Oct 22, 2026 earnings call — Q3 results and Agency MBS strategy
ARMOUR reported a GAAP net loss of $327 million in Q3 2026.
Revenue $0.1B (est $0.1B) · EPS $0.71 (est $0.71)
Key quotes
"Agency MBS faced a challenging late third quarter as macroeconomic pressures overwhelmed the favorable supply-demand dynamics that had supported the market earlier in the year."
"The available liquidity stood at an ample $1.02 billion at the end of Q3 and is expected to remain near that level through the end of October."
"ARMOUR paid monthly common dividend of $0.24 per common share per month for a total of $0.72 for the quarter."
Analyst Q&A 7
Why sell bonds instead of borrowing more
Q (Douglas Harter · BTIG): Doug asked why the company sold assets in September instead of taking on more debt. He also asked how management decides when to issue or buy back shares.
A: They sold mainly 5-year and 10-year DUS pools and some deeper discount coupons because those assets outperformed. The sale helped manage liquidity, leverage and lock in profits, and they plan to reinvest into coupons that widened most in September. They issue under the ATM when price is attractive and buy back stock when volatility makes repurchases attractive, while remaining mindful of liquidity.
"We sold primarily 5-year and 10-year DUS pools as well as some of the deeper discount coupon with maybe 50 to 60 WALA seasoning." — Sergey Losyev
Dividend level and current high yield
Q (Trevor Cranston · JMP): Trevor asked why the dividend yield is unusually high now and how the company thinks about the right dividend level given market returns.
A: They said stock price and book value volatility pushed the yield higher. Management believes earnings available for distributions will be in the range of the dividend for the coming quarter and noted they already announced November, implying they are comfortable with the current level.
"Given all of that, also the fact that we've already announced November should give you a sense of how we're feeling." — Sergey Losyev
Comfort adding leverage now
Q (UBS): Marissa asked how willing they are to add leverage given wider mortgage spreads and good repo, and what their target range is. She also asked how housing policy risk affects portfolio and prepayments.
A: They reported leverage was 7.9 turns as of October 19 (excluding treasury loans and adjusted for expected paydowns) and said they are comfortable with that level. They expect possible near-term volatility around the elections but are constructive in the medium term and have dry powder to add leverage when macro clarity improves. On housing policy, they welcome stability and affordability efforts but said any policy would need a big move to change prepayment optionality today.
"So our leverage as of Monday, October 19 was 7.9 turns." — Desmond Macauley
Duration move and hedge choices
Q (JonesTrading): Val asked whether the duration rising to 0.38 was deliberate or an unhedged extension, and whether they prefer swaps or futures now that the Fed is hiking.
A: They manage duration to a flat target within a band and allow some movement to avoid frequent rehedging, targeting slight positive duration in the front end. For hedging instruments, they prefer roughly an 80% swaps and 20% futures mix, favoring swaps at the long and short ends for different reasons.
"We still like on a nominal basis, about an 80-20 mix of swaps versus futures." — Desmond Macauley
Share buybacks versus adding leverage
Q (Timothy D'Agostino · B. Riley): Tim asked how the company balances share repurchases with adding leverage, and whether there is tension between buying stock and deploying leverage while the stock trades below book value.
A: They said leverage is largely an output and the main driver is managing liquidity. Repurchasing stock has costs and affects liquidity, so buybacks require a compelling reason and must fit within their liquidity plan. They said they tend to be conservative but must be willing to operate on both sides of the market.
"So you have to see something pretty compelling, and it also has to fit in the context of how you are managing your overall liquidity levels, and that weighs on what sort of quantum you're willing to do." — Desmond Macauley
Repo depth and GSE buying signs
Q (Jason Stewart · Compass Point): Jason asked how deep repo markets look going into year-end and how they manage funding. He also asked if there are signs GSEs will buy and tighten spreads.
A: They said quarter-end repo was very liquid and they continue to see tight repo to SOFR spreads early in Q4, though they expect some balance sheet tightening toward year-end. They noted the New York Fed could reopen RRPs or resume T-bill purchases if needed and that they finance about half their portfolio through their BUCKLER affiliate, giving access to overnight and term funding. On GSEs, pool data and smaller specified pool auction sizes in September point to engagement and they expect some buying to show up.
"So we continue to see tight repo to SOFR spreads here early in Q4." — Desmond Macauley
Stress tests and Fed rate view
Q (David Storms · Stonegate Capital): Dave asked if they changed liquidity stress tests after September volatility and asked to clarify where they expect Fed rates to go versus market pricing.
A: They said their pre-September stress tests were already robust, using COVID-like extreme scenarios, and they did not change them. On rates, they said markets price about 3 to 4 cuts by end of 2027 while their base case is 2 cuts by end of 2027, noting their front-end slight positive duration reflects that market pricing is more aggressive than their view.
"We use COVID-like levels in terms of what took place at that time." — Desmond Macauley