TPG mortgage REIT has struggled and is down ~66% YTD

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We provided an in-depth analysis of TPG RE Finance Trust’s (TRTX) Q1 earnings release for subscribers the day after the report was made available. The stock’s performance year-to-date, widespread difficulties throughout the mortgage REIT sector, and notes made in TRTX’s Q1 SEC filing concerning solvency concerns justified a deeper dive on this mortgage REIT. We are sharing an abbreviated but still comprehensive version of this article with our valued public followers.

Using The Right Lens Is Challenging But Necessary

‘In the business world, the rear-view mirror is always clearer than the windshield’

‘Price is what you pay. Value is what you get’

It is apropos to start with a few quotes from Warren Buffet. Many of Buffet’s well known investing strategies focus on value, the pitfalls of hindsight, and avoiding overconfidence. These are points we’ve hammered home in many articles, including a few public ones.

In relation to TRTX, its intrinsic value is not derived from its current or past share price. It’s not that this information has no value, it means we shouldn’t let individual data points overwhelm or bias our analysis. Stocks that have declined by two thirds or more during a crisis inevitably spark an emotional reaction, and especially if it has been in your investment account. As difficult as it is, we must strive to evaluate investments based on today’s risk-adjusted return profile.

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