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ARMOUR Residential REIT is a real estate investment trust that does not own apartments or offices. It mainly buys agency residential mortgage-backed securities, which are bonds backed by pools of home loans and guaranteed by government-related housing agencies. In simple terms, it owns pieces of the U.S. mortgage market and uses those holdings to generate interest income.
The company makes money from the spread between what its mortgage securities earn and what it pays to finance those purchases. Its main business relationships are with mortgage security dealers, repo lenders, and other financing counterparties, not retail consumers. The income it earns is then passed through to shareholders in the form expected from a REIT.
What makes ARMOUR different is that it sits in the middle of the housing finance system rather than the housing market itself. It does not make home loans or service mortgages; instead, it provides investors with a way to gain exposure to mortgage bonds. That makes its business highly tied to interest rates, funding costs, and the performance of the agency mortgage market.
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Stock intrinsic value is the real worth of a company's stock, based on its financial health and performance.
Instead of looking at the stock's current market price, which can change due to people's opinions and emotions, intrinsic value helps us understand if a stock is truly a good deal or not.
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