ARMOUR Residential REIT Insiders Sold US$512k Of Shares Suggesting Hesitancy

A number of ARMOUR Residential REIT, Inc. (NYSE:ARR) insiders sold their shares in the last year, which may have raised concerns among investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See 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 sale was by the Independent Director, Stewart Paperin, for US$467k worth of shares, at about US$18.78 per share. That means that even when the share price was below the current price of US$19.21, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 95% of Stewart Paperin's stake.

Over the last year, we can see that insiders have bought 13.50k shares worth US$265k. But insiders sold 27.35k shares worth US$512k. Over the last year we saw more insider selling of ARMOUR Residential REIT shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

ARMOUR Residential REIT Insiders Are Selling The Stock

The last quarter saw substantial insider selling of ARMOUR Residential REIT shares. In total, insiders sold US$512k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.4% of ARMOUR Residential REIT shares, worth about US$5.3m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At ARMOUR Residential REIT Tell Us?

Insiders sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. When you combine this with the relatively low insider ownership, we are very cautious about the stock. So we'd only buy after very careful consideration. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For instance, we've identified 3 warning signs for ARMOUR Residential REIT (1 makes us a bit uncomfortable) you should be aware of.

Of course ARMOUR Residential REIT may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.