Orchid Island Capital Sheds $0.90 per Share in Q3 Amid Market Volatility
In a tumultuous third quarter, Orchid Island Capital reported a net loss of $0.90 per share, marking a significant reversal from the previous quarter's net income of $0.44.
According to Robert Cauley, Chairman and Chief Executive Officer of Orchid Island Capital, the company's book value decreased to $6.02 per share at September 30th, down from $7.22 at the end of Q2.
Total return for the quarter, inclusive of dividends declared, was -12.5% in Q3 compared to a +6.2% during Q2.
In his analysis of the company's financial highlights, Jerry Sintes, Controller at Orchid Island Capital, pointed out that the company had an average portfolio size of $11.1 billion during Q3, down from $11.4 billion in Q2.
Mr. Sintes also highlighted the company's leverage ratio at September 30th, which stood at 8.6x compared to 7.3x at June 30th.
Notably, Orchid Island Capital declared a dividend of $0.30 per share during the quarter, consistent with Q2.
The big story in Q3 was undoubtedly the material sell-off in the rates market at the end of the quarter, driven by various factors including inflation, capital with AI and sovereign debt issuance driving up borrowing costs and risk premium.
However, since quarter-end, Orchid Island Capital has actually changed, with evidence suggesting stabilization. Last week saw a stabilization in the market, likely driven by the fact that the market positioning had gotten extremely short. Much of the selling seen in the market was driven by mortgage investors such as Orchid Island Capital, hedging convexity-related extension of assets owned.
