ARMOUR Residential REIT Inc. (NYSE:ARR) suffering from the typical market overreaction, CYS Investment Inc (NYSE:CYS)
ARMOUR Residential REIT Inc. (NYSE:ARR) has recently in the earlier June has announced their Q3 2013 monthly cash dividends rate for the Company’s Common Stock of $0.07 per share which is same as its Q2 2013 rate.
ARR also announced that the undistributed REIT taxable income will be $15 million until the end of June this year. This indicates that there is rarely any chance of cutting down the dividend rates in the near future. The reports from the ARR may attract the investors and can fetch buyers for the stock.
The problem with the company is that as the mortgage rate increases the company posts a loss in its book value. ARR’s book value as on March 31st, 2013 was $6.69 which had declined from $7.29 per common share as on 31st December 2013. We can clearly say that the company lost $060 in its book value with the increase of 0.21% in the average mortgage rate from 3.34% in December 2012 to 3.55% in March 2013 respectively. The stock of the company has plunged by 34.62% since the beginning of the year.
It seems that the company is suffering from the typical market overreaction. There are only few investors who understand the mortgage REIT stocks and such book loses leads the investors to go short on the stock.
This can prove to be an advantage for the company, where some investors can likely buy the stock at cheaper rates to gain in the future trade sessions.
CYS Investment Inc (NYSE:CYS) has its investments in hybrid and non-hybrid adjustable rate mortgage loans and collateralized agency residential mortgage backed securities in 17 markets across 13 states in the US. The company’s earning is expected to boost further in the coming years with the the company’s externalized management structure. The company has recently acquired CreXus Investment which can prove beneficial to the company and can gain high return from the commercial mortgage based securities sector.