Redwood Trust heads into the back half of June with short sellers rebuilding positions at the fastest weekly pace in months, even as a bellwether analyst cuts his price target by nearly 30% on the same day.
The short-side move is the clearest story this week. Short interest climbed 14% over the past seven days to reach 4.3% of the free float — a meaningful acceleration from the roughly flat readings seen through most of May. The jump appears tied to a single-session step-change around June 8, when shares short rose from roughly 4.75 million to over 5.4 million and have held there since. That level is not extreme in absolute terms, but the pace of accumulation is notable for a name that had been drifting sideways. Despite the rebuild, the borrow market remains relaxed. Availability runs above 1,000% of short interest — far more shares available to lend than are currently borrowed — and the cost to borrow is just 0.47%, near its lowest level of the past six weeks. There is no squeeze pressure of any kind in the lending pool. Options positioning offers a mild counterweight: the put/call ratio jumped to 1.79 on Monday, above recent readings but still within the normal range of the past 20 days. The overall setup is one of rising short conviction with no meaningful friction.
The Street angle sharpens the picture. BTIG's Douglas Harter — who has covered the name for years — slashed his price target from $8.50 to $6.00 this morning while keeping a Buy rating. That move matters: it's a 29% reduction and drops his target from a level that implied material upside to one much closer to where actually trades at $5.27. The mean analyst target across the coverage universe now stands at $6.66, implying roughly 26% upside from current levels — but the direction of travel is clear, with multiple analysts trimming in recent months rather than raising. Piper Sandler sits at Neutral with a $6.50 target; Jones Trading holds Buy at $6.25. The bull case centres on record mortgage banking revenues, a 67% jump in loan locks year-over-year, and a 19.1% EAD ROE that suggests the operating model is gaining leverage. Bears point to the legacy portfolio — still 15% of invested capital — dragging GAAP results, plus the structural risk of running a debt-heavy balance sheet in a credit environment that can turn quickly. The valuation is modest: price-to-book sits at 0.69x, up about three points on the week but still a meaningful discount to book value. The earnings yield (EP) runs near 18.9%, consistent with a market pricing in meaningful uncertainty rather than paying for growth.
Institutional ownership adds a layer of stability. BlackRock holds 16% of shares and added marginally through May. Wellington trimmed by 2.2 million shares as of March, the largest top-holder reduction on record. Mirae Asset moved the other way, adding 844,000 shares through late May — one of the more active recent moves in the register. The insider picture is less dramatic: the 90-day net is slightly positive at around 341,000 shares net, but recent transactions are mostly director compensation awards rather than open-market purchases. CEO Christopher Abate sold 60,000 shares in mid-April at just over $9 — well above the current price — and the stock has since retraced sharply.
Earnings history is thin but instructive. The April 29 print produced a 3.3% one-day drop, with the stock still down 3.1% five days later. The prior quarter ended with a modest 0.7% gain on the day followed by a 1.9% five-day slide. Neither reaction was dramatic, but the tilt is consistently negative. The next event is July 27.
Peer comparison offers some context on relative standing. Closest correlate CIM gained 1.2% on the week. IVR added 2.9% and NLY rose 4.1%. RWT managed just 1.5%, lagging the group — a pattern consistent with its heavier exposure to non-agency credit versus agency-focused peers. The gap to watch into July 27 is whether that underperformance narrows as the mortgage banking momentum thesis gets tested against a fresh set of quarterly numbers.
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