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ARMOUR Residential REIT, Inc. Message Board

  • johnsonjoel1 johnsonjoel1 Apr 8, 2014 6:33 AM Flag

    Approval Scenario

    Does anyone have an intelligent guess as to what will happen if (and more like "when" in my opinion) the new incentive program of 15million shares is approved? My own wild guess is that if it is approved, we will have quite a few red days in a row, dropping 15-20 cents, but that if it is not approved we will remain steady where we are. I don't see how it will not be approved, and I am figuring it will be approved, and therefore I am wondering about estimates on the negative impact on the share price. Anyone? TIA.

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    • povertysucks Apr 9, 2014 4:56 PM Flag

      No guessing is needed.

      This is nothing new for all public companies.
      Occassionally the retail stockholders vote in sufficient numbers to temporarily block the proposal.
      Temporarily because it will continue to be a future proxy propsal until it passes.

      The PPS is never affected by any incentive proposal being ratified.
      The reality upon the ratification are the following:
      A) The BOD and mgmt create sometimes absurd reasons why one or more of them can receive stox options.
      B) When stock options are granted and converted into C/S, this is an immediate dilution of the stockholders' equity ownership %.
      B1) This is similar to a secondary.
      C) Depending on the terms of the stock option, the option can immediately be converted into stock or there is a waiting period, Fortune 500 do this, for certain company goals to be met, or there can be a minimum time, 6, 12, 24 months, before the recipient can convert from an option to a stock.
      D) The recipient upon conversion can usually immediately SELL.
      E) This is how management becomes the dominant owners of smaller companies, and enormously wealthy.

      I forgot to include in a post 2 weeks ago about the larger funds, institutions, etc who always vote whatever the proxy proposals are, management and the BOD. They already possess a material quantity of C/S and they will always vote their substantial quantity to ratify whatever proposal.

      Usually, an upper mgmt stockholder will include a portion of his immense C/S quantity for sale to be included in a secondary that the company is issuing to an investor. Or one or more insiders frequently sell in smaller quantities.

      GREED is their dominant motivation and it is all legal.

      The occupation that people going to college for is not doctor or lawyer, but upper management and the Board of Directors. Their income easily exceeds almost all other occupations.

    • nickspinner Apr 9, 2014 11:34 AM Flag

      There's no way it's going to pass. I voted a big fat NO NO NO and I can't see why ANY shareholder would vote to give these hoodlums who raided the company and destroyed the share price another frigging penny.

    • I voted NO but expect it to pass. I also don't think there will be any drop as it is already baked into the price and there is no surprise factor.

      Sentiment: Strong Buy

    • I think you are correct; the EC will pass and the shares will tank. I plan to buy on the dip, as the news of the EC passing sucks, but the MBS is looking good and they arer still buying back 50 million shares (or after the EC goes up by 13M, a net of 37m shares). I look forward to the Q1 results.

      • 2 Replies to hjorleif
      • I voted my 5000 shares NO.

      • Don't be so sure. I voted my shares against the Incentive Plan and I bet many other unhappy shareholders will do the same. While it is true that such proposals normally would pass, I think this time is different. I think these management proposals usually pass because large institutional shareholders vote with management. But because ARR shares fell below five dollars for such a long time, most institutional shareholders probably had to divest themselves of their shares. So that just leaves us, the small individual share holders, and I doubt the majority is in any mood to reward management right now. If there had been a proposal for liquidation I would have voted for that. At least that would bring in considerably more money than just selling shares.

22.24-0.07(-0.31%)Aug 31 4:02 PMEDT