Redwood Trust Inc. 9.125% Senior Notes Due 2030 (RWTP)

FairStock Score: 33/100 — RISKY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I approach RWTP as a creditor, not an owner: these are Redwood Trust’s 9.125% senior notes due 2030, quoted at $21.38 on 2026-10-26, not the common stock. The issuer is a mortgage-finance specialist with four segments—Sequoia, CoreVest, Redwood Investments, and Legacy—so its fortunes are tied to housing credit and securitization demand. The record is uneven: FY2024 net income was $54.0M and diluted EPS $0.32, but FY2025 swung to a $70.0M net loss and EPS -$0.63, and FY2023 was also a small loss at -$2.3M and EPS -$0.11. Recent quarters show some narrowing: fiscal Q1 2026 lost $5.5M (-$0.07 EPS), fiscal Q2 2026 lost $1.1M (-$0.03 EPS). FairStock’s calculated ROE of 0.57%, ROCE of 0.02%, and D/E of 29.40 point to thin returns and meaningful leverage; P/B is 3.10 at the stated close. The FairStock Score is 33/100, and its Lynch box is TURNAROUND—loss in the latest year after earlier profits. As a note, the 9.125% coupon is the main attraction, but a high coupon can be compensation for credit risk. I see no durable moat in mortgage banking, and growth is not proven while losses persist. The price is well below the 52-week high of $25.89 and near the low of $19.98, but Graham would ask about coverage and asset quality, not just yield. I would want evidence of sustained positive earnings and stable leverage before calling the notes a bargain.

In plain English: Redwood Trust is a specialty finance company that buys, sells, and invests in residential mortgages. It earned $54.0 million in fiscal 2024 but lost $70.0 million in fiscal 2025 and was still losing money in the first half of fiscal 2026. The 9.125% debt due 2030 is quoted at $21.38; weak profits and high debt make repayment risk the main issue, so the price does not look like a simple bargain.

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Data as of 2026-10-26 close · note generated 2026-10-28 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer