Tue, Feb. 24, 2:23 PM
- One issue for Redwood Trust (RWT -2.5%) are mark-to-market items associated with interest rate volatility that flow through to the income statement, but in some cases the economic offsets in place only show up on the balance sheet.
- One example in Q4 was the company's MSR portfolio which was marked down by $15M thanks to declining interest rates. While MSRs are a nice natural hedge against rising rates, that benefit only shows up on the balance sheet, and not the bottom line (GAAP income in Q4 was $27M vs. $45M in Q3).
- "We are currently looking for ways to better align the accounting between our MSR investments and other interest rate sensitive securities over the coming quarters," says CFO Chris Abate, speaking on the earnings call (transcript).
- As for the 2015 outlook, the company expects to acquire $8B of conforming loans and $7B of jumbo loans - a total of $15B, or 67% higher than 2014. In commercial, the expectation is for $1.5B in originations vs. $1B in 2014 at margins averaging 150 basis points.
- Previously: Redwood Trust slips slightly after Q4 results (Feb. 23)
Nov. 7, 2014, 10:56 AM
- Q3 GAAP income of $45M or $0.50 per share compared to $16M and $0.18 in Q2. REIT taxable income of $0.21 per share vs. $0.17 in Q2. The dividend is $0.28.
- GAAP book value per share rises to $15.21 from $15.03 as GAAP income was well in excess of the quarterly payout. The current price of $19.36 is 1.27x book.
- Loan acquisitions of $3.4B were up 89% Q/Q, with the new initiative of acquiring conforming loans generating 46% of that total. Of note were gross margins on conforming loan sales turning positive in Q3 as the company moves past an initial focus of establishing itself and building market share.
- The Redwood Review
- Previously: Redwood Trust beats by $0.19, beats on revenue
- RWT +4.1%
Jun. 13, 2014, 3:14 PM
- Redwood Trust (RWT +3.2%) is ahead in today's session after last night announcing the formation of MPF Direct with the Federal Home Loan Bank of Chicago. MPF Direct will allow members of a FHLB to deliver residential high-balance mortgages to subsidiaries of Redwood.
- Per terms of the agreement, Redwood will be the sole investor in the program for a period of three years.
- Source: Press Release
Dec. 23, 2013, 2:22 PM
- Homebuilders and private mortgage insurers are partying thanks to incoming FHFA chief Mel Watts' weekend move to postpone an increase in fees which would have raised significantly raised mortgage costs for those with good, but not stellar credit and less than 20% to put down.
- "This is a victory for the housing finance industry," says FBR's Edward Mills. "We believe that this is the first of a series of decisions by incoming Director Watt to preserve/expand mortgage credit availability ... We view this announcement as positive for housing generally, but specifically for private mortgage insurers, originators, and homebuilders."
- Homebuilder ETFs: XHB +2%, ITB +2.8%.
- Homebuilder names: Toll Brothers (TOL +3.9%), Putle (PHM +5%), Lennar (LEN +3.2%), KB Home (KBH +6.9%), Hovnanian (HOV +4.8%), D.R. Horton (DHI +2.8%), Standard Pacific (SPF +4%).
- Mortgage insurers: Radian (RDN +4.1%), MGIC (MTG +1.1%), Genworth (GNW +1.6%), Old Republic (ORI +0.7%), NMI Holdings (NMIH +1.1%). Essent Group (ESNT -0.6%) is off a hair, but up 29% since its late-October IPO.
- Not showing much reaction today, but potentially set up to disappoint if the GSEs do not allow any private oxygen in mortgage finance are Redwood Trust (RWT -0.2%) and PennyMac Financial (PFSI +1.2%).
Oct. 15, 2013, 10:13 AM
- Finding itself on the wrong end of sell-side opinion of late, Redwood Trust (RWT +1.4%) finds a friend in UBS, which initiates the stock a Buy with $24 price target.
- The stock has given back a large chunk of big Y/Y gains in the past few months amid higher interest rates and the banks returning to the private-label mortgage business, particularly as jumbo mortgage rates fall below conforming rates.
- Previous downgrades from FBR and Wells.
Sep. 18, 2013, 9:16 AM
- Newcastle Investment (NCT) spinoff New Residential (NRZ) soars 6.9% premarket after declaring its first full quarterly dividend of $0.175 per share for a 10.95% yield (based on last night's close).
- Nearly 11% is a whopper of a yield considering peers like Redwood (RWT), HLSS, and Pennymac (PMT) are in the 5-10% range.
Mar. 12, 2013, 3:33 PMThe curious selloff following Redwood Trust's (RWT) blowout Q4 earnings on Feb.22 looks curiouser with each passing day. The stock's up 3.9% today and 16% since earnings. Deutsche bumped its price target amidst the selloff and Jefferies lifted its last week. Today the company announced presale results on its 4th private MBS, a $576M package. | 1 Comment
Dec. 18, 2012, 10:32 AMEllington Financial (EFC +1.5%) gains as Thomas Lott points it out as a cheaper, better-performing alternative to many of its peers in the mREIT industry. The company is actually a partnership - a good thing, writes Lott, as it allows management investment flexibility not available to REITs. The CIO is former Kidder mortgage trader Mike Vranos, who recently picked up more shares, and now owns 12% of the company. | Comment!
Feb. 27, 2012, 5:06 PM
RWT vs. ETF Alternatives
Redwood Trust Inc operates as a real estate investment trust. The Company together with its subsidiaries is engaged in investing in mortgage- and other real estate-related assets and engaging in residential and commercial mortgage banking activities.
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