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ARMOUR Residential REIT, Inc. Message Board

  • tomg86402 tomg86402 Feb 15, 2013 2:46 PM Flag

    Mr Smith has 25

    kids in the classroom, each Friday every child brings a candy bar to class. All 25 candy bars go into a sack and each child pulls one out as a treat. One Friday the class is joined by the 20 children from the class down the hall and since they did not bring any candy the class size has been diluted. 45 kids, only 25 candy bars. But if those children also bring candy you end up with 45 kids and 45 candy bars, thus no dilution.
    ARR sells new shares and is growing the size of the class but receives new money to invest for the increase in shares issued. No dilution. When will kids learn learn.

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    • Gee that is a great false analogy. Now explain why BVPS has dropped from 7.77 to 6.70-6.76 and the dividend is cut almost every quarter. Could it be that the new money can not be invested for the same returns as the old money, thus the old shares are diluted, and share price drops........

      • 1 Reply to slicktop4
      • Know the difference between return on an investment and dilution? If ARR never did an offering (SO) the return to an investor will change with market conditions. My point was the sell off with this SO is not justified because of dilution. I added 3k shares today because I realize that little or no dilution took place. I am also aware that price of stock and return on investment will be subject to market conditions and have little or nothing to do with the size of the stock float or future offerings. JMO

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