Is ARMOUR Residential REIT, Inc. (ARR) Going to Burn These Hedge Funds?

Is ARMOUR Residential REIT, Inc. (NYSE:ARR) a buy, sell, or hold? Investors who are in the know are turning less bullish. The number of bullish hedge fund positions decreased by 3 recently.

In the 21st century investor’s toolkit, there are a multitude of indicators investors can use to watch stocks. Some of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform their index-focused peers by a very impressive amount (see just how much).

Equally as key, positive insider trading activity is a second way to break down the investments you’re interested in. There are many stimuli for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).

Keeping this in mind, let’s take a glance at the key action surrounding ARMOUR Residential REIT, Inc. (NYSE:ARR).

What does the smart money think about ARMOUR Residential REIT, Inc. (NYSE:ARR)?

Heading into Q2, a total of 11 of the hedge funds we track were long in this stock, a change of -21% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.

Of the funds we track, PEAK6 Capital Management, managed by Matthew Hulsizer, holds the biggest position in ARMOUR Residential REIT, Inc. (NYSE:ARR). PEAK6 Capital Management has a $2.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $1.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and J. Alan Reid, Jr.’s Forward Management.

Due to the fact that ARMOUR Residential REIT, Inc. (NYSE:ARR) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of funds who were dropping their positions entirely at the end of the first quarter. It’s worth mentioning that James Melcher’s Balestra sold off the biggest position of the “upper crust” of funds we watch, worth an estimated $31.2 million in stock., and Brian Jackelow of SAB Capital Management was right behind this move, as the fund sold off about $21.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds at the end of the first quarter.

What do corporate executives and insiders think about ARMOUR Residential REIT, Inc. (NYSE:ARR)?

Insider purchases made by high-level executives is best served when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, ARMOUR Residential REIT, Inc. (NYSE:ARR) has experienced 3 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to ARMOUR Residential REIT, Inc. (NYSE:ARR). These stocks are Colonial Properties Trust Inc (NYSE:CLP), Mid America Apartment Communities Inc (NYSE:MAA), CYS Investments Inc (NYSE:CYS), Hatteras Financial Corp. (NYSE:HTS), and Post Properties Inc (NYSE:PPS). All of these stocks are in the reit – residential industry and their market caps are similar to ARR’s market cap.