오키드 아일랜드 캐피털(ORC) 2026년 3분기 실적 발표: 장부가치 하락, 레버리지 상승

핵심 요약

• 오키드 아일랜드 캐피털은 2026년 3분기 주당 순손실이 0.90달러를 기록해 주당 순이익 0.44달러를 기록했던 2분기 대비 적자 전환했다고 발표했습니다.
• 주당 장부가치는 7.22달러에서 6.02달러로 감소했으며, 선언된 배당금을 포함한 분기 총수익률은 2분기의 플러스 6.2%에서 마이너스 12.5%로 감소했습니다.
• 분기 말 레버리지는 7.3배에서 8.6배로 증가했습니다. 경영진은 포트폴리오의 금리 헤지를 감안할 때 레버리지가 이후 8.12배로 하락해 관리 가능한 수준을 유지하고 있다고 밝혔습니다.
• 회사는 분기 배당금을 주당 0.30달러로 유지했습니다. 경영진은 포트폴리오 수익과 추정 과세 소득이 현재 지급액 수준에 대체로 부합한다고 설명했습니다.
• 분기 말 금리 매도세 동안 모기지 자산 듀레이션이 연장됨에 따라 장기 국채 선물 활용도를 높이면서 헤지 비율이 91%에서 99%로 상승했습니다.
• 장부가치는 분기 말부터 10월 22일까지 약 4.5%의 경제적 수익률을 기록했습니다. 경영진은 최근 모기지 자산의 가격 재조정으로 향후 기대 수익률이 개선되었다고 말했습니다.

주요 재무 데이터

사업 및 포트폴리오 실적

분기 말 급격한 금리 상승, 변동성 확대, 모기지 베이시스 확대로 인해 3분기 장부가치가 감소했습니다. 경영진은 볼록성(Convexity) 관련 헤지와 일부 고레버리지 투자자들의 강제 매도가 기관 모기지 시장에 압박을 더했다고 말했습니다.

오키드 아일랜드 캐피털은 자산을 광범위하게 매각하는 대신 조기상환금이 자연 감소하도록 두고 헤지 포트폴리오의 규모와 듀레이션을 조정했습니다. 스왑 스프레드가 확대됨에 따라 헤지 수단으로서 선물이 상대적으로 매력적이게 되면서 회사는 장기 국채 선물 활용을 늘렸습니다.

신규 CMO를 발행하는 딜러들의 수요가 둔화되면서 지정 풀(Specified pools) 역시 약세를 보였습니다. 프리미엄(pay-up)이 높았던 소액 대출 잔액 및 뉴욕 지역 풀은 TBA 증권 대비 의미 있는 수준의 프리미엄 하락을 겪었습니다.

분기 말 이후 회사는 16억 달러 규모의 단기 스왑을 10년 만기 국채 선물의 동일한 DV01 익스포저로 교체했습니다. 또한 기존 TBA 숏 포지션에 맞서 일부 30년 만기 5% 지정 풀을 매도하여 현금 수준을 지지하고 레버리지를 낮췄습니다.

오키드 아일랜드 캐피털은 2분기 말 이후 시장 변동성이 심했던 4분기의 약 170만 주를 포함하여 총 662만 주를 자사주 매입했습니다. 경영진은 10월 22일 기준 주가가 추정 현재 장부가치 대비 20% 이상 할인되어 거래되고 있었다고 말했습니다.

경영진 전망

경영진은 시장 상황과 레버리지가 정상화됨에 따라 포트폴리오 상환금의 재투자를 재개하고 모기지 자산을 추가할 수 있을 것으로 예상합니다. 자본 배분은 상대적 수익률에 따라 자산 매입, 포트폴리오 교체 매매, 자사주 매입으로 분할되어 유지될 것입니다.

현재 레버리지 수준에서 경영진은 포트폴리오가 10%대 후반의 자기자본이익률(ROE)을 창출할 수 있으며, 신규 투자나 선별적인 포트폴리오 교체 매매를 통해 향후 더 높은 기대 수익률을 거둘 가능성이 있다고 보고 있습니다.

회사는 과세 소득 추정치가 연초 이후 지급된 배당금과 연동되어 있다고 밝혔습니다. 경영진은 또한 시장 조건과 포트폴리오 구성이 대체로 일정하게 유지된다는 가정하에 포트폴리오의 10월 수익률이 분기 배당금인 0.30달러와 부합하는 수준이라고 설명했습니다.

리스크 및 관전 포인트

• 경영진은 직접적인 금리 익스포저가 적절히 헤지되어 있다고 판단함에도 불구하고, 포트폴리오는 여전히 모기지 베이시스 확대 및 변동성에 노출되어 있습니다.
• 금리 상승은 모기지 현금 흐름과 자산 듀레이션을 연장시키므로 헤지 듀레이션 및 명목 익스포저에 대한 적극적인 조정이 필요합니다.
• 분기 말 유동성은 44%로 감소했으며 레버리지는 분기 이후에도 8배를 상회했습니다.
• 경영진은 시장 안정화가 반전될 수 있다고 경고하며, 또 다른 변동성 국면이 모기지 실적에 실질적인 영향을 미칠 수 있다고 말했습니다.
• 높은 모기지 금리, 고공행진하는 주택 가격, 약화된 주택 구매 여력은 주택 시장 및 모기지 신규 취급 활동에 지속적으로 부담을 주고 있습니다.
• 장부가치 대비 대폭적인 할인은 회사가 주주 가치를 제고하는 방식으로 유상증자를 추진하는 것을 막아 프리미엄에 거래되는 경쟁사들이 누리는 자본 조달 선택지를 제한합니다.

애널리스트 Q&A 하이라이트

장부가치 업데이트: 경영진은 10월 22일까지의 약 4.5% 이익이 경제적 수익률 측정치이며, 배당금이 자본총계에서 차감되었다고 설명했습니다.

배당 커버리지: 경영진은 포트폴리오 수익 및 과세 소득이 현재 배당금 수준에 근접해 있다고 말했습니다. 향후 지급에 대한 확실한 약속은 피하면서도 현재 시장 환경 및 포트폴리오 구조하에서 0.30달러의 배당 지급에 무리가 없다는 입장을 밝혔습니다.

자사주 매입 대 자산 매입: 경영진은 할인된 주식을 매입하여 얻는 수익률과 추가 모기지 투자로 얻을 수 있는 수익률을 비교하고 있습니다. 주가가 장부가치의 80% 미만에서 거래됨에 따라 자사주 매입은 여전히 매력적이지만, 모기지 스프레드 확대 또한 캐리 수익이 더 높은 자산을 매입하거나 전환할 수 있는 기회를 제공했습니다.

레버리지: 경영진은 레버리지가 분기 말 8.6배에서 8.12배로 감소했다고 말했습니다. 회사는 금리 프로필을 철저히 헤지하고 있기 때문에 현재 수준 부근에서 운용하는 데 무리가 없다는 입장이지만, 시장 상황에 따라 균형점은 달라질 수 있습니다.

실적발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and thank you for standing by. Welcome to the Orchid Island Capital Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Melissa Alfonso. Please go ahead.

Melissa Alfonso

Thank you, [ Didi ]. Good morning, and welcome to the Third Quarter 2026 Earnings Conference Call for Orchid Island Capital. This call is being recorded today, October 23, 2026. At this time, the company would like to remind the listeners that statements made during today's conference call relating to matters that are not historical facts are forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Listeners are cautioned that such forward-looking statements are based on information currently available on the management's good faith belief with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in such forward-looking statements. Important factors that could cause such differences are described in the company's filings with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K. The company assumes no obligation to update such forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking statements.

Now I'd like to turn the conference over to the company's Chairman and Chief Executive Officer, Mr. Robert Cauley. Please go ahead, sir.

Robert Cauley

Thanks, Melissa, and good morning, everyone. As usual, we've posted our deck that we will use for the call on our website. I hope you've all had a chance to download it and look it over before we begin. As again, as I've said, we will be using this for the call. We will not necessarily cover every slide in the deck, but we do try to provide as much information as we can, and we will highlight the slides that we think are the most pertinent for purposes of Q3 earnings and our outlook for the markets going forward.

Starting on Slide 3. This is just a table of comments and overview. The first thing we will do is just go over our financial results. Jerry Sintes, our Controller, will handle that. I'll then talk about market developments kind of split evenly between a quick summary of what we saw in Q3 and then an equal amount of time looking at what's happened since quarter end and kind of our outlook for the markets going forward. And then Hunter will talk about our portfolio characteristics and hedge positions, discuss some of our trade highlights that we did for the quarter and maybe since quarter end and our outlook, and then we will have our usual Q&A session.

So with that, I will turn it over to Jerry Sintes on Slide 5.

Jerry Sintes

Thank you, Bob. I'll start with the financial highlights for the third quarter. Net income, we posted a net loss of $0.90 per share in Q3 compared to net income of $0.44 in Q2. Book value at September 30 decreased to $6.02 per share compared to $7.22 at the end of Q2. Total return for the quarter, inclusive of dividends declared, was negative 12.5% for Q3 compared to a positive 6.2% during Q2. And we declared a dividend of $0.30 per share during the quarter, which was consistent with Q2.

Turning to Page 6, the portfolio highlights. During Q3, we had an average portfolio size of $11.1 billion compared to $11.4 billion in Q2. Our leverage ratio at September 30 was 8.6x compared to 7.3x at June 30. 3-month CPR during the quarter was 8.4% compared to 10.9% during Q2. And our liquidity during -- at the end of Q3 was 44% compared to 54% at the end of Q2.

With that, I'll give it back to Bob.

Robert Cauley

Thanks, Jerry. I'll start on Slide 9. And as I said, just give you a quick overview. I'm sure since we're kind of the last of the peer group to report this week, you've heard quite a bit of this already. And obviously, the big story in Q3 was this material sell-off in the rates market that occurred right at the end of the quarter, driven by many, many factors: inflation, capital, with AI and sovereign debt issuance driving up borrowing costs and risk premium and several other factors. I don't need to dwell on that too much, but we did see a very substantial sell-off late in the quarter.

And since quarter end, we have actually changed. First off, I think we stabilized. We saw evidence of that last week. Probably driven by the fact that the market positioning had gotten extremely short. A lot of the selling we saw in the market was driven by mortgage investors such as ourselves, hedging convexity related extension of the assets that we own. I think that all kind of ran its course, and the market just seemed to stabilize. I think we just basically were collectively so short, really good. It was hard to have an impetus to drive further selling.

In fact, last week, we had very strong CPI and PPI data that came out, which would -- 3 weeks ago would have caused another leg lower in the market, but we did not have that at all. This week, we've kind of had a pretty meaningful change. Not only has the market stabilized, but 2 things stick out. One, we've seen this very high correlation between oil prices and rates where oil -- higher oil prices lead to higher rates. That broke this week and particularly yesterday, where oil was up quite a bit and rates rallied quite strongly.

The other thing that we've seen this week, which is a change from what we've seen really for the last 2 quarters is kind of the safe haven status of the U.S. Treasury market, where a lot of the turmoil that's taking place in the Middle East, in Europe and so forth has led to people buying treasuries. So like I said, yesterday, there was a lot of AI-related issues in the equity markets and credit markets. We had oil higher. We had political unrest in areas in Europe and then developments in the Middle East, and treasuries rallied very strongly.

No doubt, a lot of that was short covering. In fact, color today from the market would imply that CTAs are a lot less offsides, if you will, no longer have the extreme positioning they had. CTAs are commodity trading advisers that trade in futures very actively. They tend to be kind of a form of fast money, if you will. And they were very active in the market yesterday in all likelihood, covering short. So we had a very significant rally. It since petered out today. Don't know what will happen in the next few days. But we've definitely seen a change in the rates market from what we saw at the end of Q3. So that's a very significant development.

Slide 4 -- or Slide 10, rather, I don't need to spend a lot of time on this. Just looking at the mortgage market, I'll just make one observation. This is just a proxy for the attractiveness of the asset class, the current coupon mortgage spread to the 10-year treasury. And obviously, in the period after COVID, we had this several year period where the mortgage market performance was driven by the Fed, either it was QE or QT, and that's ended now. And so I think it kind of -- we have enough data points, if you will, since that ended where we can look at mortgages relative to the period prior to that.

And if you look at this chart, you can see the period up to COVID where we traded in a relatively stable range for a large number of years, and we're now north of that. So I think the asset class does look attractive. We'll talk more about that later in the call. We have had some tightening this week, but they still look attractive, and returns in the market are still quite attractive.

Moving on to Slide 11. As you can see, we've had another spike in vol associated with the sell-off late in the quarter and the meaningful mortgage underperformance. And if you look down below that, you can see we tend to have a lot of these episodes. They are obviously very detrimental for mortgage performance. The current one seems to be abating, but it seems that we're only a few months away from the next one.

The next slide, I think, is pertinent for us because when we get into a discussion of what we did with respect to the portfolio, we, like our peers, opted to not do a lot of widespread selling. Instead, we had modest selling and let the prepayments run off and instead address the sell-off by adjusting our hedges, both the notional amount of the hedges and the duration of those hedges. Obviously, we all know, as rates sell off, mortgage cash flows extend, the duration of the asset extends. So when we added to our hedge position, we did so with longer duration assets.

But also, if you look to the left, it's not as evident here how much has happened in the swap spread market. We saw swap spreads widening. But if you look back a little further, they're kind of at the wider end of the range that they've been in. And as a result, we wanted to do our hedging in the futures market more so than swaps just because swap spreads have widened so much. So if you look at the right side, you can see that the mix, the orange piece of the pie, if you will, which represents futures, has grown quite a bit. So we opted to change the mix in the hedges somewhat. We also took the hedge coverage from a pretty high 91% going into the quarter to 99%. But as I mentioned, most of the change was in the futures market, less so in swaps.

One -- next slide, 13. Just one quick point. If you look at the top right, the primary, secondary spread, we see a pretty significant tightening trend there. And I think what's driving that, if you look at the left side chart, you can see, one, the red line, that just is mortgage rates. As we all know, they're up in the mid-7% range. And not surprisingly, the refinancing activity associated with such a high mortgage rate is quite low. So it seems to be that mortgage originators may be giving up some profitability in order to maintain origination levels. As we enter into the typical seasonal slowdown with very high mortgage rates, very low affordability, it's a challenging market for that sector, for the originators.

We did see last night, for instance, President Trump signed an executive order, another step taken to try to reinvigorate the housing market, which has been struggling so much in the current rate environment and also not to downplay at all, but affordability, housing prices are quite high. So the combination, money is expensive, homes are expensive, and that makes for a very challenging market.

That's pretty much it. For the macro outlook, I'm going to turn it over to Hunter, and he can go through the portfolio developments, and then we will go to our Q&A. Thank you.

George Haas

Thanks, Bob, and hello, everyone. I'd like to add a little more context to Bob's comments regarding the performance of our portfolio and the hedge book during the third quarter and October month-to-date. Following a strong second quarter when we generated 6.2% total return, performance in July as the 10-year rose about 20 basis points, and our book value declined roughly 5%. We continue to see a familiar pattern in that month in which higher rates, wider spread environment and type of environment we've experienced over the last several quarters, during those types of moves, we tend to see belly and lower coupon mortgages underperform and premium coupons outperform on a relative basis, although in July, both sectors widened relative to our hedges.

Performance improved in August as interest rates were largely unchanged. Mortgage spreads recovered a little bit, and we regained approximately half of July's book value decline. As we moved through August into early September, the 10-year treasury yield broke above its recent trading range, climbing into the 4.70s and approaching 5%. Throughout this period, we steadily extended the duration of our hedges, particularly through longer-dated treasury futures, as Bob alluded to, as the duration of our mortgage portfolio increased. This allowed us to maintain a relatively flat interest rate risk profile despite substantial extension in our underlying mortgage assets.

The sell-off remained relatively orderly through the first 10 days of September. That changed with a sharp increase in rates and volatility, combined with significant widening in the mortgage basis, triggered some convexity related selling -- or convexity related hedging, I should say, and forced selling by some of the more highly levered investors. Specified pools had held in relatively well until that point, supported by strong demand from dealers creating new CMOs in the preceding months when rates were lower. However, as rates moved higher and selling pressure increased in the CMO floater market, that source of demand slowly -- slowed considerably.

This put additional pressure on higher pay-up specified pools, particularly low loan balance and New York geographic collateral, where we saw a meaningful decline in pay-ups relative to TBA. During this period, we made some moves. We executed a 15-year, 30-year coupon swap. We unwound our 3-month into 5-year payer spread swaption trade that we put on in the prior quarter, near max value, realized approximately 200% return on the premium paid. And we added short positions in 7-year, 10-year and even 30-year treasury futures.

Market conditions remain stressed into the second week of October but have since begun to improve. This improvement has been reflected in our performance, with book value increasing approximately 4.5% month-to-date through yesterday, October 22. Since quarter end, we've made several adjustments to the portfolio and hedge book. We've replaced $1.6 billion of short-dated swaps with an equivalent amount of DV01 in the 10-year treasury futures. We've sold some low pay-up 30-year 5s specified pools against a TBA short position that we had established at the end of the second quarter when implied funding levels on the rolls were quite higher. And we bought back our 1,500 contract ultra 30-year treasury future position that we had sold in September -- or that had matured in September.

Throughout the third quarter and October month-to-date, our primary focus has been on maintaining liquidity and a relatively flat interest rate profile. At the same time, we repurchased 6.62 million shares since the end of the second quarter, taking advantage of the substantial discount to book in the stock while maintaining a competitive expense ratio and avoiding dilutive equity issuance.

Looking ahead to the fourth quarter and next year, we'll continue this disciplined approach: We expect to reduce hedges as rates rally, add mortgage assets as market conditions and leverage normalize and look for opportunities to improve portfolio carry as relative value opportunities emerge. Our taxable income estimates remain in line with the dividends paid year-to-date. More recently, a modest increase in asset yields has contributed to some improvement in our taxable net interest margin.

While the recent repricing of mortgage assets negatively affected book value during the quarter, it has also improved the prospective returns available in the market. At current leverage levels, we believe the portfolio is capable of generating returns on equity in the high teens with somewhat higher prospective returns available through new investments or selective portfolio rotation. Our economic returns on shareholders' equity for both the quarter and the year have rivaled those at the top of the pure agency peer group without the benefit of any accretive equity issuance.

With our shares trading at a discount of more than 20% to estimated current book value as of October 22, we continue to view share repurchases as an attractive use of capital alongside opportunities to invest in additional mortgage assets.

And with that, I'll turn it back over to Bob.

Robert Cauley

Thanks, Hunter. Very good summary. I think, with that, we can turn the call over to questions. Operator, Didi, you can field the first question.

Operator

[Operator Instructions] And our first question comes from Doug Harter of BTIG.

질의응답

Douglas Harter

I just wanted to clarify the book value update that you gave and how that factors in kind of accrued earnings or the accrued dividend.

Robert Cauley

4.5% through yesterday, and it does include or exclude the dividend, if you will. So it reflects the dividend -- I'm sorry. It reflects the accrual of the earnings, the dividend.

Douglas Harter

So that's like an economic return number?

Robert Cauley

Yes, yes.

Douglas Harter

Okay. Appreciate it. And then can you just talk about your thought process and kind of how you weigh the decision to buy back your stock at a discount, which you guys clearly did last quarter? And how that compares to the attractiveness of kind of buying additional assets?

Robert Cauley

Well, we always -- it's just a number, right? You're looking at returns on marginal investments versus returns on buying back the shares. We're at such an extreme discount now. As Hunter mentioned, we're comfortably below 80% of book. So it's a pretty attractive return. I mean, that being said, we did 6.6 million shares. That's not a huge number, and it was something we will continue to do.

But I think, as Hunter alluded to, I would think, going forward, given what happened late in the quarter -- and by the way, the number we quote, a lot of that share repurchase activity had occurred before the last, whatever, 5 or 6 days of September. So we have done some in the fourth quarter. I think it's about 1.7 million. That's just when the stock was extremely cheap in the midst of all the turmoil. But the sector is attractive, and we'll probably -- as I think we mentioned, we had not reinvested paydowns during Q3. We will cease. We will start reinvesting paydowns.

And we may actually add some assets just to kind of take advantage of the additional -- the changes to the hedge book, I think we can accommodate that. So I would probably -- it's going to be a mix of asset acquisition and share buybacks just depending on what more -- looks more attractive at the time.

George Haas

I would just chime in that...

Douglas Harter

Sorry, go ahead.

George Haas

Sorry. No, I was just going to chime in that there's certainly some assets in the portfolio that look more attractive than others, and there's still a few things that are on the tighter side. And so we have a little bit of room to -- we have room to shed some of the tighter things and either reinvest the proceeds from that in stock buybacks or reallocate or rotate into asset classes that are -- or coupons, really, that are more attractive. And I just wanted to clarify on the book value question, the dividend has been removed from shareholders' equity. I got a little confused in that one.

Operator

And our next question comes from Jason Weaver of JonesTrading.

Jason Weaver

I'm just trying to ballpark dividend coverage going forward. Can you walk me through like how comfortable you are with the $0.30 level? I know there's some expanded ROEs available in the marketplace, but we have some swaps rolling off that are giving you some positive carry at the same time.

Robert Cauley

I think we're quite content. I think the earnings level of the portfolio is pretty much in line with the dividend. As Hunter mentioned, tax-wise, it's right on top of it. We expect at the end of the year that the taxable earnings versus the dividend is going to be very close. But the earnings rate, and we just updated this for October, is very much in line with the dividend. We don't know what the future holds, but if we maintain the current level in terms of market conditions and portfolio composition, we are very comfortable with the current pay rate.

Jason Weaver

All right. And then I think during Hunter's comments, you mentioned you had a 30, 15 coupon swap that you had put on. Talk a little bit about how you're viewing that trade. And also, is part of that trade a pure spread hedge? I noticed that the 30-year leg is quite a bit larger.

George Haas

It was -- I'm sorry, the trade was actually a 15, 30. We were long 15-year 5.5s versus a lower amount of 30-year 6s. And it was just really a relative value proposition. We put the trade on at sort of historic wides between 15s and 30s. And I think the trade gapped tighter about 10 ticks and then we unwound the position. I think what you may be referring to is we were also short some 30-year 5s going into -- that had been a TBA short that we put on as the basis really tightened in the second quarter, and we've kind of been riding that short as an alternative hedge.

And then in October, our leverage had increased a little bit with the losses from the third quarter. Cash was down a little. We just decided to go ahead and sell some pools and cover that TBA short. So the pools that we sold, we really didn't kind of truly experience a realized loss on if you will -- I mean, we lost a few ticks on pay-up for some specified pool features, but we were selling pools and buying back TBA. So it has helped us bolster our cash and get the leverage down a little bit, and we can wait and reposition if we want to.

Operator

[Operator Instructions] And our next question comes from Mikhail Goberman of Citizens JMP.

Mikhail Goberman

Most of my questions have kind of been touched on. So maybe if I could ask if you could expound a bit generally on your thoughts on the leverage ratio and where it kind of goes going forward as we move into the end of the year.

Robert Cauley

Yes, it was quite high at the end of the quarter. It has since come down. It is still north of 8x. I don't have today's number, but the last one I saw was 8.26x. Hunter, if you can update that, please do. But -- so it's down. But as we kind of alluded to earlier, with the changes in the composition of the hedge book, both in terms of the size and the duration, and the fact that the market appears to have stabilized and mortgages have started to recover somewhat, I think we're comfortable maintaining that level.

Changing market conditions obviously can change that. But for now, I think the approach that we took of just addressing the sell-off from the hedge side has worked, and it allows us to retain as much earnings power -- both as much earnings power as possible, but also as much potential book value recuperation through tightening of mortgages. So our intention now is to retain the portfolio at this size. And as I said, we'll probably reinvest paydowns, may actually add some. So we're comfortable. Long-winded answer, but the answer is we're comfortable at this level.

George Haas

Yes. Leverage is at 8.12x. And all through the third quarter, our duration gap was very, very tight. So I think like in the deck, maybe it's 0.17. We maintain -- we try to maintain a very tight -- we kind of look at DV01 and we look at the DV01 of all of our partials, make sure we don't have any curve exposure. And we're very well hedged from an interest rate standpoint. We certainly have exposure to volatility and mortgage basis, but we've been able to manage -- stay on top of delta hedging as rates move around.

We'll continue -- as I mentioned in my comments, we'll continue to do that to the extent that rates pull back, which I don't necessarily think they are, but we're clearly sitting at a relatively high level of rates and come in every morning and look at our risk. So we're comfortable with the leverage from that perspective. And mortgages aren't at the far extreme of their wides, but they've certainly given up some ground and have shown signs of support.

And I think there were some things going on in the third quarter related to some hedge fund stop-outs and some liquidations, and there was a lot of kind of a flurry of BWIC activity that occurred in a very short period of time. And once that kind of passed through the pipeline, things definitely felt a lot firmer. Who's to say, I mean, it could change again tomorrow, but that little episode where things got the most extreme in the last month or so was fairly short-lived.

Mikhail Goberman

I appreciate that. And so as you guys -- it sounds like you guys still have a pretty good appetite for buying back your stock. As you think about continuing to do that, so I guess the question is, do you just kind of try to manage the leverage ratio at, let me guess, like an 8x, 8.5x kind of range as you go forward?

Robert Cauley

Yes, that makes sense. And I mean, I think the share buybacks, if we continue to trade meaningfully below 80% of book, that looks pretty compelling. I would hope that would change given the relative performance of the stock, but we'll see. And then on the asset side, we have seen some decent recoveries reflected in the book value. If that were to change dramatically, if we were to tighten in significantly in the near term, that will change the calculus in terms of which option looks more attractive. But for now, it's -- they're pretty close to equilibrium, in other words, about even.

George Haas

Yes. There's just -- we can go through and we surveil the portfolio and things that look tight and don't have to stay. And if the better use of capital is to buy stock back, then that's what we can do and to the extent that things look wide and maybe it's less clear that that's the right move. And also, we can -- as I mentioned, there are opportunities in the portfolio at these rate levels to do some rotation and get a little bit better carry out of certain assets as well.

Robert Cauley

The big takeaway though is with the stock trading where it is, it's really an albatross around our neck. Most of our -- not most, but some of our peers trade at premiums and obviously being able to raise stock accretively and buy assets at these cheap levels is an extremely attractive option to have at your disposal. We're at the other end of that spectrum where we trade at a meaningful discount. And so that's off the table. We're not willing to sell shares at anywhere close to this level of a discount. So we manage as best we can given the price of the stock relative to book and try to generate the returns that we do and see how we stack up. And hopefully, at some point, the stock reflects the relative performance. But to date, it certainly has not.

Operator

Thank you. I show no further questions at this time. I'd like to turn it back to Robert Cauley for closing remarks.

Robert Cauley

Thanks, [ Didi ]. Again, thanks, everybody, for dialing in and listening to our call. To the extent you have further questions and want to elaborate further, we will be glad to do so. Or if you just happen to catch the replay and have a question, feel free to call us at the office. The number is (772) 231-1400. We're always welcome to take any questions. And otherwise, we will speak to you at the end of the fourth quarter and calendar year 2026. Thank you.

Operator

This concludes today's conference call. Thank you for participating, and you may now disconnect.