Ellington Financial Inc., operating through its subsidiary, Ellington Financial Operating Partnership LLC, is an investment company primarily focused on acquiring and actively ...
Ellington Financial Inc. is a specialty finance company organized as a mortgage real estate investment trust, or mortgage REIT, with a primary objective of generating income and attractive risk-adjusted returns from a diversified portfolio of financial assets. The company was launched in 2007 and commenced operations in August 2007. It ...Ellington Financial Inc. is a specialty finance company organized as a mortgage real estate investment trust, or mortgage REIT, with a primary objective of generating income and attractive risk-adjusted returns from a diversified portfolio of financial assets. The company was launched in 2007 and commenced operations in August 2007. It is affiliated with Ellington Management Group, an investment management organization with a longer history in mortgage credit and fixed-income investing. Ellington Financial should be distinguished from Ellington Management Group: the public company owns and manages investment assets, while affiliated entities provide investment-management and operating services.
EFC invests across several asset classes rather than focusing exclusively on agency mortgage-backed securities. Its residential exposure includes government-agency-guaranteed RMBS as well as non-agency securities backed by prime jumbo, Alt-A, manufactured-housing, and subprime loans. The company also acquires residential mortgage loans directly. In commercial real estate, it invests in commercial mortgage loans, commercial mortgage-backed securities, and other forms of commercial real estate debt. Additional investments may include consumer loans, asset-backed securities backed by consumer and commercial receivables, corporate loans, corporate debt and equity securities, collateralized loan obligations, and mortgage-related or non-mortgage-related derivatives.
The company’s business model is asset-intensive and depends on sourcing investments, underwriting credit risk, financing assets, managing interest-rate exposure, and actively trading or repositioning portions of the portfolio. Unlike a conventional operating manufacturer, EFC has no traditional bill-of-materials structure or substantial manufacturing cost base. Its principal economic costs generally include interest expense on borrowings, financing and hedging costs, management and incentive fees, servicing and administrative expenses, transaction costs, credit losses, and changes in the fair value of investments and derivatives. Leverage and liquidity management are therefore important to results, particularly during periods of rising interest rates, widening credit spreads, declining property values, or stressed mortgage markets.
As a REIT, Ellington Financial generally seeks to distribute a significant portion of taxable income to shareholders. The supplied information reports a trailing dividend of approximately $1.56 per share and a dividend yield near 11.5 percent, although dividends can change and are not guaranteed. Reported trailing metrics include a market capitalization of roughly $1.7 billion, a price-to-book ratio below one, and return on equity of approximately 11.6 percent. These figures are market-dependent and should not be interpreted as forecasts.
Laurence Eric Penn is identified as the company’s chief executive officer. Michael Vranos is a prominent Ellington founder, chairman, investment professional, and leader of affiliated management operations. EFC’s stated investment approach emphasizes diversification, active portfolio management, credit selection, hedging, and disciplined capital allocation. Its principal opportunities are the ability to exploit inefficiencies in mortgage and specialty-finance markets, while its key risks include leverage, refinancing needs, interest-rate volatility, prepayments, defaults, valuation changes, regulatory requirements, and fluctuations in real-estate and consumer-credit conditions.
YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength.
QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes.
RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three).
$674.5M
+139.0%
-23.5%
Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day.
$146.9M
+0.7%
-44.4%
Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials.
+84.3%
-15.7%
-8.8%
Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on).
+61.6%
+49.4%
+16.1%
Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales.
+21.8%
-57.9%
-27.2%
Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock.
$509.0M
+218.2%
-22.2%
FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine.
+75.5%
+149.5%
+1.8%
Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe.
924.8%
+2.3%
+2.1%
Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking.
0.08x
—
+142.5%
Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground.
Operator: Good morning, ladies and gentlemen. Welcome to the Ellington Financial Second Quarter 2026 Earnings Call. Today's call is being recorded. [Operator Instructions] I will now turn the call over to Mr. Alaael-Deen Shilleh, Associate General Counsel and Secretary. Please go ahead, Mr. Shilleh.
Alaael-Deen Shilleh: Thank you. Before we begin, I'd like to remind everyone that this conference call may include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and involve risks and uncertainties detailed in our annual and quarterly reports filed with the SEC. Actual results may differ materially from these statements, so they should not be considered to be predictions of future events. The company undertakes no obligation to update these forward-looking statements. Joining me today are Larry Penn, Chief Executive Officer of Ellington Financial; Mark Tecotzky, Co-Chief Investment Officer; and J.R. Herlihy, Chief Financial Officer. Our second quarter earnings conference call presentation is available on our website, ellingtonfinancial.com. Today's call will track that presentation and all statements and references to figures are qualified by the important notice and end notes in the presentation. With that, I'll hand it over to Larry.
Laurence Penn: Thanks, Alaael-Deen. Good morning, everyone, and thank you for joining us today. I'll begin on Slide 3 of the presentation. Ellington Financial delivered yet another terrific quarter, continuing the momentum we have built over the past several years. Strong performance across our diversified platform once again drove strong GAAP earnings, adjusted distributable earnings well above our dividend, and also drove a further increase in book value per share. For the quarter, we generated GAAP net income of $0.43 per share, ADE of $0.60 per share, and an annualized economic return of 13.6%. These results reflected excellent securitization execution, continued outstanding results at Longbridge, solid contributions from our other loan origination partners and continued strong credit performance across our loan portfolios. Meanwhile, the financing spreads on our credit lines continue to narrow, which is providing an additional tailwind to our results. Importantly, all these drivers reinforce one another. Strong loan sourcing supports capital deployment and securitization volume. Through our securitization executions, we create attractive retained investments that help build our future earnings power. We release capital for redeployment, and we replace short-term financing with more stable non-mark-to-market funding. Moreover, our securitizations benefit greatly from increasing scale, as our larger and more frequent transactions continue to expand our investor base and have improved our execution levels over time. Meanwhile, strong loan credit performance supports the yields on our …
