Redwood Trust, Inc. (RWT)

Doug Harter et al. of Credit Suisse published a report the morning of 8/19 with a price target of 10.50 and an outperform rating. They wrote, "We had the opportunity to host meetings with Dash Robinson (President), Brooke Carillo (CFO),
and Kaitlyn Mauritz (IR). The meetings highlighted RWT’s ability to weather the current volatile
markets and its longer-term positioning to benefit from the challenges. The confidence in the
long-term positioning plus the valuation (67% of tangible book value) causes us to reiterate our
Outperform rating." I bought some shares.

From Seeking Alpha.
Glad to see they have half a billion in cash and margin calls are met.

Q1'20 Key Financial Results and Metrics

GAAP net loss was $(943) million, or $(8.28) per diluted common share
GAAP book value per common share was $6.32 at March 31, 2020; includes a $(0.78) per share impact from the impairment of intangible assets
Unrestricted cash balance was $375 million at March 31, 2020
Total recourse debt(1) of $4.6 billion at March 31, 2020
Company Update

At May 6, 2020, Redwood's unrestricted cash balance was $552 million and the company had met all margin calls due
Expect to reduce March 31, 2020 total recourse debt to $2.6 billion and total marginable debt to $1.1 billion on a pro forma basis(2)
On a preliminary basis, Redwood's GAAP book value per common share as of April 30, 2020 is estimated to be approximately 5% higher than GAAP book value per common share at March 31, 2020(3)
On May 6, 2020, Redwood announced the previously delayed first quarter dividend is now scheduled to be paid fully in cash on May 8, 2020

Redwood Trust EPS beats by $0.20, beats on net interest income

Redwood Trust (NYSE:RWT): Q2 GAAP EPS of $0.66 beats by $0.20.

Net interest income of $31M (+14.8% Y/Y) beats by $2.36M.

From today’s press release. Looks like they will have plenty to talk about during the fourth quarter earnings call. I’m looking forward to it!

Fourth Quarter Business Update:

• Locked a record $3.8 billion(1) of residential loans with over 90 discrete sellers, an 81% increase in locks from the third quarter of 2020
• Originated $446 million of business purpose loans, up 71% from the third quarter of 2020
• Completed the first residential loan purchases through "Rapid Funding", a proprietary technology-enabled program that significantly accelerates purchase timelines for qualified originators
• Executed four securitizations across Residential and Business-Purpose Lending, including two traditional marketed deals and two innovative single-investor deals placed directly with insurance companies
• During the quarter, the Company estimates the fair value of its securities investment portfolio increased approximately 3%

The whole key here is how long does it take to get back to normal. If we recover in the next 6-12 months RWT will be back to $15 give or take by the end of 2021. I think we will have some back and forth with the coronavirus, but I believe with all of the efforts being put forth, this will largely be behind us in the next 12 months and RWT along with many other stocks will rebound nicely. I like RWT because while the risk is greater in the short term the long-term upside is 500-600%. Most stocks also have good upside - but more like 50-200% depending on the company. I feel good about putting some money to work at these prices...

Key Financial Results and Metrics

GAAP net income was $54 million, or $0.42 per diluted common share
GAAP book value per common share was $9.91 at December 31, 2020
Economic return on book value(1) of 7%
Recourse leverage ratio(2) of 1.3x at December 31, 2020
Declared and paid a regular quarterly dividend of $0.14 per common share for the fourth quarter