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1. Company Snapshot

1.a. Company Description

Ellington Financial Inc., through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States.The company acquires and manages residential mortgage-backed securities (RMBS) backed by prime jumbo, Alt-A, manufactured housing, and subprime residential mortgage loans; RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or the U.S. government-sponsored entity; residential mortgage loans; commercial mortgage-backed securities; and commercial mortgage loans and other commercial real estate debt.It also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; corporate debt and equity securities; corporate loans; and other strategic investments.


In addition, the company offers consumer loans and asset-backed securities backed by consumer and commercial assets.Ellington Financial LLC was incorporated in 2007 and is based in Old Greenwich, Connecticut.

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1.b. Last Insights on EFC

Ellington Financial Inc. recent performance was driven by strong Q4 2024 earnings, with net income attributable to common stockholders of $22.4 million, or $0.25 per common share. The company's investment portfolio generated $25.3 million, or $0.28 per common share, and its credit strategy contributed $29.3 million, or $0.32 per common share. Additionally, the company declared a monthly dividend of $0.13 per share of common stock, payable on March 25, 2025 to stockholders of record as of February 28, 2025. This positive dividend activity is a testament to the company's commitment to returning value to shareholders.

1.c. Company Highlights

2. Ellington Financial's Q3 2025 Earnings: Strong Performance and Strategic Growth

Ellington Financial delivered a robust financial performance in Q3 2025, with GAAP net income of $0.29 per share and adjustable distributable earnings (ADE) of $0.53 per share, a quarterly high since 2022. The significant increase in ADE is driven by higher net interest income from loan portfolios and substantial proprietary reverse mortgage securitization gains at Longbridge. The company's ADE of $0.53 per share exceeded analyst estimates of $0.44 per share, indicating a strong operational performance.

Publication Date: Nov -30

📋 Highlights
  • Strong ADE Growth: ADE reached $0.53/share (Q3 2025), a 2022 high, driven by $400M securitization gains and 12% portfolio growth.
  • Balance Sheet Strengthening: Issued $400M 5-yr notes at 7.3% (363 bps over 5-yr treasury), adding $1.2B in cash/unencumbered assets and 2/3 equity coverage.
  • Exceptional Credit Performance: 47 bps cumulative losses over 10 years in commercial loans and 13 bps in residential loans, with 9.2% annualized economic return.
  • Securitization Expansion: Completed 7 securitizations (Q3 2025) and 20 YTD, tripling last year’s pace, boosting non-QM and reverse mortgage portfolios.
  • Non-QM Market Opportunities: Captured 10–15% of unserved homebuyers with higher-FICO discipline, tighter spreads, and $400M ATM issuance to fund growth.

Financial Highlights

The company's total portfolio holdings grew 12% during the quarter, led by non-QM, proprietary reverse mortgage, and commercial mortgage bridge loans. The increase in portfolio holdings, coupled with a strengthened balance sheet, positions Ellington Financial for continued growth. The company completed 7 securitizations during the quarter, a record, and priced 20 securitizations year-to-date, more than triple last year's pace.

Balance Sheet Strengthening

Ellington Financial's balance sheet was further strengthened by increasing long-term non-mark-to-market financings, including $400 million of 5-year senior unsecured notes at 7.3%, a 363 basis point spread over the 5-year treasury. The notes issuance is expected to be accretive due to adding assets at yields above the cost of debt. As of September 30, combined cash and unencumbered assets were about $1.2 billion, or about 2/3 of total equity, indicating a healthy liquidity position.

Valuation and Dividend Yield

With a Price-to-Book Ratio (P/B) of 0.79, Ellington Financial's stock appears to be undervalued relative to its book value. The Dividend Yield stands at 11.39%, making it an attractive income-generating investment. The company's strong ADE generation power and ability to cover its dividend suggest that the dividend is sustainable.

Credit Performance and Business Outlook

The company's credit performance remained strong, with exceptionally low realized credit losses across residential and commercial loan strategies. Ellington Financial is optimistic about the potential for technology to automate and improve loan underwriting and plans to launch a securitization of agency-eligible mortgages. The current regulatory environment could provide a unique opportunity for the company to capitalize on its expertise in non-QM and reverse mortgage markets.

Growth Prospects

3. NewsRoom

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Ensign Peak Advisors Inc Reduces Stock Position in Ellington Financial Inc. $EFC

Dec -01

Source: defenseworld.net

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Ellington Financial Announces Estimated Book Value Per Common Share as of October 31, 2025

Nov -26

Source: businesswire.com

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Bank of New York Mellon Corp Increases Holdings in Ellington Financial Inc. $EFC

Nov -21

Source: defenseworld.net

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Ellington Financial: Dividend Remains Well Covered, With Room For An Increase

Nov -20

Source: seekingalpha.com

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Ellington Financial (EFC) Upgraded to Buy: What Does It Mean for the Stock?

Nov -10

Source: zacks.com

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Ellington Financial Inc. (EFC) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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EFC Gases & Advanced Materials Announces Agreement to Join Element Solutions Inc.

Nov -06

Source: prnewswire.com

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Ellington Financial Inc. Reports Third Quarter 2025 Results

Nov -05

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.49%)

6. Segments

Investment Portfolio

Expected Growth: 7.5%

Ellington Financial Inc.'s diversified portfolio of mortgage-backed securities, loans, and other financial assets provides a stable source of income, driven by increasing demand for mortgage financing and growing housing market, as well as the company's expertise in actively managing its portfolio.

Longbridge

Expected Growth: 4.5%

The mortgage-backed securities trust is expected to grow driven by increasing demand for housing, low interest rates, and government-backed guarantees, resulting in a stable income stream for investors.

Corporate/Other

Expected Growth: 4.5%

The Corporate/Other segment of Ellington Financial Inc. is expected to grow driven by the company's diversified investment portfolio, strategic asset allocation, and effective risk management practices, which will contribute to its residual category of assets, liabilities, and equity.

7. Detailed Products

Agency RMBS

Ellington Financial invests in and manages a portfolio of agency residential mortgage-backed securities (RMBS), which are backed by the full faith and credit of the US government.

Non-Agency RMBS

Ellington Financial invests in and manages a portfolio of non-agency residential mortgage-backed securities (RMBS), which are not backed by the US government.

Commercial Mortgage-Backed Securities (CMBS)

Ellington Financial invests in and manages a portfolio of commercial mortgage-backed securities (CMBS), which are backed by commercial properties.

Asset-Backed Securities (ABS)

Ellington Financial invests in and manages a portfolio of asset-backed securities (ABS), which are backed by a pool of assets such as auto loans, credit card receivables, and student loans.

Corporate Debt

Ellington Financial invests in and manages a portfolio of corporate debt securities, including high-yield bonds and leveraged loans.

Equities

Ellington Financial invests in and manages a portfolio of equities, including common stocks and preferred stocks.

Mortgage Servicing Rights (MSR)

Ellington Financial invests in and manages a portfolio of mortgage servicing rights (MSR), which represent the right to service mortgage loans.

8. Ellington Financial Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Ellington Financial Inc. operates in a niche market with limited substitutes, reducing the threat of substitutes.

Bargaining Power Of Customers

Ellington Financial Inc. has a diverse customer base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Ellington Financial Inc. relies on a few key suppliers, giving them some bargaining power, but the company's size and reputation mitigate this threat.

Threat Of New Entrants

The financial services industry is highly competitive, and new entrants can easily disrupt the market, posing a significant threat to Ellington Financial Inc.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players, leading to intense rivalry and competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 89.78%
Debt Cost 3.95%
Equity Weight 10.22%
Equity Cost 13.49%
WACC 4.92%
Leverage 878.93%

11. Quality Control: Ellington Financial Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Franklin BSP Realty Trust

A-Score: 7.2/10

Value: 7.7

Growth: 6.8

Quality: 6.1

Yield: 10.0

Momentum: 3.0

Volatility: 9.3

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Manhattan Bridge Capital

A-Score: 7.1/10

Value: 4.5

Growth: 5.0

Quality: 8.2

Yield: 10.0

Momentum: 6.0

Volatility: 9.0

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Ellington Financial

A-Score: 6.8/10

Value: 5.7

Growth: 3.0

Quality: 5.9

Yield: 10.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Ladder Capital

A-Score: 6.6/10

Value: 6.1

Growth: 4.6

Quality: 5.5

Yield: 10.0

Momentum: 4.0

Volatility: 9.7

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Ready Capital

A-Score: 5.2/10

Value: 7.4

Growth: 5.4

Quality: 2.9

Yield: 10.0

Momentum: 0.5

Volatility: 5.0

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Sachem Capital

A-Score: 4.0/10

Value: 7.0

Growth: 1.0

Quality: 3.0

Yield: 10.0

Momentum: 0.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.72$

Current Price

13.72$

Potential

-0.00%

Expected Cash-Flows