Market cap of Redwood Trust Inc. [RWT] reaches 1.13B – now what?


Redwood Trust Inc. [NYSE: RWT] loss -9.81% or -1.01 points to close at $9.29 with a heavy trading volume of 8395313 shares. The company report on June 6, 2022 that Redwood Trust Prices Upsized $200 Million Convertible Senior Notes Offering.

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Redwood Trust, Inc. (NYSE: RWT; “Redwood” or the “Company”), a leader in expanding access to housing for homebuyers and renters, today announced that it priced $200,000,000 aggregate principal amount of its 7.75% convertible senior notes due 2027 (the “Notes”) in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The aggregate principal amount of the offering was increased from the previously announced offering size of $150,000,000. Redwood granted the initial purchasers of the Notes an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $30,000,000 principal amount of Notes. The Notes will be senior unsecured obligations of Redwood. The offering is expected to close on June 9, 2022, subject to the satisfaction of certain closing conditions.

Interest on the Notes will be payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2022; the Notes will mature on June 15, 2027, unless earlier repurchased, redeemed or converted. Upon conversion, holders of the Notes will receive shares of Redwood’s common stock, together with cash in lieu of any fractional share. If Redwood undergoes a “fundamental change” (as defined in the offering memorandum relating to the Notes), subject to certain conditions, holders of the Notes may require Redwood to repurchase all or part of their Notes for cash in an amount equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any.

It opened the trading session at $9.89, the shares rose to $10.03 and dropped to $9.27, the range by which the price of stock traded the whole day. The daily chart for RWT points out that the company has recorded -27.93% loss over the past six months. However, it is still -7.65% lower than its most recent low trading price.

If we look at the average trading volume of 1.35M shares, RWT reached to a volume of 8395313 in the most recent trading day, which is why market watchdogs consider the stock to be active.

Here is what top equities market gurus are saying about Redwood Trust Inc. [RWT]:

Based on careful and fact-backed analyses by Wall Street experts, the current consensus on the target price for RWT shares is $12.72 per share. Analysis on target price and performance of stocks is usually carefully studied by market experts, and the current Wall Street consensus on RWT stock is a recommendation set at 1.70. This rating represents a strong Buy recommendation, on the scale from 1 to 5, where 5 would mean strong sell, 4 represents Sell, 3 is Hold, and 2 indicates Buy.

JP Morgan have made an estimate for Redwood Trust Inc. shares, keeping their opinion on the stock as Overweight, with their previous recommendation back on May 13, 2022. While these analysts kept the previous recommendation, Wells Fargo raised their target price to Equal Weight. The new note on the price target was released on November 01, 2021, representing the official price target for Redwood Trust Inc. stock. Previously, the target price had yet another raise from $12 to $14, while Piper Sandler kept a Overweight rating on RWT stock.

The Average True Range (ATR) for Redwood Trust Inc. is set at 0.36, with the Price to Sales ratio for RWT stock in the period of the last 12 months amounting to 1.78. The Price to Book ratio for the last quarter was 0.77, with the Price to Cash per share for the same quarter was set at 3.36.

Trading performance analysis for RWT stock

Redwood Trust Inc. [RWT] fell into the red zone at the end of the last week, falling into a negative trend and dropping by -9.01. With this latest performance, RWT shares dropped by -7.84% in over the last four-week period, additionally sinking by -27.93% over the last 6 months – not to mention a drop of -19.98% in the past year of trading.

Overbought and oversold stocks can be easily traced with the Relative Strength Index (RSI), where an RSI result of over 70 would be overbought, and any rate below 30 would indicate oversold conditions. An RSI rate of 50 would represent a neutral market momentum. The current RSI for RWT stock in for the last two-week period is set at 39.43, with the RSI for the last a single of trading hit 33.52, and the three-weeks RSI is set at 41.89 for Redwood Trust Inc. [RWT]. The present Moving Average for the last 50 days of trading for this stock 9.81, while it was recorded at 10.11 for the last single week of trading, and 11.86 for the last 200 days.

Redwood Trust Inc. [RWT]: A deeper dive into fundamental analysis

Operating Margin for any stock indicates how profitable investing would be, and Redwood Trust Inc. [RWT] shares currently have an operating margin of +114.45 and a Gross Margin at +95.22. Redwood Trust Inc.’s Net Margin is presently recorded at +46.00.

Return on Equity for this stock inclined to 24.75, with Return on Assets sitting at 2.47.

Redwood Trust Inc. [RWT]: An earnings per share (EPS) analysis

The progress of the company may be observed through the prism of EPS growth rate, while Wall Street analysts are focusing on predicting the 5-year EPS growth rate for RWT. When it comes to the mentioned value, analysts are expecting to see the 5-year EPS growth rate for Redwood Trust Inc. go to 29.74%.

An analysis of insider ownership at Redwood Trust Inc. [RWT]

There are presently around $871 million, or 72.80% of RWT stock, in the hands of institutional investors. The top three institutional holders of RWT stocks are: BLACKROCK INC. with ownership of 20,415,569, which is approximately 0.209% of the company’s market cap and around 0.50% of the total institutional ownership; VANGUARD GROUP INC, holding 12,245,804 shares of the stock with an approximate value of $126.13 million in RWT stocks shares; and STATE STREET CORP, currently with $42.54 million in RWT stock with ownership of nearly 8.084% of the company’s market capitalization.

Positions in Redwood Trust Inc. stocks held by institutional investors increased at the end of April and at the time of the April reporting period, where 106 institutional holders increased their position in Redwood Trust Inc. [NYSE:RWT] by around 8,993,087 shares. Additionally, 116 investors decreased positions by around 7,508,416 shares, while 34 investors held positions by with 68,067,156 shares. The mentioned changes placed institutional holdings at 84,568,659 shares, according to the latest SEC report filing. RWT stock had 30 new institutional investments in for a total of 3,573,053 shares, while 30 institutional investors sold positions of 1,704,800 shares during the same period.