Should You Take Comfort From Insider Transactions At ARMOUR Residential REIT, Inc. (NYSE:ARR)?
We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell ARMOUR Residential REIT, Inc. (NYSE:ARR), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
View our latest analysis for ARMOUR Residential REIT
The Last 12 Months Of Insider Transactions At ARMOUR Residential REIT
Over the last year, we can see that the biggest insider purchase was by Co-CEO, Co-Vice Chairman Scott Ulm for US$139k worth of shares, at about US$13.88 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$9.57). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Happily, we note that in the last year insiders paid US$428k for 39.50k shares. But insiders sold 750.00 shares worth US$12k. In the last twelve months there was more buying than selling by ARMOUR Residential REIT insiders. Their average price was about US$10.83. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
ARMOUR Residential REIT is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
ARMOUR Residential REIT Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at ARMOUR Residential REIT. insider Mark Gruber shelled out US$26k for shares in that time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
Insider Ownership of ARMOUR Residential REIT
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.5% of ARMOUR Residential REIT shares, worth about US$9.4m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Does This Data Suggest About ARMOUR Residential REIT Insiders?
We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if ARMOUR Residential REIT insiders bought more shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for ARMOUR Residential REIT (of which 3 are a bit concerning!) you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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