Thomas Lott
Long/short equity, deep value, special situations, hedge fund manager

Ellington Financial: The Best Mortgage 'REIT' At A Healthy Discount To Book Value

Ellington Financial (NYSE:EFC), a partnership investing in non-Agency and Agency mortgages, is an investment in a hedge fund-like structure with one of the best mortgage teams in the business. At a price 11% below book value, Ellington trades cheaper than almost all of its peers, yet has generated far better Returns on Equity (ROEs) averaging 13% per year since December 31, 2007. Even better, EFC offers a current yield of 13% today.

Given what the Fed has recently announced in terms of purchasing mortgage backed securities and long dated treasuries, Ellington looks to be a solid pick for 2013 based on its historical track record and current focus on lower priced, non-Agency paper that will continue to directly...

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