What Happened?

Shares of mortgage investment firm Ellington Financial (NYSE: EFC) fell 4% in the morning session after it announced a public offering of 8.775 million shares of its common stock. 

The company priced the offering to raise expected gross proceeds of $118.5 million. Ellington Financial stated it planned to use the money from the sale to redeem all outstanding shares of its Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock. Public stock offerings can often cause a company's share price to fall because they increase the total number of shares available, which can dilute the ownership stake of existing investors.

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What Is The Market Telling Us

Ellington Financial’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

Ellington Financial is down 2.7% since the beginning of the year, but at $13.31 per share, it is still trading close to its 52-week high of $14.35 from February 2025. Investors who bought $1,000 worth of Ellington Financial’s shares 5 years ago would now be looking at an investment worth $882.29.

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