Armour borrows short-term to own guaranteed mortgage bonds and keeps the interest gap. In the first nine months of 2026 that gap widened, but a third-quarter fall in bond prices sharply cut the value behind each share.
Every month, millions of American households pay their mortgage. Some of that money may end up with Armour Residential, a real estate investment trust. Armour owns bonds paid from pools of home loans, almost all guaranteed by the housing agencies Fannie Mae, Freddie Mac or Ginnie Mae. It buys them mostly with borrowed money and keeps the difference between the interest they pay and the interest it owes.
To fund the bonds, Armour pledges them to lenders in short-term loans called repurchase agreements, or repo, renewed every few weeks. Swaps, contracts that fix part of the borrowing cost, shield some of the gap. What remains is that gap, plus or minus results on those contracts, minus costs. A key cost is the fee for its outside manager, Armour Capital Management, set on money raised from shareholders rather than on results. As a real estate investment trust, Armour generally pays no federal income tax because it distributes its taxable income, and it rewards owners with a monthly dividend. The bet is narrow: at the end of 2025, its three largest groups of long-dated fixed-rate bonds made up about 30%, 20% and 18% of the $20 billion portfolio.
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