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Ellington Financial (EFC) estimates June 30 book value per share of $24.50, down just 1% from...

Ellington Financial (EFC) estimates June 30 book value per share of $24.50, down just 1% from its May 31 estimated book value. At the regular session close of $22.20, the shares are trading at a 9.4% discount to book. Two months ago - just before bond prices started heading south - the stock was at a 6.3% premium to book (the company launched a secondary the next day). The shares are ahead by 0.7% AH.
Comments (5)
  • Tack
    , contributor
    Comments (13401) | Send Message
     
    An indication of how much of a over-reaction the panicky moves in MREITs have been since the rate increases, which have been overdone in themselves.
    8 Jul 2013, 10:01 PM Reply Like
  • jzkl1234
    , contributor
    Comments (79) | Send Message
     
    i think it's more an indication on the investment objectives of EFC vs. pure agency mbs reits. EFC can do a lot more than most mreits, including credit hedge. Also EFC has made no money in agency mbs in the recent past and is likely to hold either a small net position or be much more hedged than the typical mreit. Furthermore, EFC is managed by real seasoned pros who have been in the mbs markets longer than most if not all other mreit management teams.

     

    The mreit declines may in fact be overdone but their book values will be down much much more than EFC's, count on it!
    8 Jul 2013, 10:10 PM Reply Like
  • Dividend Living
    , contributor
    Comments (266) | Send Message
     
    Still, EFC had half of their hedge in interest rate swaps and treasuries for their agency MBS holdings (the same type of hedge as other mREITs) and the other half was in TBA's. I see it as a good sign that the hedges will offset BV losses to a certain extent in the other mREITs. EFC is the master hedger though and I don't expect the rest of the mREITs to do this well.
    9 Jul 2013, 02:16 AM Reply Like
  • Mktneutralhedger
    , contributor
    Comments (1081) | Send Message
     
    Panic selling in mREITS opened up lots of opportunities. Fundamentals are worse but not the end of the world implied by current prices.
    More, preferreds are a real bargain. Companies can cut their dividends but that or a lower BV do not justify the drop suffered by preferreds.
    CYS-PA is a crime at $23.
    9 Jul 2013, 07:02 AM Reply Like
  • Micro_Cap_Maven
    , contributor
    Comments (98) | Send Message
     
    Thank you all for insightful comments. You're certainly in sync with what I've been saying for awhile -- namely, that EFC is NOT a mREIT, not run like one and not structured like one. The market has priced EFC as though it is MORE risky than an mREIT when in fact, the opposite is true.
    9 Jul 2013, 12:41 PM Reply Like
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