Pros
Business model works in a bull real estate market. As a REIT, very lofty goal to compete with GSE - Yahoo's Business Summary: Redwood Trust, Inc., a financial institution, together with its subsidiaries, invests in, finances, and manages real estate assets. The company invests in residential and commercial real estate loans, and in asset-backed securities backed by real estate loans. It credit-enhances loans by acquiring and managing the first-loss and credit-sensitive securities that bear the credit risk of securitized loans. For federal income tax purposes, the company is structured as a real estate investment trust (REIT). As a REIT, it would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. Redwood Trust, Inc. was founded in 1994 and is based in Mill Valley, California.
Cons
REIT model does not enable negative view and bets towards downside