I would be leary of buying ARR right now in the A/H's. The second PR about buying back shares is, IMO, nothing more than a smoke screen for the real news. The real news is the divy cut.
spd, what kind of people do you consider your peers? I am just wondering why you think people can't see one announcement is negative and the other is positive.
ARR likes to price at a 15% yield. At .08*12 = .96
.96/.15 = $6.15ish
5% buyback = price boost of about 5% 6.15 * 1.05 = $6.45. Price might reach 6.45.
Oh, wait, never mind, I can't read past .08 Q1 dividend. It is too smokey.
re:"spd, what kind of people do you consider your peers?"
The kind of people who know when someone is trying to pull the wool over their heads. You'll see the kind I'm talking about tomorrow morning around 10AM when the real traders show up.
It comes down to this - most investors that I know (including myself) had figured on an 8 cent rate this quarter. Q3 spread has compressed a little into Q4, so it makes sense. The good news is it has not compressed further, and tends sideways.
ARR has done a great job at managing CPR.
You're right to say AH doesn't matter - it usually doesn't. But what you may misunderstand is buying back shares buys back THEIR OWN BOOK or portfolio, meaning someone is selling you an estimated present value of $7.77 for somewhere in the mid $6 range.
So you buy shares back, and sell that portion to the federal reserve for a profit. That profit can be used to prop up the dividend, or even buy more shares if the price continues to give you a discount to book value.
It's a form of deleveraging, and that is a function of a natural stock cycle.
What you also may have missed is most of the other players are doing the same thing - buying themselves back below book. ARR was about 2 months late to that party, and their stock shows a little more volatility because of it. Fine and dandy, but they are going to buy back shares.
Main point - when you hold $7.77 in book value per share, and can sell most of those assets to the Federal reserve at-will, you can irrationally conclude this is going down to $5 or whatever. These forums are mostly interesting from a debate standpoint, but the reality is people don't sell something worth nearly $8 for $5. You might give some discount, but not that much in a situation such as this.
"So you buy shares back, and sell that portion to the federal reserve for a profit. That profit can be used to prop up the dividend, or even buy more shares if the price continues to give you a discount to book value."
How does ARR sell shares to the federal reserve?
re:"No way 100mm. dol. buying back."
I don't believe it either. That PR was thrown out there simply to cover up the fact that they are cutting the divy yet again. Smoke screen. This is the second divy cut in less than 6 months. The Street knew this was coming last week.