Ellington Residential reports Q4 adjusted distributable EPS 27c, consensus 23c

“During Q4, Ellington Residential generated net income of 75c per share and a non-annualized economic return of 7.7%, while Adjusted Distributable Earnings grew to 27c per share and more than covered our dividend,” said CEO Laurence Penn. “After a tumultuous start to Q4, which saw U.S. Treasury yields rise to 15-year highs and yield spreads widen sharply, markets subsequently rallied through year end in anticipation of the conclusion of the Federal Reserve’s hiking cycle…In a year of elevated interest rate and yield spread volatility that saw the FDIC seize and then sell $60+ billion of Agency MBS, Agency RMBS ended 2023 on a high note and actually outperformed U.S. Treasuries and interest rate swaps on a duration-adjusted basis for the year. Now, with markets expecting eventual interest rate cuts from here but yield spreads still wide on an historical basis, Agency RMBS is attracting incremental demand from investors, albeit tempered by uncertainty around the timing of future cuts. For CLOs, despite their strong finish to 2023, some subsectors have actually lagged the broader corporate bond rally and so should have further room to appreciate. We also expect performance dispersion in the CLO market to persist in 2024, which should continue to create investment opportunities for EARN.”