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Ellington Residential Mortgage REIT is a Maryland real estate investment trust formed in August 2012 that specializes in acquiring, investing in and managing residential mortgage- and real estate-related assets. Our primary objective is to generate attractive current yields and risk-adjusted... More
Wednesday, Nov 1311:15 AMEllington Residential flies post-earnings
Wednesday, Nov 1311:15 AM| Comment!
- The near-indiscriminate selling in mortgage REITs (REM +0.6%) left at least one major bargain as Ellington Residential Mortgage (EARN +10.7%) soars after reporting Q3 core EPS of $0.61 and an increase in book value to $18.80 per share from $18.57 at the end of Q2. This left the stock - prior to today's move - at a whopping 23.7% discount to book.
- The dividend was just $0.50 per share against core earnings of $0.61 - is a special payout coming?
- Ellington Residential is managed by the same crack team which has expertly preserved book value at Ellington Financial (EFC +0.3%), only EFC is a partnership, EARN is a REIT.
- Net interest margin increased 14 bps to 1.77%. The CPR rose to 3.6% from 1.7%.
- Earnings call is just getting underway.
- Press release
- Relevant ETFs: MORT, MORL.
Tuesday, Oct 293:23 PMTwo sell-siders offer tepid defense of American Capital
Tuesday, Oct 293:23 PM| Comment!
- "A good quarter, all things considered," says Nomura's Bill Carcache, maintaining his Hold rating and $22 price target on American Capital Agency (AGNC -8.7%) after Q3 results. Carcache seems copacetic with CIO Kain's defensive stance - a view not shared by all, judging by the earnings call and the direction of the stock today.
- KBW, meanwhile, maintains its Buy rating, but cuts the price target to $25.50 from $27. The team sees Kain loosening up on his "fully hedged" stance and lifting earnings power "north of the $0.80 dividend."
- You take what you get when you buy an actively managed mREIT like AGNC, says Nomura. Some quarters are going to be terrific, and others - like Q3 - will have a ton of activity with little to show for it.
- AGNC continues to be a major drag on the sector (REM -3.7%). Other names: Two Harbors (TWO -2.6%), Hatteras (HTS -2.9%), Anworth (ANH -3.8%), Western Asset (WMC -2.6%), Ellington (EFC -1.9%), (EARN -3%), AG Mortgage Investment (MITT -5.1%), Apollo Residential (AMTG -4.9%).
Tuesday, Oct 112:49 PMEllington management sees gains from taper
Tuesday, Oct 112:49 PM| Comment!
- Presenting at the JMP Conference (slides) (webcast), Ellington management lays out the differences between its older partnership - Ellington Financial (EFC -0.1%) - and its recently IPOd mREIT Ellington Residential (EARN +0.9%).
- With 15% agency exposure and 85% non-agency, EFC is about credit risk; with 85% agency exposure and 15% non-agency, EARN is about prepayment risk.
- Turning to market commentary, management feels at this moment there's a good deal more upside than downside. Particularly interesting is their conviction (pages 10 and 11) in the value of pool payups. These were destroyed when rates moved higher over the summer, but have barely recovered even as mortgage prices have improved over the past month. Behind the bizarre price action is - what else - the distortions introduced by the Fed's QE. The taper could turn out to be very helpful. "Tremendous declines in prices set you up for very asymmetric risk/reward opportunities."
Tuesday, Sep 242:45 PMNon-agency REITS the way to go, says Maxim
Tuesday, Sep 242:45 PM| 16 Comments
- The mREIT (REM -0.5%) environment has turned favorable, says Maxim's Michael Diana, but non-agency players are his favorites due to less leverage and exposure to higher home prices. His favorite picks:
- Ellington Financial (EFC +1.2%) - a non-REIT which gives it "the ability to hedge and trade on an unrestricted basis [and profit from] volatility." His target price is $28 (Ellington Residential EARN is the REIT version).
- Two Harbors (TWO -0.3%) - “due to substantial non-Agency and hedging expertise, as well as diversification.” The price target is $11.50.
- American Capital Mortgage (MTGE +1.2%) - price target $25.
- Eleven mREITs have cut their dividends this quarter, but pricing below book value still leaves yields high - 13.9% average for agency REITs, and 13.1% for hybrids.
- Other buy-rated mREITs at Maxim: AMTG, DX, AGNC. Hold-rated: MITT, ARR, HTS, JMI.
- Related ETFs: MORT, MORL.
Wednesday, Sep 1812:50 AM
Tuesday, Sep 312:17 PMMortgage REITs hammered as rates jump
Tuesday, Sep 312:17 PM| 4 Comments
- Armour Residential (ARR -2.9%), CYS Investments (CYS -2.3%), and Hatteras Financial (HTS -2.5%) are leading the mREIT sector (REM -1.3%) lower as interest rates again move sharply higher.
- Other movers include Annaly (NLY -1.6%), Western Asset (WMC -1.5%), and Ellington (EARN -2.2%), (EFC -2.1%).
- Other ETFs: MORT, MORL.
- Still occasionally lumped in with mREITs, specialty mortgage servicers gain as the market now realizes the value of MSRs increases as rates move higher (fewer prepayments). Ocwen (OCN +4.1%), Nationstar (NSM +2.4%), Walter Investment (WAC +1.8%).
Thursday, Aug 291:02 PMGundlach turns bullish on mREITs; Apple's "dead money"
Thursday, Aug 291:02 PM| 35 Comments
- In a major about-face, Jeff Gundlach turns bullish on the mortgage REIT sector (REM +0.7%), telling CNBC he spots value as many are trading at 10% or more discounts to net asset value. He specifically mentions Annaly (NLY +1.3%) as being a buy. Reported book value as of June 30 is $13.03 vs. the current price of $11.50.
- Other popular names trading at big discounts (though not mentioned by Gundlach): AGNC, ARR, IVR, HTS, CYS, CMO, MTGE, DX, WMC, JMI, EARN, to name a few.
- Other mREIT ETFs: MORT, MORL.
- He's also a fan of closed-end income funds trading at wide discounts to NAV. None are mentioned, but PDI, PFN, and PFL come to mind. DoubleLine's own DBL is trading right about at NAV.
- Of Apple's (AAPL +0.6%) big run to $500? "All the easy money has been made ... It's kind of dead money."
Monday, Aug 193:09 PMRate worries again rout income favorites
Monday, Aug 193:09 PM| 85 Comments
- A solid selloff in mortgage REITs (REM -3.7%) turns into a rout as the 10-year Treasury yield takes out another 2-year high at 2.89%. Looking at the short end, September 2015 Eurodollar futures at 98.65 are pricing in more than 100 bps of rate hikes between now and then.
- American Capital (AGNC -5.8%), Armour (ARR -7.5%), Apollo (AMTG -4.9%), Ellington (EARN -4.8%), Anworth (ANH -5.5%), Western Asset (WMC -5.7%), Arlington Asset (AI -4.7%), Dynex (DX -5.1%), Newcastle (NCT -2.3%).
- Mentioned before as starting to look very cheap, Annaly (NLY -4.9%) losses deepen with the stock at $10.72 - its lowest price since 2001 (the dividend fell to $0.25 at the end of 2000 before rising to $0.68 by the start of 2002).
- Tumbling income funds include (KFN -2%), and (PTY -2.1%).
- Among equity REITs, Realty Income (O -1.8%), Medical Properties (MPW -2.4%), and Simon Property Group (SPG -1%) lead down, but HCP (HCP +0.6%) remains green.
Thursday, Aug 1511:12 AMIncome stocks hit hard by rising yields
Thursday, Aug 1511:12 AM| 13 Comments
- Anything paying income is again being particularly hard hit by the rise in Treasury yields (the 10-year now at a 2-year high of 2.8%).
- Selections in mREITs (REM -2.1%), (MORT -1.9%) include RAIT Financial Trust (RAS -4.1%) - whose IRT had an ill-timed IPO yesterday and Ellington Residential (EARN -4.8%) - the market not caring about reasonable Q2 performance, a hefty discount to book, and the launch of a repurchase program. Other mREITs: CYS Investments (CYS -3.6%), Apollo (AMTG -3%), Newcastle (NCT -5%), Invesco (IVR -2.7%), Arlington Asset (AI -1.2%). A leveraged ETF play: MORL.
- Hanging in there relatively well are the BDCs: Fifth Street (FSC -1.3%), Triangle (TCAP -1%), MCG (MCGC -1.2%), Hercules (HTGC -1.2%), Ares (ARCC -0.3%).
- BDC ETFs: BDCS, BDCL, BIZD.
- In emerging markets fixed income, a trader takes note of EDD, a closed-end fund now trading at more than a 15% discount to NAV.
- Emerging market bond ETFs: EMB, LEMB, PCY, EMLC, ELD, PFEM, EBND, VWOB.
Thursday, Aug 157:43 AMEllington Residential book value off 5.5% in Q2
Thursday, Aug 157:43 AM| Comment!
- June 30 book value of $18.57 compares to $19.65 on March 31. Much of the decline was due to a widening of spreads, but - going forward - this gives agency MBS a much "higher quality" net interest margin, says the company, as prepayment risk and policy risk are "substantially reduced." Management spent the quarter deploying the vast majority of its IPO proceeds into these better spreads.
- The board authorizes a $10M share repurchase program.
- Earnings call at 11 ET. Press release.
- EARN no trades premarket, but one could expect at least some of the stock's now 15.2% discount to book value to evaporate today.
- EARN is the REIT vehicle run by the managers of Ellington Financial (EFC).
Thursday, Aug 156:27 AM
Tuesday, Aug 1310:11 AMBig move for Ellington continues
Tuesday, Aug 1310:11 AM| 2 Comments
- Ellington Residential Mortgage (EARN +1.3%) follows through on yesterday's late-day surge, with earnings set to be released tomorrow morning.
- David Schawel speculates book value could come in north of $18 per share (after the big run, the stock is currently at $16.21).
- Pine River Capital (the managers of Two Harbors TWO, and investors in a number of other REITs) disclosed a 5.5% stake in EARN on Friday.
- EARN (a REIT) is managed by the same group who runs Ellington Financial (EFC, a partnership/hedge fund). EFC - which reported its Q2 last week - thus far has navigated its way through the MBS rout as well as anyone.
Tuesday, Jul 1611:02 AMTwo Harbors (TWO +0.1%) tops Credit Suisse's list of mREITs (REM) to own given the new rate environment - considerably more favorable now that the yield curve has steepened. Hybrids in general offer better risk/reward than agency-only names, says CS, which also likes Ellington Financial (EFC is a partnership, not a REIT, but EARN is a REIT and is run by the same team). The analysts also like the specialized business models at Newcastle (NCT), New Residential (NRZ), and PennyMac (PMT). |Tuesday, Jul 1611:02 AM| 1 Comment
Monday, Jul 83:35 PMMore on the Wunderlich downgrade of the mREITs (REM +1.2%), (MORT +1.3%): The "lack of liquidity reached crisis levels" on Friday, says the team. "Price discovery has become a very uncertain process and we believe there is a risk that some entity - be it a mREIT or a hedge fund - could fail to meet margin requirements ... while we hope to be wrong in this case, equity investors need to be mindful of the potential downside scenarios." |Monday, Jul 83:35 PM| 47 Comments
Friday, Jul 511:23 AMMore on the carnage in mREITs (REM -5.2%): The pain seems worst for agency REITs and those most exposed to fixed rates. Western Asset (WMC -9.8%), Ellington Residential (EARN -6.5%), AG Mortgage (MITT -7.5%), Apollo (AMTG -6.7%). Owners of ARMs like Hatteras (HTS -6.6%) and Capstead (CMO -6.4%) aren't spared either. Less torched are stocks like Dynex (DX -2.7%) and Ellington Financial (EFC -3.3%) - both with plenty of non-agency paper on their books and thought to be a well-hedged as they come (yes, we know EFC is a partnership, not an mREIT). |Friday, Jul 511:23 AM| 2 Comments
Wednesday, Jun 194:37 PM
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Darren McCammon:: They didn't sell off assets at the lowest prices of the quarter. Had only NLY, ARR, AGNC, etc. shown similiar restraint.
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Albert Alfonso:: High-yield anything is out of favor ATM. MLPs, mREITs, BDCs, etc