EJF Investments is targeting an 8-10% pa return from regulatory-driven credit investments, primarily by investing in securitisations of debt issued by small US banks. Strengthened balance sheets and improved profitability have resulted in very low default rates. We think the portfolio should benefit from a rising interest rate environment. The fund benefits from access to attractive specialty finance investments from the manager’s sector focus. There is ample evidence of shareholder alignment. We initiate coverage with a BUY rating and a 160p TP.