Scott Kennedy’s mREIT Earnings Series: Assessing Orchid Island Capital’s Performance For Q4 2023
Introduction section by Colorado Wealth Management Fund.
Article section by Scott Kennedy.
Bringing More of Scott’s Work to Our Website
The REIT Forum is a service produced by Michael Vanloon (better known as Colorado Wealth Management Fund) and Scott Kennedy. After intense consideration, I decided to launch our service through Substack. Since then, we’ve seen great success. Substack enables us to give readers real-time alerts with entire articles delivered directly to their inboxes.
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Finding Our Positions
I posted a subscriber-exclusive article with links to our Google Sheets. You can always access our positions there. Scott’s positions are updated each week. CWMF’s positions are usually updated on the same day as the trade.
Related to the stocks in this article:
CWMF is long: RITM-D, GPMT-A, DX-C, EFC-A, RITM-C, EFC-B, PMT-C, PMT-B, AGNCP, CIM-D, RITM-B, RITM, SLRC, GPMT, RC.
Scott Kennedy is long: RITM, RC, SLRC, GPMT, ARCC, GBDC, RITM-D, MITT-B, MITT-C, GAINL, ECCC.
The rest of this post is from Scott Kennedy.
This 1st earnings assessment article reviews ORC’s BV and core earnings equivalent performance during Q4 2023.
This article also discusses how ORC’s quarterly change in BV and core earnings equivalent “matched up” to expectations. Earnings remain a key driver to stock performance.
ORC’s BV matched my/our expectations while the company's core earnings equivalent was a minor-modest outperformance.
No change in ORC’s percentage recommendation ranges or risk rating. ORC is currently deemed slightly overvalued (SELL). A continued modest-notable pullback would first need to occur prior to purchasing.
ORC's quarterly BV gain will likely underperform sub-sector peers. I want to see continued improvement in ORC's core earnings equivalent metric prior to any potential upgrade.
Hi subscribers. For new members, my name is Scott Kennedy and currently I fully cover 20 mortgage real estate investment trust (mREIT) and 15 business development company (“BDC”) common stocks within this Investing Group regarding research/data, subscriber questions, weekly projected book values/net asset values (BV/NAV), and common stock recommendation ranges. Colorado (“CO”) Wealth Management handles the mREIT preferred stocks and he and his team handles all other applicable REIT sectors outside the mREIT sector. CO also provides some mREIT common stock and BDC articles from time-to-time which are more of an “overview/introduction” discussion; typically based either on my or our combined research/data. This also includes some macroeconomic trends and data. My name is always attached to all Investing Group articles I personally wrote so there is no confusion for subscribers.
This REIT Forum article is part of a series of articles over a span of 6-7 weeks which will analyze my previously projected BV/NAV and core earnings (or core earnings equivalent)/net investment income (“NII”) figures and compare these metrics to each mREIT’s and BDC’s actual reported results, respectively. For readers who are familiar with my public mREIT and/or BDC articles, these types of articles are beneficial to readers who desire to pursue a more active investing strategy and/or want more “real time” thoughts/analysis.
I hope my services/contributions ultimately help enhance a subscriber’s total investment returns or minimize their total investment losses within the mREIT and BDC sectors. At the very least, I hope subscribers will gain more insight into the mREIT and BDC sectors by reading my/our exclusive REIT Forum articles.
1) ORC’s BV and Core Earnings Equivalent Q4 2023 Performance (Projected Versus Actual Results):
On 1/10/2024, Orchid Island Capital Inc. (ORC) reported the company’s preliminary earnings results for the fourth quarter of 2023. Table 1 below provides ORC’s BV and earnings summary.
Table 1 – ORC Q4 2023 BV and Earnings Summary
Source: Taken Directly from the REIT Forum’s © Analytical Spreadsheets/Data
Regarding core earnings, unfortunately ORC does not provide this metric. However, a good “substitute” to this metric is ORC’s net spread income less operational expenses (which management continues to disclose/highlight).I provided the following commentary in regards to ORC’s preliminary results for the fourth quarter of 2023: