Short Interest in Ellington Credit Company (NYSE:EARN) Increases By 71.0%

Key Points

• Short interest surged 71% to 1.25 million shares as of July 31, representing 3.4% of shares outstanding and 2.7 days to cover.
• Ellington Credit reported quarterly earnings of $0.15 per share, below the $0.20 consensus estimate, while revenue of $6.08 million also missed expectations.
• The company declared a monthly dividend of $0.08 per share, implying a 21.8% annualized yield; analysts maintain a “Moderate Buy” consensus with a $5.50 price target.

Ellington Credit Company (NYSE:EARN - Get Free Report) was the recipient of a large growth in short interest during the month of July. As of July 31st, there was short interest totaling 1,252,174 shares, a growth of 71.0% from the July 15th total of 732,223 shares. Based on an average daily volume of 463,252 shares, the days-to-cover ratio is presently 2.7 days. Currently, 3.4% of the shares of the company are short sold.

Ellington Credit Price Performance

Shares of NYSE:EARN traded up $0.01 during midday trading on Monday, hitting $4.41. The company had a trading volume of 355,307 shares, compared to its average volume of 440,113. Ellington Credit has a 12-month low of $4.25 and a 12-month high of $5.89. The company has a fifty day moving average of $4.43 and a two-hundred day moving average of $4.68. The company has a market cap of $165.73 million, a price-to-earnings ratio of -4.50 and a beta of 1.28.

Ellington Credit (NYSE:EARN - Get Free Report) last released its earnings results on Wednesday, August 12th. The real estate investment trust reported $0.15 earnings per share for the quarter, missing the consensus estimate of $0.20 by ($0.05). The company had revenue of $6.08 million during the quarter, compared to the consensus estimate of $10.57 million.

Ellington Credit Announces Dividend

The business also recently disclosed a monthly dividend, which will be paid on Wednesday, September 30th. Stockholders of record on Monday, August 31st will be given a dividend of $0.08 per share. This represents a c) dividend on an annualized basis and a dividend yield of 21.8%. The ex-dividend date of this dividend is Monday, August 31st. Ellington Credit's payout ratio is presently -97.96%.

Analyst Upgrades and Downgrades

Separately, Piper Sandler dropped their price objective on shares of Ellington Credit from $5.25 to $5.00 and set an "overweight" rating on the stock in a report on Monday, July 13th. One research analyst has rated the stock with a Buy rating and one has assigned a Hold rating to the company's stock. According to MarketBeat, the stock currently has an average rating of "Moderate Buy" and a consensus price target of $5.50.

Institutional Investors Weigh In On Ellington Credit

Several hedge funds and other institutional investors have recently added to or reduced their stakes in EARN. Quadrature Capital Ltd purchased a new position in Ellington Credit during the fourth quarter valued at approximately $75,000. HighTower Advisors LLC purchased a new stake in shares of Ellington Credit in the fourth quarter worth $369,000. Envestnet Asset Management Inc. raised its position in shares of Ellington Credit by 6.5% during the 3rd quarter. Envestnet Asset Management Inc. now owns 76,237 shares of the real estate investment trust's stock valued at $415,000 after purchasing an additional 4,675 shares during the period. Osaic Holdings Inc. raised its position in shares of Ellington Credit by 60.3% during the 2nd quarter. Osaic Holdings Inc. now owns 104,689 shares of the real estate investment trust's stock valued at $602,000 after purchasing an additional 39,392 shares during the period. Finally, Vident Advisory LLC lifted its stake in shares of Ellington Credit by 109.1% during the 2nd quarter. Vident Advisory LLC now owns 36,350 shares of the real estate investment trust's stock valued at $209,000 after buying an additional 18,967 shares in the last quarter. 20.40% of the stock is owned by hedge funds and other institutional investors.

About Ellington Credit

Ellington Credit Income Fund NYSE: EARN is a closed-end management investment company that seeks to generate current income through a diversified portfolio of mortgage- and asset-backed securities. The fund primarily invests in residential mortgage-backed securities (RMBS) and asset-backed securities (ABS), with additional exposure to commercial mortgage-backed securities (CMBS) and related structured credit instruments. To enhance income and manage risk, the fund employs leverage and derivative strategies such as interest rate swaps and credit default swaps, allowing it to adjust duration and credit exposure dynamically.

The fund is externally managed and advised by Ellington Management Group, LLC, an established investment firm specializing in mortgage credit and structured products.

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