Weitz has been a long-time holder of Redwood’s stock, though its market price has dropped 40 percent in the last five years. In the second quarter of 2008, when Weitz’s holding totaled 5.7 million shares, the company’s average trade price was $33.69. Still, the Guru grew his stake, especially in 2011 when Weitz consecutively purchased, building his holding to 7.5 million shares in the beginning of last year, which was the largest it had been in the last five years.
Today, Redwood is trading at $18.28. After this recent reduction, Weitz still has 6.5 million shares of Redwood Trust.
RWT data by GuruFocus.com
With a market cap of $1.46 billion, Redwood Trust’s main investments consist of residential mortgage loans, commercial loans and other forms of commercial real estate financing. An avid dividend payer, Redwood’s dividend yield sits comfortably at 6 percent, its payout ratio at 0.9.
For the final quarter of 2012, Redwood distributed 0.25 per share in dividends on Dec. 14.
"The payment of regular dividends remains a priority for Redwood,” said Redwood CEO Marty Woods in the release announcing the payment. “Our fourth quarter dividend will mark our 54th consecutive quarterly dividend.”
The company also looks forward to increasing its dividend to $0.28 per share in 2013.
In the last 12 months, Redwood maintained a revenue growth rate of 8.4 percent, although 10-Year Financials show that the company has declined in revenue for the past 10 years.
On GuruFocus, the company has five Severe Warning signs, revealing such things as a declining operating margin, gross margin and per share revenue. Its Medium Warning signs also signal both its P/B and P/S ratios close to their three-year highs.
Besides Weitz, other Gurus who have stake in the company include NWQ Managers, RS Investment Management, Diamond Hill Capital and Arnold Schneider. (RWT: Guru Trades)
To view more of Wallace Weitz’s latest trades, visit Stock Picks.
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