From other sites
at Nasdaq.com (Dec 8, 2014)
at Zacks.com (Oct 31, 2014)
at CNBC.com (Oct 30, 2014)
at CNBC.com (Oct 30, 2014)
at Fox Business (Oct 2, 2014)
at CNBC.com (Apr 1, 2014)
at CNBC.com (May 15, 2013)
at CNBC.com (Apr 24, 2013)
at CNBC.com (Apr 8, 2013)
at CNBC.com (Mar 22, 2013)
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.
Dec. 18, 2013, 8:21 AM
- Armour Residential (ARR) sets a $0.05 monthly dividend for calendar year 2014. It's an annualized yield of 16.2% based on last night's close of $3.70. September 30 book value was $5.26, putting the stock at about a 30% discount to book. The next payment date is January 30 to holders of record on January 15.
- Press release
Dec. 16, 2013, 3:35 PM
- The mortgage REIT sector (REM -0.6%) is lower on a bright green day for the rest of the market, with Anworth Mortgage's (ANH -1.2%) 33% dividend cut Friday night offering another excuse to Sell. Anworth is an agency mortgage player, investing mostly in adjustable mortgages. Anworth's new forward yield of 7.5% is so far out of line with the double digits of the rest of the industry, it suggests even more declines are in store for the stock, or big dividend cuts lie ahead for competitors. At $4.19, Anworth is selling for a near-30% discount to September 30 book value.
- Down the most today is American Capital Mortgage (AGNC -2.7%), and its non-agency cousin, American Capital Agency (MTGE -1.7%) is off sharply as well.
- Others: Annaly (NLY -1.3%), Armour (ARR -1.2%), Western Asset (WMC -1.8%), Apollo (AMTG -1.4%), Ellington (EFC -0.4%), (EARN +0.2%)
- Related ETFs: MORT, MORL
Dec. 6, 2013, 11:42 AM
- There's a bit of green spreading across the mREIT sector this morning as Treasurys reverse an early plunge following the strong jobs report - the 10-year yield is now off 3 basis points to 2.85% after climbing to 2.93% just after the 8:30 ET release.
- However, there's no relief for sector leaders Annaly (NLY -1%) and American Capital Agency (AGNC -1.5%), both of which continue to reel following Goldman's Sell recommendation yesterday - each have carved out new 52-week lows this morning. There may be plenty of players in the mREIT sector, but for the institutional big boys who have the Goldman report on their desks, there's just NLY and AGNC. Others in the red include: Armour (ARR -0.7%) and CYS Investments (CYS -1.1%).
- Posting gains: Chimera (CIM +0.8%), Invesco (IVR +0.2%), Hatteras (HTS +0.2%), Dynex (DX +0.7%), New York Mortgage (NYMT +0.3%), Apollo Residential (AMTG +0.7%), Javelin (JMI +1.1%), AG Mortgage Investment (MITT +2.3%).
- Related ETFs: REM, MORT, MORL.
Dec. 2, 2013, 3:48 PM
- There's no mercy for the mREIT sector (REM -1.6%) as this morning's strong economic data sends the 10-year Treasury yield five basis points higher to 2.80%. Among the new 52-week lows today are sector giants Annaly (NLY -1.6%) and American Capital Agency (AGNC -1.8%).
- Also down sharply are Armour (ARR -2.4%), CYS Investments (CYS -2.4%), Dynex (DX -2.5%), American Capital Mortgage (MTGE -2.8%), AG Mortgage (MITT -2.4%), and Arlington Asset (AI -3.1%).
- Management matters, and investors have clearly lost some faith in the leadership of Annaly and American Capital - both of which trade at more than 20% discounts to book value. The newest favorite is that of Ellington Financial (EFC), where management has mostly been able to preserve book value this year. Company structure may have helped too - Ellington is a partnership, not a REIT and has somewhat more flexibility with its portfolio. The stock trades at just a 6% discount to October 31 reported book.
- ETFs: MORT, MORL
Nov. 22, 2013, 3:11 PM
- A nice backup in rates (the 10-year Treasury yield is off 4 bps to 2.75%) is of no help to the mortgage REITs (REM -0.3%), with sector kingpins Annaly (NLY -1.4%) and American Capital Agency (AGNC -1.2%) both hunkered down (NLY earnings call, AGNC earnings call) for the Fed taper, and both hitting 52-week lows today.
- Earlier this week, AGNC and MTGE CIO Gary Kain took his case all the way to Asia at the Citi financial services conference in Hong Kong (transcript). Yes, book value has been hit by higher rates, but also by how much the market is willing to pay for it. Whereas AGNC traded at an average of 110%-120% of book over the past 4-5 years, it's now at sub-90%.
- Discounts can last for awhile, he admits, but also reminds this isn't some opaque bank balance sheet, but instead an easily valued, highly liquid portfolio of assets trading at $0.85-$0.90 on the dollar. As long as it persists, American Capital will continue selling MBS for $1 and buying back stock at a discount.
- Previous: Kain makes a similar case
- Related ETFs: MORT, MORL
- Other sector stocks: Armour (ARR), Two Harbors (TWO -0.8%), CYS (CYS +0.1%), AG Mortgage (MITT -0.5%)
Nov. 8, 2013, 9:51 AM
- Sharply higher interest rates has a number of mREITs (REM -2.4%) hitting new 52-week lows. Most of the stocks were already on the defensive over the past few sessions following near-universally disappointing Q3 results.
- Annaly (NLY -3.3%), American Capital (AGNC -2.9%), (MTGE -2.5%), Armour (ARR -3.7%), Invesco (IVR -3%), CYS Investments (CYS -5.3%), Hatteras (HTS -3%).
- Other related ETFs: MORT, MORL.
- Earlier: Big beat on jobs number sends Treasury prices south.
Oct. 29, 2013, 9:20 AM
- The first post-earnings downgrade for American Capital Agency (AGNC) comes from BAML, which removes its Buy rating. The quick take from the company's results (reported last night) shows CIO Gary Kain lightening up the portfolio and shortening duration just as the bond market was set to reverse course and move sharply higher. Today's 11 ET conference call should prove a worthy listen. AGNC -4.7% premarket.
- Armour Residential results show pretty much the same thing, with the book dropping to $16.7B from $22.6B a quarter earlier. ARR -4.1%.
- Other agency players premarket: Annaly (NLY) -1.9%, CYS Investments (CYS) -0.8%.
- Kain's non-agency vehicle: American Capital Mortgage (MTGE) -4.3%.
- ETFs: REM -0.6%. Also: MORT, MORL.
Oct. 28, 2013, 4:38 PM
- Core income - includes unrealized gains - of $0.11 per share compares to $0.18 in Q2. Q2 quarterly dividend was $0.21 per share.
- Book value per share of $5.26 off 3.1% from $5.43 at the end of Q2. Today's close of $4.38 puts the stock at a 16.7% discount.
- Company sold $6B of MBS during quarter and realized losses of $301M. Portfolio size of $16.7B at end of quarter compares to $22.6B at end of Q2. Leverage of 6.93x.
- Net interest margin of 1.24% is off 14 basis points from Q2.
- ARR -1.8% AH.
- Q3 results, press release.
Oct. 28, 2013, 4:36 PM
Sep. 24, 2013, 2:45 PM
- The mREIT (REM -0.5%) environment has turned favorable, says Maxim's Michael Diana, but non-agency players are his favorites due to less leverage and exposure to higher home prices. His favorite picks:
- Ellington Financial (EFC +1.2%) - a non-REIT which gives it "the ability to hedge and trade on an unrestricted basis [and profit from] volatility." His target price is $28 (Ellington Residential EARN is the REIT version).
- Two Harbors (TWO -0.3%) - “due to substantial non-Agency and hedging expertise, as well as diversification.” The price target is $11.50.
- American Capital Mortgage (MTGE +1.2%) - price target $25.
- Eleven mREITs have cut their dividends this quarter, but pricing below book value still leaves yields high - 13.9% average for agency REITs, and 13.1% for hybrids.
- Other buy-rated mREITs at Maxim: AMTG, DX, AGNC. Hold-rated: MITT, ARR, HTS, JMI.
- Related ETFs: MORT, MORL.
Sep. 19, 2013, 9:13 AM
Sep. 19, 2013, 7:30 AM
Sep. 18, 2013, 5:42 PM
Sep. 18, 2013, 2:29 PM
- Most stocks are partying in wake of the Fed not commencing its QE taper today, but one sector of note is the beaten down mortgage REIT (REM +2.8%) group.
- Annaly (NLY +3.2%), American Capital (AGNC +3.5%), (MTGE +2.4%), Armour (ARR +3.4%), Two Harbors (TWO +3.4%), CYS Investments (CYS +3.7%), Anworth (ANH +2.8%), Western Asset (WMC +2.2%), Javelin (JMI +2%), AG Mortgage (MITT +2.1%), Arlington Asset (AI +1.6%).
- Yesterday, KBW called out CYS Investments as one of the more aggressive plays for those believing rates might head lower.
- ETFs of note: MORT, MORL.
Sep. 17, 2013, 12:53 PM
- MLV Capital initiates coverage on some names in the mREIT sector, starting Dynex (DX +1.9%), Armour Residential (ARR +0.6%), and Hatteras (HTS +1%) all with Buys.
- Dynex: The stock is still in the "penalty box" after the company reported a surprisingly high 15% decline in Q2 book value. Focused on rising long-term rates, investors are ignoring mitigating factors like slower prepayment speeds. Earlier: Dynex cuts its dividend in Q3.
- Armour: The stock trades at a 26% discount to book and yields nearly 21%. Even a 30% cut in the dividend only brings the yield down to 15%. The discount to book and massive yield seem to have priced in the company missing a margin call or two.
- Hatteras: "The company is being punished for doing all the right things," says MLV, though in the next sentence the team reminds book value plummeted 21% in Q2. Like with Dynex, the market is too focused on rates, and not slowing prepayment speeds.
Sep. 16, 2013, 1:32 PM
- "The stock prices do not fully reflect the risks to the agency mortgage REIT model," writes Sandler O'Neill in its downgrade of American Capital (AGNC -1.2%) and Armour Residential (ARR +0.4%). The risks:
- Price volatility in MBS, the overhang of what the Fed might do with $1.3T of MBS on its balance sheet, other MBS owners could become sellers - namely mutual funds and other mREITs, retail skittishness could widen discounts to book value even further, and the transition to a new Fed chairman.
- While not cutting earnings estimates, Sandler does cut AGNC's price target to $21 from $25, and ARR's to $3.50 from $4.50.
- The average book value/share of agency mREITs fell 4.5% in Q1, 14.7% in Q2, and "we don't think all the volatility is behind us." Book value could fall another 10-25% if some of the above risk factors play out. Additionally, Sandler expects the agency mREITs to trade at a 10-20% discount to book as long as the overhang of the Fed being a seller remains.
- Earlier: The downgrade and Compass One's differing opinion.
- Related ETFs: REM, MORT, MORL.
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.
Other News & PR