Common shares in residential mortgage REITs are basically built for trading. They have high yields and complicated income statements. That combination leads to money flooding in and out of the sector while distorting price-to-book ratios between comparable REITs. We’ve witnessed a significant distortion in relative valuations since the middle of May. Initially, ARMOUR Residential REIT (ARR) was our pick for the cheapest residential mortgage REIT.
On 5/17/2019 we issued a buy alert for ARR:
The discount of 12% on ARR is gone, now running closer to 9%.
[[AGNC]] still has a premium,