Should Redwood Trust, Inc. (NYSE:RWT) investors track the following data?
In the eyes of many of your peers, hedge funds are viewed as overrated, old financial tools of a period lost to current times. Although there are over 8,000 hedge funds in operation currently, this site looks at the masters of this club, close to 525 funds. Analysts calculate that this group has its hands on the lion’s share of all hedge funds’ total assets, and by keeping an eye on their highest quality investments, we’ve identified a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as key, positive insider trading activity is a second way to look at the financial markets. There are a number of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).
Furthermore, let’s analyze the latest info surrounding Redwood Trust, Inc. (NYSE:RWT).
Hedge fund activity in Redwood Trust, Inc. (NYSE:RWT)
At the end of the second quarter, a total of 16 of the hedge funds we track held long positions in this stock, a change of 33% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably.
Out of the hedge funds we follow, Wallace Weitz’s Wallace R. Weitz & Co. had the most valuable position in Redwood Trust, Inc. (NYSE:RWT), worth close to $92 million, comprising 3.7% of its total 13F portfolio. The second largest stake is held by John Paulson of Paulson & Co, with a $24.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Wallace Weitz’s Wallace R. Weitz & Co., Jim Simons’s Renaissance Technologies and Charles Clough’s Clough Capital Partners.
Now, specific money managers have been driving this bullishness. Wallace R. Weitz & Co., managed by Wallace Weitz, initiated the largest position in Redwood Trust, Inc. (NYSE:RWT). Wallace R. Weitz & Co. had 92 million invested in the company at the end of the quarter. Brian Taylor’s Pine River Capital Management also initiated a $57.4 million position during the quarter. The other funds with new positions in the stock are Howard Marks’s Oaktree Capital Management, John Paulson’s Paulson & Co, and Wallace Weitz’s Wallace R. Weitz & Co..
What do corporate executives and insiders think about Redwood Trust, Inc. (NYSE:RWT)?
Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time frame, Redwood Trust, Inc. (NYSE:RWT) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Redwood Trust, Inc. (NYSE:RWT). These stocks are Colony Financial Inc (NYSE:CLNY), American Capital Mortgage Investment Crp (NASDAQ:MTGE), Spirit Realty Capital Inc (NYSE:SRC), Brandywine Realty Trust (NYSE:BDN), and PS Business Parks Inc (NYSE:PSB). All of these stocks are in the reit – diversified industry and their market caps resemble RWT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Colony Financial Inc (NYSE:CLNY) | 15 | 0 | 0 |
| American Capital Mortgage Investment Crp (NASDAQ:MTGE) | 19 | 0 | 0 |
| Spirit Realty Capital Inc (NYSE:SRC) | 15 | 0 | 0 |
| Brandywine Realty Trust (NYSE:BDN) | 7 | 0 | 0 |
| PS Business Parks Inc (NYSE:PSB) | 11 | 0 | 0 |
Using the returns demonstrated by the previously mentioned research, regular investors should always track hedge fund and insider trading sentiment, and Redwood Trust, Inc. (NYSE:RWT) is no exception.
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