Overview
State Street Corp increased its stake in Ellington Financial Inc. by 7.5% during the second quarter, according to its latest regulatory filing. The asset manager held 4.95 mn shares at June 30 after adding 347,567 shares, with the position valued at $68.04 mn at the end of the reporting period.
The institutional buying comes as Ellington Financial shares have moved lower since the filing period. EFC closed at $11.59 on Oct. 2, the latest trading session before Oct. 3, down 0.86% for the day. The stock traded between $11.52 and $11.92 during Friday’s session.
At the Oct. 2 close, Ellington Financial had a market capitalization of about $1.51 bn and a trailing P/E ratio of 6.83. Its 52-week range stood at $11.28 to $14.12, placing the shares close to the bottom of that range.
Institutional investors expand EFC positions
State Street wasn’t the only large institution increasing exposure during the second quarter. BlackRock reported 20.88 mn Ellington Financial shares valued at about $284.14 mn, while Bank of New York Mellon reported 818,015 shares worth approximately $11.13 mn. MarketBeat’s filing summary lists both as new second-quarter positions.
BlackRock was the largest reported institutional holder for the quarter, followed by several other large asset managers. State Street’s 4.95 mn-share position represented about 3.8% of Ellington Financial based on the filing data.
Institutional ownership estimates differ slightly by data provider because filings cover different reporting dates and methodologies. MarketBeat puts institutional ownership at 55.62%, while another current filing database estimates 53.22%.
Analysts keep Hold rating
Wall Street sentiment remains restrained. MarketBeat showed a consensus Hold rating as of Oct. 3, based on four analyst ratings, with an average 12-month price target of $14.50. All four analysts in its current consensus were at Hold or equivalent ratings.
UBS raised its target from $14 to $14.50 in August while keeping a Neutral rating. Zacks Research downgraded Ellington Financial from Strong Buy to Hold in July, and BTIG Research moved the stock from Buy to Neutral in June. Weiss Ratings also maintained a Hold rating.
A more recent research change came from Argus, which reduced Ellington Financial to Hold on Sept. 23. The downgrade arrived after the company’s second-quarter results but before the latest decline in EFC shares.
Ellington Financial beats Q2 earnings estimate
Ellington Financial reported adjusted distributable earnings of $0.60 per common share for the second quarter, compared with $0.55 in the first quarter. Net income attributable to common stockholders was $54.4 mn, or $0.43 per share, while book value reached $13.61 per common share at June 30.
The $0.60 adjusted result exceeded the $0.46 consensus estimate tracked by MarketBeat. MarketBeat also reported quarterly revenue of $134.11 mn against an estimate of $114.59 mn.
Ellington Financial’s next quarterly earnings release is currently estimated for Nov. 4. That report will give investors the first full update on third-quarter performance following the recent decline in the share price.
Dividend yield rises to 13.46%
Ellington Financial continues to pay a monthly common dividend of $0.13 per share. The latest declared payment is due Oct. 30 to shareholders of record as of Sept. 30, following another $0.13 payment made Sept. 30.
The monthly rate equals $1.56 per share on an annualized basis. At the Oct. 2 closing price of $11.59, the indicated dividend yield was about 13.46%, up from roughly 12.6% when the shares were trading around $12.36 in late September.
Ellington Financial invests in mortgage-related, consumer-related and other financial assets. Its holdings include residential and commercial mortgage loans and securities, reverse mortgage assets, consumer loans, asset-backed securities and other investments.
