain, Make ARMOUR Residential REIT A Buy
- The dividend for Q2 2014 has already been declared as $0.05 per month ($0.15 for Q2 2014). This is stable now for the third quarter in a row.
- The decrease in the yield for the 10 year US Treasury Note should mean a book value increase in Q2 2014 for ARR.
- The portfolio realignment in Q1 and Q2 2014 should make ARR's portfolio safer from interest rate increases going forward.
- The interest rates decreased in Q1 2014. Yet ARR lost book value. What will change that for ARR in Q2 2014 and future quarters?
- Company continues to be attractive after maintaining dividends.
- Macro-economic environment is stable and economic indicators are showing solid trends.
- ARR still needs to strike balance by managing risk and increasing asset yield.
Strength In ARMOUR Residential REIT's Portfolio - May 2014 SEC Filing
- ARMOUR holds over $16.7 billion in fixed rate securities and $192 million in ARM and hybrid securities.
- Leverage ratio has climbed to 8.2x to 1, as the company target is 8x to 9x to 1.
- ARR continues to repurchase common shares.
- Recommend ARR as a buy and hold long-term investment.
There are no Transcripts on ARR.
Tue, Dec. 9, 12:57 PM
- Unable to catch a bid for a few sessions, mortgage REITs (REM +1%) have turned higher in afternoon action, led by Annaly (NLY +0.7%) and American Capital Agency (AGNC +1.5%).
- Helping are jitters in the stock market (though U.S. averages are well off the lows), and a 10-year Treasury yield that's retreated all the way to 2.21% after hitting the mid-2.30s on the back of Friday's strong jobs number.
- Armour (ARR +1.1%), Two Harbors (TWO +0.9%), CYS Investments (CYS +1.4%), Invesco (IVR +1.8%), American Capital Mortgage (MTGE +1%), Hatteras Financial (HTS +2%), Capstead (CMO +2%).
- Other ETFs: MORT, MORL
- Also showing some green are the recently beaten-up BDCs, including Prospect Capital (PSEC +0.2%), Fifth Street Finance (FSC +0.2%), Ares Capital (ARCC +0.5%), FS Investment (FSIC), Triangle Capital (TCAP +1.7%).
- ETFs: BDCL, BDCS, BIZD
- Previously: Money flows back into fixed income (Dec. 9, 2014)
Fri, Dec. 5, 10:12 AM
- This morning's big jobs number has pushed yields higher at both the short and long end of the curve, and has mortgage REIT investors mulling losses on MBS holdings.
- The mREIT ETF (REM -0.6%) Others: MORT, MORL
- Annaly (NLY -1.2%), American Capital Agency (AGNC -1%), Armour Residential (ARR -0.6%), Chimera (CIM -0.6%), MFA Financial (MFA -0.9%), Western Asset (WMC -1.3%).
- Previously: Short end of yield curve on the move after jobs number (Dec. 5, 2014)
- Previously: Bonds and dollar higher, gold slumps after strong jobs report (Dec. 5, 2014)
Fri, Oct. 31, 10:07 AM
- Compass Point pulls the plug on its Buy recommendation on Armour Residential (ARR -0.5%) following the Q3 earnings report this week.
- Most metrics were soft, with core income failing to cover the dividend, book value falling, and net interest spread narrowing amid climbing prepayments.
- The current price of $3.95 is a 13.8% discount to Sept. 30 book value.
- Previously: Rising prepayments ding Armour Residential
Wed, Oct. 29, 5:16 PM
- Q3 core income of $49M or $0.13 per share vs. $50.9M and $0.13 in Q2. Quarterly dividends of $0.15.
- Book value per share of $4.58 slips from $4.90 at end of Q2. Today's close of $4.00 is a 12.7% discount to book.
- Net interest margin of 1.43% slips three basis points from Q2.
- CPR of 7.46% up 234 basis points from Q2.
- Leverage of 8.42:1 vs. 7.9:1 one quarter ago.
- Previously: ARMOUR Residential REIT misses by $0.02
- ARR -0.5% AH
- Previously: ARMOUR Residential REIT misses by $0.02
Wed, Oct. 29, 4:58 PM
Wed, Oct. 29, 1:43 PM
- Fed purchases of mortgage-backed securities are ending today, but reinvestments are likely to keep a firm bid in the market, says Deutsche's MBS team. The "real risk" to the MBS market won't come until the Fed ends reinvestments - early 2016 at the soonest, and maybe not until 2017.
- QE's end, says the team, leaves the Fed with $1.7T in MBS holdings and private investors with just $3.5T. The Fed's massive holdings - 1/3 of the universal amount, but 1/2 of dollar duration - keep a source of volatility out of the market.
- The end of the Fed as a net buyer will be about the first time since the early 1990s when MBS haven't been getting a bid from either the GSEs, Treasury, or Fed.
- ETFs" REM, MORT, MORL
- Names of interest: Annaly (NLY -1.6%), American Capital Agency (AGNC -2.5%), Armour (ARR -1.2%), Hatteras (HTS -1.6%), CYS Investments (CYS -1.7%)
Thu, Oct. 9, 10:40 AM
- It's been a good week for mortgage REITs (REM +0.7%) which rose on Tuesday as the broad market tumbled and brought yields down with it, rose more on Wednesday, this time alongside a major broad market rally on dovish FOMC minutes, and are on the move higher again today as the averages again head south.
- Down to 2.28% earlier in the session (a 16-month low), the 10-year Treasury yield is now flat on the day at 2.32%.
- This week's strong move comes following a tough September in which the mREITs gave back a nice chunk of their YTD gains.
- Annaly (NLY +1.2%) is up nearly 5% over the last four sessions. American Capital Agency (AGNC +1.5%) is ahead more than 6%.
- Others: Armour (ARR +1%), Chimera (CIM +1%), CYS Investments (CYS +1.2%), New York Mortgage (NYMT +1.3%), Anworth (ANH +0.8%), Dynex (DX +1%), Javelin (JMI +1.5%), Five Oaks (OAKS +0.9%).
- Other ETFs: MORT, MORL
Tue, Sep. 30, 3:05 PM
- Many in the sector (REM -0.9%) presented today at the JMP Financial Services and Real Estate Conference. Those heard in full by this reporter - CYS Investments (CYS -1.6%), Hatteras Financial (HTS -0.9%), and MFA Financial (MFA -1.3%) - presented nothing alarming, but the sector is nevertheless lit up bright red.
- Other presenters included Capstead Mortgage (CMO -1.2%), Arlington Asset (AI -2.2%), Dynex Capital (DX -1.7%), Invesco (IVR -1.2%), Armour (ARR -2%), New York Mortgage Trust (NYMT -3.2%), Javelin Mortgage (JMI -1.5%), Five Oaks Investment (OAKS -1.9%), and Apollo Residential (AMTG -1.1%).
- Related ETFs: MORT, MORL
- Previously: CYS's Grant not buying hawkish ideas from Fed
- Previously: Hatteras updates on Q3 at conference
- Previously: MFA Financial positions for further housing improvement
Thu, Sep. 18, 1:10 PM
- The entire sector is in the red, but the biggest declines are being seen in the industry giants, about the only spots large investors can move a lot of shares quickly: Annaly Capital (NLY -1.6%), American Capital Agency (AGNC -1.6%).
- Yesterday's FOMC statement may have left in the "considerable period" language, but the committee remains on course to begin a rate hike cycle in less than a year.
- Further, the selloff on the long end of the curve can has reached the sizable stage - the 10-year yield is up 32 basis points in a month, and has now erased about all of the summer's decline. Book values could take a hit (though hedging is likely to ease the pain).
- REM -0.7%
- Other ETFs: MORT, MORL.
- Other names: Armour (ARR -1.3%), Invesco (IVR -0.7%), Hatteras (HTS -3%), Capstead (CMO -0.3%), Western Asset (WMC -0.4%)
Fri, Aug. 1, 7:15 AM
- Core income of $50.9M or $0.13 per share vs. $58.3M and $0.15 in Q1. Quarterly dividends of $0.15.
- Book value per share of $4.90 up from $4.67. Last night's close of $4.21 is a 14.1% discount to book.
- Net interest margin of 1.46% slides 36 basis points from Q1.
- Leverage of 7.9:1 vs. 8.12:1.
- CPR of 5.12% vs. 3.68%.
- Previously: ARMOUR Residential REIT misses by $0.03
- ARR fell 0.5% AH last night.
Thu, Jul. 31, 5:06 PM
Mon, Jul. 7, 8:29 AM
- Both Armour Residential (ARR) and sister-company Javelin Mortgage (JMI) confirm their monthly dividends for Q3, Armour's payout being $0.05 monthly and Javelin's $0.15.
- Armour press release; Javelin press release
- Armour's dividend amounts to an annualized rate of 13.9% and Javelin's to 13%.
- Javelin is now lower by 2.5% premarket after the Citi downgrade.
Wed, May. 28, 2:43 PM
- The swoosh down in interest rates - the 10-year Treasury yield is now off 8 bps on the session to just 2.44% - isn't really boosting the mREIT sector (REM -0.1%), and one wonders which managements hunkered down for higher rates and now find themselves overhedged. There's also a flattening yield curve and it wasn't too long ago when the bear case on mortgage REITs was slimming net interest margin, not higher rates.
- Kudos to CYS Investment (CYS +0.5%) management, which - not finding a ton of value in mortgages - loaded up on Treasurys in Q1. The stock is one of the sector's stronger performers YTD, up 24.5%.
- Others today: Annaly (NLY +0.1%), American Capital (AGNC -0.7%), Armour Residential (ARR +0.7%), Hatteras Financial (HTS -0.3%), Capstead Mortgage (CMO -0.2%), Western Asset Mortgage (WMC -0.6%)
- ETFs: MORT, MORL
Thu, May. 15, 1:13 PM
- In the red along with the rest of the stock universe all session, a bit of green begins to creep into the mortgage REIT sector (REM -0.4%) as the 10-year Treasury yield tumbles below 2.50%.
- Annaly Capital's (NLY +0.1%) Q1 results were a notable disappointment as management seemingly found itself overhedged while rates fell sharply. One wonders if the hedges were lifted at all for Q2.
- The sector's best performer today is CYS Investments (CYS +1.1%). Management indicated on the April 22 earnings call that it thought mortgages were too pricey, so instead had put a slug of money into Treasurys - a move looking pretty good so far.
- Others: Two Harbors (TWO), Chimera Investment (CIM +0.2%), Armour Residential (ARR -0.1%), AG Mortgage Investment (MITT +0.1%)
- ETFs: MORT, MORL
Mon, May. 5, 8:21 AM
- Core income of $58.3M or $0.15 per share compares to $59.3M and $0.15 in Q4; $0.15 quarterly dividend.
- Book value per share of $4.67 slips from $4.75 after payment of $0.15 in dividends. Friday's closing price of $4.25 is a 9% discount to book.
- Leverage of 8.12x up from 6.92x; average net interest margin of 1.82% up 22 basis points; average CPR of 3.68% slips from 4.8%.
- Repurchased 600K shares at average price of $4.31 each.
- Source: Press Release
- ARR no trades premarket
Tue, Apr. 29, 12:12 PM
- The mortgage REIT (REM -0.9%) sector is lower following American Capital Agency Q1 results from after the bell last night. Earnings beat expectations and comfortably covered the $0.65 dividend, but a 2.3% gain in book value may have been somewhat shy of what was hoped for.
- Opinions make markets, and - unlike CYS Investments' management - American Capital CIO Gary Kain does not view the current mortgage market as too pricey to play in.
- Also for fixed income investors to chew on is Apple's upcoming (bell-ringing?) massive debt offering.
- Related ETFs: MORT, MORL.
- Other agency (or mostly so) MBS names: Annaly (NLY -0.7%), Armour (ARR -0.1%), Hatteras (HTS -0.1%), Capstead (CMO), Anworth (ANH -0.2%), Ellington Residential (EARN -0.6%).
ARR vs. ETF Alternatives
ARMOUR Residential REIT Inc invests in and manages a leveraged portfolio of residential mortgage backed securities. The Company is externally managed by ARMOUR Residential Management LLC, pursuant to a management agreement.
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