We initiate coverage of Armour Residential REIT, Inc. (ARR) with a Neutral rating and a $20 fair value estimate. We see several positive macro factors that could potentially improve the valuation of shares. Lower fixed income volatility, a constructive mortgage spread environment, and a steepening yield curve are all supportive of ARR’s business. Additionally, at 0.91x estimated BVPS and a 14.9% current dividend yield, shares are historically inexpensive. However, we expect ARR shares will lag peers as layered risks mitigate the potential for shares to re-rate in a more constructive macro environment. Recent management turnover, material weaknesses over internal controls & procedures, the lack of capital activity, and interconnectedness of if its broker-dealer are all thorns in the ARR story.