Eagle Point Credit (ECC) Stock

We take a look at the action in preferreds and baby bonds through the second week of December and highlight some of the key themes we are watching. All preferred stock sectors declined as longer-term Treasury yields rose; mREITs outperformed due to SOFR Fix/Float and CMT Reset preferreds. BDC GAIN issued a 7.875% 2030 baby bond.

The Fed's revised guidance for only two rate cuts in 2025 caused market panic, despite a current rate cut to 4.25-4.5%. Floating rate instruments like CLOs remain attractive due to their high-yield and low volatility, especially with rates staying above 4%. I identify one ETF and two CEFs for investors looking to take advantage of this panic and new course for the Fed.

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CLO Equity offers high returns but comes with significant risks, especially during economic downturns, as defaults can severely impact the equity tranche. ECC's GAAP Net Investment Income (NII) is insufficient to cover its dividend payouts, leading to NAV erosion and reliance on share issuances. ECC's current dividend yield of 21.19% is unsustainable, with expected long-term returns of 12.80%, assuming stable economic conditions and limited defaults.

Eagle Point (ECC) came out with quarterly earnings of $0.29 per share, beating the Zacks Consensus Estimate of $0.28 per share. This compares to earnings of $0.34 per share a year ago.

Eagle Point Credit Co LLC (NYSE:ECC ) Q3 2024 Earnings Conference Call November 14, 2024 10:00 AM ET Corporate Participants Garrett Edson - ICR, Investor Relations Tom Majewski - Chief Executive Officer Ken Onorio - Chief Financial Officer and Chief Operating Officer Conference Call Participants Mickey Schleien - Ladenburg Thalmann Matthew Howlett - B. Riley Securities Paul Johnson - KBW Greg Kraut - KPG Funds Operator Greetings.

Eagle Point Credit's Preferred “D” is grossly undervalued due to the company's open market selling of the shares, which has greatly suppressed its price and offers an 8.65% yield. ECC.PR.D has lagged its closest peer by over 18% and the PFF preferred stock ETF by over 11%. When the selling ends, there is big upside here. Oxford Lane offers a very undervalued baby bond - symbol OXLCI. Its yield to maturity blows away the other baby bonds in the sector (and even many term preferred stocks).