Is ARMOUR Residential REIT, Inc. (ARR) A Good Stock To Buy?

Because ARMOUR Residential REIT, Inc. (NYSE:ARR) has witnessed falling interest from the smart money, it’s safe to say that there was a specific group of hedgies that slashed their entire stakes last quarter. Interestingly, Stephen Feinberg’s Cerberus Capital Management cut the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising about $33.9 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund said goodbye to about $0.2 million worth of ARR shares. These moves are interesting, as total hedge fund interest fell by 6 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ARMOUR Residential REIT, Inc. (NYSE:ARR) but similarly valued. These stocks are Griffon Corporation (NYSE:GFF), Invesco Dynamic Credit Opportunities Fd (NYSE:VTA), NCI Building Systems, Inc. (NYSE:NCS), and Net 1 UEPS Technologies Inc (NASDAQ:UEPS). This group of stocks’ market valuations are similar to ARR’s market valuation.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was just $39 million in ARR’s case. NCI Building Systems, Inc. (NYSE:NCS) is the most popular stock in this table, while Invesco Dynamic Credit Opportunities Fd (NYSE:VTA) is the least popular one with only 6 bullish hedge fund positions. ARMOUR Residential REIT, Inc. (NYSE:ARR) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NCS might be a better candidate to consider a long position.