Posted by: ctraderd | May 12, 2013

Watchlist- Week of 5/13/13 $CPSS $EFC

Last week, the Dow Jones Industrial Average gained +144.53 for +.97%, the S&P 500 gained +17.57 for +1.89%, and QQQ shares closed Friday’s trading session at $73.05, gaining +.71 for +.98% on the week. Last week, I only opened up one position and that was when I bought 125 shares of EFC at $25.45. Other than that I’ve just been sticking to my position of long 500 CPSS at an average of $9.236. Before making any decisions based on this article, read my disclaimer and do your own research!!

1.) Consumer Portfolio Services, Inc. (CPSS)

CPSS gained +.74 for +8.81% last week, closing Friday’s trading session at $9.14. I am down approximately –1% on the trade, or –$48. So far this trade has gone pretty well. My patience has worked so far and my price target still remains $13.00+ before I think about selling any of the 500 shares, so I’m in for the haul still.

2.) Ellington Financial, LLC (EFC)

Last week, EFC dropped –.531 for –2.05%. Let’s start with some background on this one.

Utilizing a flexible and opportunistic investment strategy, Ellington Financial has built a portfolio of mortgage-related investments, consistently striving to deliver attractive returns to shareholders. Ellington Financial is externally managed and advised by Ellington Financial Management LLC (our "Manager" or "Ellington Financial Management"), an affiliate of Ellington Management Group, L.L.C. ("Elllington Management Group" or "EMG"), and thus benefits from EMG’s deep experience in the mortgage-related markets, highly analytical investment processes, operational expertise and resources, and extensive relationship base, providing significant competitive advantages.

Additionally, an emphasis on risk management is fundamental to the Ellington Financial approach – driving attractive, risk-adjusted returns across market cycles and enabling us to identify and succeed in investment opportunities that we believe are consistent with our investment strategy. Ellington Financial’s understanding of the market across asset classes, over time, and through a highly analytical lens helps us to realize potential and unlock value (Source: http://bit.ly/ZYOwOC).

EFC has a market cap of $517.14 million and earnings are continuing to rise. From 2009 to 2012, EFC’s net income is up around 3.8%, but from 2011 to 2012, EFC’s net income has taken an extraordinary leap of 940% from $10.33 million to $97.15 million! I believe that for the 2013 fiscal year, EFC is set to post their first $100 million+ year in net income. Ellington has a book value/share of about $24.85 and $2.90/share in cash. Also, EFC pays a dividend of 12.15% or $3.08/share a year, which is a huge plus. I bought 125 shares at $25.45 on Friday with a price target of $30.00+.

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