MeritValue

TWO HARBORS INVESTMENT CORP.

TWODdata completeness 88%17 fiscal years on file
The thesis, from the filings

TWO HARBORS INVESTMENT CORP. earns about 24% on invested capital, but has diluted owners by 40% over 5 years — worth asking whether the growth reaches owners. The cash-flow models don't apply cleanly here — the ledger says why below. Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$168.6M1$295.5M2$480.4M3$450.2M3$412M3
Net income$187.2M4$220.2M5−$106.4M6$298.2M6−$454.3M6
Operating cash flow$423.5M7$623.4M8$343.5M9$201M9$88.9M9
Capital expenditure—————
Free cash flow (derived)—————
Total debt————$8.56B10
Cash & equivalents$1.15B11$683.5M12$729.7M13$504.6M14$842.3M14
Diluted shares74.5M96.1M95.7M113.1M104.1M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom). A derived or summed figure cites every filing line it was built from.

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$171.73
your share of equity
Profit it earned you last year
−$43.64
Free cash flow it threw off
—
Debt you’d be carrying
$821.92

10 shares is a claim on $171.73 of net worth that earned you −$43.64 last year, against $821.92 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
24% avg · 5y
FY21 17%FY22 26%FY23 30%FY24 51%FY25 -4%

It earned an average 24% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+40% shares · 5y

Share count is up 40% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has held roughly steady.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.5.0
DCF · Growth Exit 10Y
not applicable
REIT — real-estate depreciation is an accounting charge on assets that generally appreciate, so it inflates free cash flow and depresses reported earnings and book value at the same time. Every model here reads one of those, and none is a fair base. FFO/AFFO is the applicable measure — see the FFO capitalisation model, which values REITs from it.
DCF · Growth Exit 5Y
not applicable
REIT — real-estate depreciation is an accounting charge on assets that generally appreciate, so it inflates free cash flow and depresses reported earnings and book value at the same time. Every model here reads one of those, and none is a fair base. FFO/AFFO is the applicable measure — see the FFO capitalisation model, which values REITs from it.
Earnings Power Value
not applicable
REIT — real-estate depreciation is an accounting charge on assets that generally appreciate, so it inflates free cash flow and depresses reported earnings and book value at the same time. Every model here reads one of those, and none is a fair base. FFO/AFFO is the applicable measure — see the FFO capitalisation model, which values REITs from it.
FFO · Capitalized
not applicable
FFO constructible for only 0 of the last 6 fiscal years — need ≥3 (net income and depreciation & amortization must both be tagged).
Graham Number
not applicable
REIT — real-estate depreciation is an accounting charge on assets that generally appreciate, so it inflates free cash flow and depresses reported earnings and book value at the same time. Every model here reads one of those, and none is a fair base. FFO/AFFO is the applicable measure — see the FFO capitalisation model, which values REITs from it.

Different models answer different questions — which to trust when →

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Sources — the receipts
  1. 10-K filed 2024-02-20 · period ending 2021-12-31 · accession 0001465740-24-000076 (InterestAndDividendIncomeOperating)
  2. 10-K filed 2025-02-18 · period ending 2022-12-31 · accession 0001465740-25-000083 (InterestAndDividendIncomeOperating)
  3. 10-K filed 2026-02-17 · periods ending 2023-12-31, 2024-12-31, 2025-12-31 · accession 0001465740-26-000009 (InterestAndDividendIncomeOperating)
  4. 10-K filed 2024-02-20 · period ending 2021-12-31 · accession 0001465740-24-000076 (NetIncomeLoss)
  5. 10-K filed 2025-02-18 · period ending 2022-12-31 · accession 0001465740-25-000083 (NetIncomeLoss)
  6. 10-K filed 2026-02-17 · periods ending 2023-12-31, 2024-12-31, 2025-12-31 · accession 0001465740-26-000009 (NetIncomeLoss)
  7. 10-K filed 2024-02-20 · period ending 2021-12-31 · accession 0001465740-24-000076 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K filed 2025-02-18 · period ending 2022-12-31 · accession 0001465740-25-000083 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K filed 2026-02-17 · periods ending 2023-12-31, 2024-12-31, 2025-12-31 · accession 0001465740-26-000009 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K filed 2026-02-17 · period ending 2025-12-31 · accession 0001465740-26-000009 (LongTermDebt)
  11. 10-K filed 2023-02-28 · period ending 2021-12-31 · accession 0001465740-23-000055 (CashAndCashEquivalentsAtCarryingValue)
  12. 10-K filed 2024-02-20 · period ending 2022-12-31 · accession 0001465740-24-000076 (CashAndCashEquivalentsAtCarryingValue)
  13. 10-K filed 2025-02-18 · period ending 2023-12-31 · accession 0001465740-25-000083 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K filed 2026-02-17 · periods ending 2024-12-31, 2025-12-31 · accession 0001465740-26-000009 (CashAndCashEquivalentsAtCarryingValue)