Redwood Trust (RWT, Financial) invests in mortgage-related and other real estate-related assets and is engaged in residential and commercial mortgage banking activities. A volatile interest rate environment and increased competition in each of Redwood Trust’s business segments (residential and commercial mortgage banking) has resulted in lower than expected volumes and profitability through 2015. Despite difficult market conditions, the company has remained profitable in each of its business segments. Redwood Trust continues to enhance its competitive advantage across its platforms and remains well positioned to take advantage of potential government-sponsored enterprise reform, what we believe will be the eventual revitalization of private-label residential securitization and new commercial investment opportunities. We believe Redwood’s market valuation of less than book value overly discounts Redwood’s future earning capabilities. While we wait for the value to be realized, a dividend yield of nearly 8.5% should enhance future total return.
From Weitz Funds' Balanced Fund fourth quarter 2015 commentary.
