Insider sentiment remains bearish, and both of the short-term (one-week) sell/buy readings from Vickers are at their lowest levels since early October, observes Stephen Biggar, editor of Argus Research.
However, a number of insiders at ARMOUR Residential REIT (ARR) recently added to their holdings. On October 30, four senior executives — the president & Co-CEO; the CFO; the COO; and the VP of Finance & Controller—all made direct open-market purchases of ARR shares.
President & Co-CEO Jeffrey Zimmer purchased a total of 4,000 shares in two transactions (at prices ranging from $25.25-$25.75), increasing his holdings to 100,591 shares.
VP of Finance & Controller Gordon Harper purchased 500 shares at $25.385 per share, increasing his holdings to 3,624. CFO James Mountain purchased a total of 4,000 shares in three transactions, increasing his holdings to 19,062 shares.
And finally, COO Mark Gruber purchased 4,000 shares — increasing his holdings to 19,958 shares. This is the largest bout of purchasing at this company since December 2016, when shares were trading around $21.
ARMOUR invests primarily in fixed-rate residential, adjustable-rate and hybrid-adjustable-rate residential mortgage-backed securities issued or guaranteed by U.S. Government-sponsored enterprises (“GSEs”), or guaranteed by the Government National Mortgage Association.
As of September 30, 2017, the company’s Agency Securities portfolio consisted of Fannie Mae, Freddie Mac and Ginnie Mae mortgage securities, substantially all of which are fixed-rate securities, and was valued at $7.1 billion on a trade-date basis.
The book value at October 23, 2017, was estimated to be $26.48 per common share and the shares are currently trading around $24.05.
The company’s Credit Risk and Non-Agency Securities portfolio was valued at $1.0 billion and the company’s Interest-Only Securities portfolio was valued at $27.2 million.
During Q3 2017, the annualized yield on the company’s MBS portfolio was 3.06%, and the annualized cost of funds on average liabilities (including realized cost of hedges) was 1.42%, resulting in a net interest spread of 1.64% for Q3 2017. The company pays a monthly dividend of $0.19 per share for a current yield of 9.33%.
Stephen Biggar is editor of Argus Research.
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