Stock Traders Purchase High Volume of Put Options on Starwood Property Trust (NYSE:STWD)

Key Points

• Unusually large options activity: investors bought 21,206 put options on STWD on Tuesday — a 998% increase versus the average, signaling heavy bearish bets.
• Capital returns: the board authorized a $400 million share repurchase (up to 6.1% of shares) and the company offers a quarterly dividend that annualizes to a 10.8% yield, though the dividend payout ratio is elevated at 165.52%.
• Recent fundamentals and analyst view: STWD reported a slight earnings beat ($0.42 vs. $0.41 consensus) and revenue beat, trades near $17.85 with a $6.61B market cap, and carries a consensus Hold rating with a $19.90 target.

Starwood Property Trust, Inc. (NYSE:STWD - Get Free Report) was the recipient of unusually large options trading on Tuesday. Stock investors purchased 21,206 put options on the company. This is an increase of 998% compared to the average volume of 1,932 put options.

Starwood Property Trust Price Performance

Shares of STWD traded up $0.32 during mid-day trading on Tuesday, hitting $17.85. The company's stock had a trading volume of 985,013 shares, compared to its average volume of 3,595,033. The company has a debt-to-equity ratio of 3.10, a current ratio of 1.68 and a quick ratio of 1.68. The stock has a market capitalization of $6.61 billion, a price-to-earnings ratio of 15.38, a PEG ratio of 2.34 and a beta of 1.10. Starwood Property Trust has a fifty-two week low of $16.59 and a fifty-two week high of $21.05. The firm has a 50-day moving average price of $18.07 and a 200 day moving average price of $18.58.

Starwood Property Trust (NYSE:STWD - Get Free Report) last announced its quarterly earnings data on Wednesday, February 25th. The real estate investment trust reported $0.42 EPS for the quarter, beating analysts' consensus estimates of $0.41 by $0.01. Starwood Property Trust had a return on equity of 8.16% and a net margin of 22.32%.The company had revenue of $492.95 million during the quarter, compared to the consensus estimate of $469.53 million. During the same quarter in the prior year, the firm earned $0.48 EPS. The company's quarterly revenue was up 8.5% compared to the same quarter last year. On average, research analysts predict that Starwood Property Trust will post 1.88 EPS for the current fiscal year.

Starwood Property Trust announced that its board has initiated a share repurchase plan on Thursday, February 26th that permits the company to buyback $400.00 million in shares. This buyback authorization permits the real estate investment trust to reacquire up to 6.1% of its shares through open market purchases. Shares buyback plans are typically an indication that the company's management believes its shares are undervalued.

Starwood Property Trust Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Wednesday, April 15th. Investors of record on Tuesday, March 31st will be paid a $0.48 dividend. The ex-dividend date of this dividend is Tuesday, March 31st. This represents a $1.92 dividend on an annualized basis and a yield of 10.8%. Starwood Property Trust's dividend payout ratio (DPR) is currently 165.52%.

Institutional Investors Weigh In On Starwood Property Trust

Large investors have recently made changes to their positions in the company. DLD Asset Management LP bought a new position in shares of Starwood Property Trust in the second quarter valued at approximately $692,415,000. Vanguard Group Inc. grew its holdings in shares of Starwood Property Trust by 7.1% during the third quarter. Vanguard Group Inc. now owns 32,976,364 shares of the real estate investment trust's stock worth $638,752,000 after purchasing an additional 2,193,085 shares during the last quarter. Geode Capital Management LLC increased its stake in shares of Starwood Property Trust by 2.4% in the fourth quarter. Geode Capital Management LLC now owns 6,406,419 shares of the real estate investment trust's stock valued at $115,453,000 after buying an additional 148,740 shares in the last quarter. Northern Trust Corp raised its holdings in shares of Starwood Property Trust by 1.2% in the third quarter. Northern Trust Corp now owns 5,387,358 shares of the real estate investment trust's stock valued at $104,353,000 after buying an additional 64,178 shares during the last quarter. Finally, Norges Bank acquired a new position in Starwood Property Trust during the 4th quarter worth about $75,177,000. Institutional investors own 49.82% of the company's stock.

Analysts Set New Price Targets

A number of brokerages have issued reports on STWD. Weiss Ratings reaffirmed a "hold (c)" rating on shares of Starwood Property Trust in a research note on Wednesday, January 21st. Keefe, Bruyette & Woods decreased their target price on Starwood Property Trust from $20.50 to $20.00 and set an "outperform" rating for the company in a research note on Monday, March 2nd. Zacks Research raised Starwood Property Trust from a "strong sell" rating to a "hold" rating in a report on Monday, January 12th. Wells Fargo & Company decreased their price target on Starwood Property Trust from $22.00 to $21.00 and set an "outperform" rating on the stock in a research note on Thursday, February 26th. Finally, Bank of America reaffirmed a "neutral" rating and set a $19.00 price target on shares of Starwood Property Trust in a research report on Friday, March 6th. Three research analysts have rated the stock with a Buy rating and four have assigned a Hold rating to the company's stock. According to data from MarketBeat, the stock presently has a consensus rating of "Hold" and a consensus target price of $19.90.

Starwood Property Trust Company Profile

Starwood Property Trust NYSE: STWD is a publicly traded real estate investment trust that specializes in originating, acquiring and managing commercial mortgage loans and other real estate-related investments. The company's portfolio spans a variety of asset classes, including senior mortgages, mezzanine debt, preferred equity and direct equity investments in commercial properties. By focusing on both debt and equity capital solutions, Starwood Property Trust seeks to generate attractive risk-adjusted returns for its shareholders through a combination of current income and capital appreciation.

Operating primarily in the United States, Starwood Property Trust deploys capital across a broad range of property types, such as multifamily residential, office, retail, hotel and industrial.

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