A series of fruitless acquisitions has Redwood Trust in hot water with a pair of activist investors calling for a dramatic shakeup at the mortgage REIT.
Investor Bradley Radoff kicked things off on 14 September when he wrote an open letter to Redwood’s board of directors demanding the REIT be sold and taken private due to the stock trading at a discount to intrinsic value and the firm allegedly overpaying its executives. A former Third Point and Citadel employee turned private investor, Radoff pins executive compensation at $21.3m for FY 2025 and alleges in his letter that “enriching company executives appears to be the main function of Redwood Trust’s public structure.”
He also criticized its recent corporate refinancing — Redwood on 10 September priced a $185m senior convertible note at a 7% coupon due in 2030. It used $130m to buy back $123.8m of senior notes with a 7.75% coupon due in 2027 and another $20m to buy back 5.5m shares of common stock. The last $35.7m was held as cash. While the move alleviated near-term maturity concerns, Radoff took issue with the dilutive nature of the issuance.
“The company’s recent capital markets activity indicates either a blatant attempt at...
