In a significant corporate development, Ellington Credit Company, a real estate investment trust with a market capitalization of $195 million, announced the results of its annual shareholder meeting held on Wednesday.
The company, which is currently listed on the New York Stock Exchange under the ticker NYSE:EARN and has delivered an impressive 24.81% return year-to-date, sought and received approval from its shareholders for a series of proposals that could potentially reshape its operational framework.
InvestingPro analysis suggests the stock is currently trading near its Fair Value, with a comprehensive Pro Research Report available for deeper insights into the company's fundamentals.
Key among the approved items was the transition of the company's legal form from a Maryland real estate investment trust to a Delaware statutory trust. This move, supported by a majority vote of 11,245,845 for and 526,737 against, with 381,382 abstentions, reflects a strategic shift that aligns with the company's future growth plans.
Furthermore, shareholders cast their votes on the election of trustees, with all six nominees securing their positions for a term extending to the 2025 annual meeting. The trustees, including Robert B. Allardice, III, Mary McBride, David J. Miller, Laurence E. Penn, Ronald I. Simon, Ph.D., and Michael W. Vranos, received widespread support, with votes in favor overwhelmingly surpassing withheld votes and broker non-votes.
Notably, the company maintains a strong dividend track record, having paid consistent dividends for 12 consecutive years, with a current yield of 14.31%. InvestingPro subscribers can access additional insights through 8 more ProTips about the company's financial outlook.
The company's new Delaware Amended and Restated Declaration of Trust was also ratified, garnering 11,248,346 votes for, against 465,314, and 440,304 abstentions. This adoption marks a significant governance update for the trust.
In a move to streamline its management operations, shareholders approved an Investment Advisory Agreement with Ellington Credit Company Management LLC, which is set to replace the existing management agreement. The proposal received 11,139,677 votes for, 559,602 against, and 454,685 abstentions.
Additionally, the executive compensation package received an advisory "Say on Pay" approval with 10,231,474 votes for, despite a notable 1,028,069 votes against and 894,421 abstentions, indicating some shareholder reservations.
Lastly, the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2024, was ratified with a strong majority of 17,218,699 votes for, outpacing the 367,947 votes against and 361,125 abstentions. Trading at a P/E ratio of 6.63, with an overall Financial Health score of FAIR according to InvestingPro metrics, the company continues to maintain its market position while navigating evolving market conditions.
The information reported is based on the company's 8-K filing with the Securities and Exchange Commission.
In other recent news, Ellington Residential and Ellington Credit Company have reported notable developments. Ellington Residential's strategic shift towards Collateralized Loan Obligations (CLOs) investments, moving away from traditional agency Mortgage-Backed Securities (MBS) strategy, has been highlighted by Piper Sandler.
The firm has confirmed its Overweight rating on Ellington Residential, maintaining a price target of $8.00. The CLO portfolio of Ellington Residential has increased to $145 million, indicating progress in its transition.
On the other hand, Ellington Credit Company revealed robust Q3 results, marked by a 10.8% annualized economic return and a decrease in the debt-to-equity ratio to 2.5:1, primarily due to a strategic shift towards CLO investments.
The company's net income stood at $0.21 per share and adjusted distributable earnings (ADE) were $0.28 per share, surpassing dividends despite a sequential decline. The CLO portfolio of Ellington Credit saw significant growth, reaching $144.5 million.
As part of recent developments, both companies are seeking additional shareholder votes for strategic changes. Piper Sandler has revised its core earnings per share (EPS) estimates for Ellington Residential for the years 2024 and 2025. Ellington Credit Company, meanwhile, is transitioning into a registered investment company (RIC) to leverage a more favorable tax status, with over 92% approval on three proposals.
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