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Redwood Trust, Inc. Message Board

  • smoothjazz0204 smoothjazz0204 Jul 6, 2008 10:00 PM Flag

    WESTON'S CRZ HIT PIECE PULLED

    http://seekingalpha.com/article/83770-crystal-rivers-q2-write-downs-could-bankrupt-the-company?nick_was_taken=&additional_ids=198668#comment-198668

    Too late for RWT, but enough responders to his upcoming CRZ hit job objected to his duplicity, carelessness and omissions that Seeking Alpha fell compelled to yank his article. If it is not too late, I recommend someone go through this RWT hit piece and look for omissions, obfuscations and outright lies. This guy may lose that smirk yet, if it is proven he is using Seeking Alpha to perpetrate a fraud by going short then dumping on companies with dubious articles.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • All of the articles that these folks have published on Seeking Alpha are designed to create fear and uncertainty in the shareholders of target stock. They use convenient assumptions and inuendo to arrive at a disaster scenario. Then, when backed by a truly impressive short sale program, they are successful in driving the stock price down. This plan has worked so far with RWT and I am sure they have profited enormously.

      However, it is not too late for RWT. While the stock has dropped significantly, the price of the stock is ultimately going to be determined by the amount of credit losses that are actually taken in the RWT portfolio.

      And, there are some reasons to be optimistic on this front. ARM resets peaked in March at about 110 million and have dropped steadily to about 50 million in July. They will drop again in the coming months to half this number. This will slow the rate of foreclosures, the downward pressure on home prices, and losses in these mortgage portfolios. In fact, the Bear Stearns portfolio of these kinds of higher risk CES investments, now owned by the Fed, showed a very modest drop in value during the second quarter.

      If the RWT second quarter results show equally modest decliines in value, this fellow's whole theory will fail. Then the stock will begin a recovery. With the large short position, the recovery could be impressive.

    • Weston's piece is back on the CRZ board, with some editing and some "editor's notes". The following has also been added:

      "Disclosure: Author is long CRZ puts, short TMA stock, short RWT stock, long RWT puts; no position in other companies mentioned.
      [Editor's note: disclosure of author's RWT positions added 7/7/08]"

      There was NO such disclosure following his RWT piece.

    • While that article is negative, it does bring up many negative issues about the company that are worth looking at. I like this stock quite a bit and a negative article helps get more at even better prices without anything changing in the underlying fundamentals. Value guys love this stock, I love this stock. There are certainly risks, but the chance of RWT going under or lowering its dividend this year seems unlikely. One article does not change anything and it is pretty obvious that this article is what sparked the selling.

      I think it is pretty certain that the special dividend is not going to be paid this year however.. Hopefully it can survive and start paying that again in the next 2-3 years - that is why I am buying this thing here.

      • 1 Reply to jedw69
      • I think Greg Weston has been rather clearly shown to be a short seller who publishes negative articles on target companies to profit from the drop in price. So, everything he publishes has to be seen in that light including the article on RWT.

        He does make one valid point in the article, And that is that the mortgage resets have led to a drop in home prices and writedowns in the value of mortgage securities. But, that was not new information. It was discussed openly by RWT management. Weston says these will accelerate, based largely on his intuition and forecasts. But, as the amount of resets continues to drop from the peak amount in March 2008, it would seem more likely that these writedowns will decelerate.

        The other points he makes are based on self serving guesses, judgements and inuendo, not fact.

        RWT will clearly have more writedowns. However, to contemplate bankruptcy or a major collapse for a company with $257 million in cash, no leverage, controlled overhead expenses, and experienced senior management who have significant stock ownership with a recent record of buying more, is a real reach.

        RWT will continue to pay the regular $3.00 per share dividend. They have said that in their reports. This alone justifies a much higher valuation. And, the new income producing investments that RWT is making will give them the cash flow to begin, once again, paying special dividends.

 
RWT
19.82-0.360(-1.78%)Dec 24 1:04 PMEST

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