Ellington Financial Inc. heads into its Q1 2026 earnings today with the borrow market unusually relaxed — and short sellers who were pressing the stock hard last month now in retreat.
Short interest has fallen sharply since mid-April. At roughly 4.9% of the float, the current reading is down nearly 15% from a month ago, when positions peaked above 6.7 million shares around late March. The pull-back is meaningful: short sellers who were most aggressive through the first quarter appear to have covered. Borrow costs confirm the easing — the cost to borrow has dropped by more than a third in a week to just 0.33%, and availability in the lending pool is generous, pointing to no near-term squeeze risk. Days to cover, at nearly nine per the latest FINRA data, remain elevated but are not an acute concern given the broad retreat in short positioning.
Options positioning has tilted modestly more defensive. The put/call ratio is running at 1.06, about 1.2 standard deviations above its 20-day average of 0.92 — a mild bias toward downside protection rather than anything alarming. The stock closed at $13.11 on Tuesday, up less than 1% on the day but still off about 1.7% on the week. The 8.9% gain over the past month is the more striking move, and that rally likely explains why options traders are hedging slightly into the print.
The analyst backdrop is stale by the time of this report — the most recent consensus data is from November 2025, and the most recent rating actions date to late summer 2025. Taking those with appropriate caution: the direction of travel from that period showed a moderate tilt toward buy-side conviction, with BTIG and Jones Trading carrying Buy ratings and targets in the $14–$14.50 range, against UBS holding at Neutral with a $13.50 target. The mean price target of $14.63 implies roughly 12% upside from current levels. One metric that stands out is the forward dividend score, which ranks in the 99th percentile of the universe — a reminder that for a mortgage REIT trading below book (price-to-book at 0.95), income generation is a central part of the bull case. EPS momentum scores, however, are softer, ranking in the 38th–46th percentile range, which tempers the growth angle. Institutional holders have been broadly adding: BlackRock raised its position by over a million shares to 13.3% of shares outstanding as of March 31, and Vanguard added nearly 350,000 shares in the same period.
The print will therefore test whether the income thesis — a near-12% forward yield against a sub-book valuation — holds up to scrutiny on portfolio quality and spread income at a time when the macro backdrop for mortgage REITs remains contested.
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