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Ellington Management Group

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Ellington Management Group
TypePrivate
IndustryInvestment Management
Founded1994; 32 years ago (1994)
FoundersMike Vranos
Laurence Penn
Headquarters
Old Greenwich, Connecticut
,
United States
Area served
United States
Key peopleMike Vranos (CEO)
AUM$22 billion (2026)
Number of employees
~170 (2026)
Websiteellington.com
Footnotes
[1]

Ellington Management Group is an alternative investment manager with headquarters in Old Greenwich, Connecticut and New York City. Ellington is best known for its focus on securitized assets and other credit instruments, which it manages through hedge funds, private debt funds, long-only vehicles, and separately managed accounts. Affiliates of the firm also manage or advise two publicly-traded companies: Ellington Financial (NYSE:EFC) and Ellington Credit Company (NYSE:EARN). As of March 31, 2026, Ellington and its affiliates managed accounts totaling over $22 billion in assets.[1][2]

History

[edit]

The firm was founded in December 1994 by Michael Vranos and five partners with an initial $100 million in funding from Ziff brothers investments. Five of the founding partners previously worked in Kidder, Peabody & Co’s mortgage-backed securities (MBS) trading group, of which Vranos was the senior managing director.[3] Geanakoplos, one of the six founding partners, served as Ellington’s Head of Research and has concurrently held a faculty appointment at Yale University, where he is the James Tobin Professor of Economics.[4][5] Laurence Penn, previously a managing director and co-head of collateralized mortgage obligation (CMO) origination and trading at Lehman Brothers, joined as a founding partner in 1995. Penn had met Vranos at Harvard, where both men were undergraduate mathematics majors, and they were friends from their freshman year onward.[6][7]

Vranos had joined Kidder in 1983 after graduating magna cum laude, Phi Beta Kappa, with a degree in mathematics from Harvard University. He rose quickly, becoming a managing director in his twenties, and in 1989 was put in charge of Kidder's mortgage-backed securities desk. Under Vranos, Kidder Peabody became one of the largest participants in the mortgage-backed securities market. From 1990-1994, the firm underwrote more than $200 billion in collaterized mortgage obligations (CMOs), representing about 20% of the total issuance during that period and nearly twice the volume of its closest competitor. By the early 1990s Vranos was consistently ranked among Wall Street's highest-paid traders.[8]

In the aftermath of the Joseph Jett trading scandal, General Electric sold most of Kidder's assets to PaineWebber Group in late 1994; Kidder ceased to exist as an independent firm that December.[9] Following the sale of Kidder Peabody, Vranos chose not to join PaineWebber and instead launched his own firm, Ellington, which was named after Vranos’s hometown of Ellington, Connecticut.[10] Ellington was seeded with $100 million in capital from Ziff Brothers Investments, as well as $10 million of Vranos’s own capital.[8]

In 1996, when the US bond market was down by 2.3%, Ellington posted annualized returns of 40% in the first four months by betting on undervalued mortgage securities.[10] By mid-1996, Ellington managed more than $300 million; Ellington's hedge funds returned about 30% (after fees) in its first year, 50% in 1996, and 20% in 1997.[11][12]

Ellington was affected by the Long-Term Capital Management debacle in 1998.[13] For a few days in mid-October, the firm sold mortgage securities to lower its funds' leverage.[14][15][16] The firm issued a public statement describing its borrowings to quell public fears, which clarified that although it was meeting margin calls by unloading hundreds of millions of dollars in assets over a two-day period, losses were limited.[17][18][19] However, from its December 1994 inception through April 2004, the firm delivered a composite annualized return of 15.4%, after fees, weathering both the 1998 crisis and a sharp bond-market selloff in mid-2003.[8]

In November 2002, the independent board of Beacon Hill Asset Management LLC, whose founders had been sued by the U.S. Securities and Exchange Commission for fraud, selected Ellington to take over and liquidate the firm's remaining mortgage-derivative holdings; by 2003 Ellington had finished liquidating the assets, netting $323 million after fees for Beacon Hill's shareholders, roughly 8% more than the portfolio's value when Ellington took over.[8] By 2004 Ellington managed about $3 billion in hedge fund assets.[20]

In July 2007, Ellington formed Ellington Financial to invest primarily in non-agency mortgage-backed securities. The deal was underwritten by Friedman Billings Ramsey and although originally slated for a $750 million offering, evolving market conditions only allowed for a $250 million capital raise. Before the private placement, a New York Times columnist noted that a portion of the private placement might be used to purchase risky tranches from bankrupt subprime lender New Century Financial Corporation and noted the potential difficulty in valuing such instruments. At that time, Ellington’s assets under management included $1.2 billion in a managed account, $5.4 billion in hedge funds and private accounts, and almost $23 billion in collateralized debt obligations.[21]

In October 2007, as the future credit performance of residential mortgages became increasingly uncertain, one Ellington fund was reported to have fallen in value by 22% and to have temporarily suspended redemptions pending greater clarity around valuations.[22][23]

In October 2010, Ellington Financial went public on the New York Stock Exchange with the ticker "EFC".[11] The IPO was underwritten by Deutsche Bank Securities.[24]

In May 2013, Ellington launched a second public vehicle, Ellington Residential Mortgage REIT (NYSE: EARN), a joint venture with Blackstone Group focused on agency mortgage-backed securities, which raised $129 million in its May 2013 initial public offering.[25] In April 2024 the company changed its name to Ellington Credit Company, and in 2025 it converted from a real estate investment trust into a closed-end fund registered as a regulated investment company, shifting its focus toward collateralized loan obligations.[26] Both Ellington Financial and Ellington Credit Company are externally managed by affiliates of Ellington Management Group, with Laurence Penn serving as chief executive officer of each.[27]

In 2014 an office was opened in London, England in order to expand into the European market.[28] By that time, the firm managed about $6 billion and was expanding its focus to include non-performing loans and commercial real estate credit.[10]

In 2016, Ellington ventured into private credit with the launch of Ellington Private Opportunities, a closed-ended debt fund.[29] In 2019, Ellington launched its first UCITS fund, which was distributed by Franklin K2.[30] In 2022, Ellington expanded its insurance-solutions business to broaden its client base. By June 2023, Ellington’s insurance solutions business had attracted $1.8 billion in funding and commitments.[31]

Notable funds and investments

[edit]

In an interview with Bloomberg in July 2020, Ellington’s Vranos explained that the firm had put $3 billion to work in non-agency and other mortgage securities since March of that year when the Covid pandemic began.[32] An Ellington residential-mortgage-debt fund returned more than 28% over its lifespan between 2020 and mid-2022. A second iteration of the fund returned 24% between the start of 2023 and January 2024.[33]

Investment approach

[edit]

Ellington's strategies have historically centered on identifying mortgage- and other asset-backed securities that it believes are mispriced relative to their cash flows, then hedging the resulting interest-rate and other risks using interest rate swaps, Treasury securities, credit default swaps, and other instruments. While the firm initially focused on residential mortgage-backed securities and CMOs, over time the firm has diversified its credit strategies.[10] [34] As of 2026, Ellington managed strategies across residential and commercial mortgages, consumer debt, corporate credit and leveraged loans in U.S. and European markets. Ellington also invested in RMBS and CMBS, corporate CLOs, consumer-loan ABS, mortgage derivatives, residential transition and reverse mortgage loans, and mortgage-related operating companies.[35][36]

Publicly-traded investment vehicles

[edit]

Affiliates of Ellington Management Group manage or advise two publicly-traded vehicles: Ellington Financial Inc (NYSE: EFC) and Ellington Credit Company (NYSE: EARN).[35][36]

Ellington Financial Inc was launched in 2007 as a $250 million private placement, and it made its public debut on the NYSE in October 2010.[11][21] By October 2021, EFC’s market capitalization exceeded $1 billion, and by August 2026, it exceeded $1.7 billion.[37] From its August 2007 inception through Q1 2026, EFC reported a cumulative economic return of 355.4%, or 8.5% annualized.[38]

In 2014, EFC purchased a stake in Longbridge Financial, a reverse mortgage loan origination and servicing company.[39] In 2016, EFC brought in Home Point Capital, a portfolio company of Stone Point Capital, as an equal partner; EFC repurchased Home Point’s stake in October 2022, making Longbridge a wholly owned subsidiary of EFC.[40] In 2025, Longbridge was the second largest HMBS issuer, with a 23% market share.[41]

In May 2023, EFC announced that it had agreed to acquire Arlington Asset Investment Corp., a mortgage REIT focusing on RMBS investments.[42] The merger closed in December 2023, for a total purchase price of $136 million.[43]

Ellington Credit Company went public on the NYSE in 2013[44] and converted to a registered closed-end fund focused on investments in collateralized loan obligations in March 2025.[45]

Philanthropy

[edit]

Ellington Management Group and its founder, Michael Vranos, have been longtime supporters of Help For Children ("HFC"), formerly known as Hedge Funds Care, an international charity dedicated to the prevention and treatment of child maltreatment. Vranos serves on the organization’s Board of Directors and received the organization's Lifetime Award for Caring in 2007.[46] He was responsible for starting HFC Rocks, which is a benefit concert that unites finance professionals to raise millions of dollars for HFC. The first HFC Rocks charity concert took place in 2017 with live performances by the rock bands The Goo Goo Dolls and The Record Company. The HFC Rocks events occur annually, with other notable bands including Joan Jett, Billy Idol, Counting Crows, and Foreigner.[47][48]

References

[edit]
  1. 1 2 "Prospectus - Ellington Credit Company". SEC. June 11, 2026. Retrieved August 24, 2026.
  2. ↑ "Ellington: An Experienced and Successful Team". Ellington Management Group, L.L.C. Archived from the original on December 12, 2007. Retrieved December 9, 2007.
  3. ↑ Pacelle, Mitchell (October 13, 1998). "Vranos's Ellington Management Sells Big Chunks of Hedge Fund's Holdings". The Wall Street Journal. Retrieved February 5, 2018.
  4. ↑ "John Geanakoplos - Vice Chairman, Research Oversight". Ellington.com. Retrieved August 19, 2026.
  5. ↑ "John Geanakoplos". economics.yale.edu. Retrieved August 19, 2026.
  6. ↑ Chris Byron. "Another harrowing hedge fund tale". MSNBC. Retrieved February 10, 2014.
  7. ↑ "Laurence Penn - Vice Chairman, Chief Operating Officer". ellington.com. Retrieved August 19, 2026.
  8. 1 2 3 4 "Ellington's Vranos Says He Won't Crash Again Amid Rate Increase". Bloomberg News. June 29, 2004. Archived from the original on October 25, 2012. Retrieved August 30, 2009.
  9. ↑ Raghavan, Anita (January 18, 1995). "Kidder Peabody Name To Vanish -- Venerable Presence Fades After 129 Years". The Wall Street Journal. Retrieved August 24, 2026.
  10. 1 2 3 4 Arroyo, Carmen (July 26, 2022). "Ellington's Vranos Bets on '90s Trades That Brought Him Fame". Bloomberg. Retrieved August 24, 2026.
  11. 1 2 3 "In Hindsight". Investment Dealers' Digest. October 15, 2010. Archived from the original on June 11, 2014. Retrieved April 22, 2012 – via HighBeam Research.
  12. ↑ Parcelle, Mitchell (February 12, 1999). "Title of Article". The Wall Street Journal. Retrieved September 8, 2026.
  13. ↑ Reed Abelson (October 13, 1998). "THE MARKETS: Market Place; Still Another Hedge Fund Seems to Be in Financial Peril". The New York Times. Retrieved December 9, 2007.
  14. ↑ "Digest". The Washington Post. October 13, 1998. Archived from the original on June 11, 2014. Retrieved April 22, 2012 – via HighBeam Research. Ellington Capital Management, a hedge fund run by former Kidder, Peabody trader Michael Vranos, offered $1.5 billion in mortgage securities yesterday, traders said, despite weak investor demand for mortgages.
  15. ↑ "Picking Up The Bond Pieces While Waiting For The Next Shoe To Drop". Post-Tribune. IN. October 14, 1998. Archived from the original on June 11, 2014. Retrieved April 22, 2012 – via HighBeam Research. Monday was a holiday for the bond market, but it was a work day for some trading desks attempting to find buyers for securities and derivatives that leveraged funds were forced to liquidate to meet margin calls. Come Tuesday, the newspapers were reporting that Ellington Fund, run by former Kidder, Peabody mortgage whiz Michael Vranos, had become the latest casualty of the great deleveraging trade of 1998, driven by a huge widening of credit spreads that punished holders - indiscriminately - of all instruments except those issued by the U.S. Treasury.
  16. ↑ Jerry W. Markham (2006). A Financial History of Modern U.S. Corporate Scandals: From Enron to Reform. M.E. Sharpe. p. 440. ISBN 9780765615831. Retrieved March 18, 2014.
  17. ↑ Abelson, Reed (October 18, 1998). "INVESTING: DIARY; Pssst. . .We Have No Problems At This Hedge Fund. Really". The New York Times. Retrieved December 9, 2007.
  18. ↑ "Hedge Fund Firm Says It Covered Its Losses". The New York Times. October 18, 1998. Retrieved December 9, 2007.
  19. ↑ "UBS hedge fund exposure". The Independent. October 17, 1998 – via HighBeam Research. UBS last night refused to comment on reports that it had liquidated $250m of bonds held as collateral after Ellington allegedly missed a margin call this week. {{cite web}}: |access-date= requires |url= (help); |url-access= requires |url= (help)CS1 maint: deprecated archival service (link)
  20. ↑ Michael Peltz (June 29, 2004). "Ellington's Vranos Says He Won't Crash Again Amid Rate Increase". Bloomberg. Retrieved March 18, 2014.
  21. 1 2 Morgenson, Gretchen (July 22, 2007). "Mr. Vranos Has a Deal for You". The New York Times. Retrieved December 10, 2007.
  22. ↑ Zuckerman, Gregory (December 6, 2007). "Vranos May Try to Reopen Ellington Credit Fund". The Wall Street Journal Online. Dow Jones & Company, Inc. Retrieved December 9, 2007.
  23. ↑ Pulliam, Susan; Smith, Randall; Siconolfi, Michael (October 12, 2007). "U.S. Investors Face An Age of Murky Pricing". The Wall Street Journal Online. Dow Jones & Company, Inc. Retrieved December 10, 2007.
  24. ↑ "Securities and Exchange Commission EDGAR Filings". Retrieved April 28, 2012.
  25. ↑ "EARN IPO". NASDAQ. Retrieved February 11, 2014.
  26. ↑ "Ellington Credit Completes Conversion to Closed-end Fund," April 1, 2025
  27. ↑ "Ellington Credit," retrieved September 12, 2026
  28. ↑ Stephen Foley (December 22, 2013). "US hedge funds set to expand in Europe". Financial Times. Retrieved April 4, 2014.
  29. ↑ Donde, Anastasia (July 13, 2016), Ellington Gathers $80m for First PE-style Fund, PEI-Private Credit, retrieved September 24, 2026{{citation}}: CS1 maint: date and year (link)
  30. ↑ Franklin Templeton launches liquid hedge fund range, Funds Europe, October 1, 2019, retrieved September 24, 2026{{citation}}: CS1 maint: date and year (link)
  31. ↑ Thrasher, Michael (June 28, 2023), Hedge Fund Spies Opportunity as Insurers Rethink Residential Mortgages, Institutional Investor, retrieved September 24, 2026{{citation}}: CS1 maint: date and year (link)
  32. ↑ "Ellington Put $3B to Work Since March Crash, CEO Vranos Says". Bloomberg News. July 28, 2020. Retrieved August 14, 2026.
  33. ↑ Arroyo, Carmen (April 5, 2024). "Ellington Fund Mints 24% Return With Residential Mortgage Bet". Bloomberg News. Retrieved August 14, 2026.
  34. ↑ Trincal, Emma (July 31, 2007). "Ellington, Citadel, Marathon Emerge as Distressed Players". Daily News. New York, NY. Archived from the original on June 11, 2014. Retrieved April 22, 2012 – via HighBeam Research.
  35. 1 2 "Our Investment Strategy". ellingtonfinancial.com. Retrieved August 12, 2026.
  36. 1 2 "Our Investment Strategy". ellingtoncredit.com. Retrieved August 10, 2026.
  37. ↑ Market capitalization of Ellington Financial (EFC), Companies Marketcap, retrieved August 26, 2026
  38. ↑ Earnings Conference Call Q1 2026, Ellington Financial, May 6, 2026, retrieved August 26, 2026{{citation}}: CS1 maint: date and year (link)
  39. ↑ "Ellington Financial Invests in Longbridge for Reverse Mortgage Growth". HousingWire. September 11, 2014. Retrieved September 18, 2026.
  40. ↑ Clow, Chris (October 7, 2022). "Longbridge Financial acquisition by investment firm is complete". HousingWire. Retrieved September 18, 2026.
  41. ↑ "What a Difference a Decade Makes – Full Year HMBS Issuer League Tables Then and Now". New View Advisors. January 5, 2026. Retrieved September 22, 2026.
  42. ↑ Krechevsky, David (May 31, 2023). "Ellington Financial Agrees To Acquire AAIC". National Mortgage Professional. Retrieved September 22, 2026.
  43. ↑ "Form 8-K - Merger Agreement". SEC.gov. December 14, 2023. Retrieved September 22, 2026.
  44. ↑ "Ellington Residential Mortgage REIT," May 1, 2013
  45. ↑ "Form N-2 Registration Statement," April 1, 2025
  46. ↑ Julian, Kate (April 6, 2009). "Makeover". The New Yorker. Retrieved August 9, 2026.
  47. ↑ McElhaney, Alicia (November 15, 2022). "Inside HFC Rocks, the Alts Industry Charity Concert (And Foreigner's Smallest Gig in Years)". Institutional Investor (magazine). Retrieved August 9, 2026.
  48. ↑ Williamson, Christine (September 2, 2019). "Managers turn up volume with Billy Idol fundraiser". Pensions & Investments. Retrieved February 5, 2018.
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