Mr Cooper Group Inc (COOP)

[Dmdmd2020]

As I was researching equity tranches of MBS and CDOs, I found a clear example of how Greywolf was intricately involved with Goldman Sachs in a CDO Trust called Timberwolf I.

https://www.hsgac.senate.gov//imo/media/doc/Financial_Crisis/FinancialCrisisReport.pdf?attempt=2

Per the link from the congressional subcommittee, starting on page 393 (PDF page 400/646):

"Timberwolf I CDO. Timberwolf I was a $1 billion hybrid CDO2 transaction that referenced single-A rated securities from other CDOs. Those CDO securities referenced, in turn, RMBS securities carrying lower credit ratings, primarily BBB. Altogether, Timberwolf referenced 56 unique CDO securities that had over 4,500 unique underlying assets. Goldman served as the CDO’s placement agent, initial purchaser, collateral put provider, and liquidation agent. It also hired a hedge fund with former Goldman employees, Greywolf Capital Management, to act as the collateral manager. Greywolf selected the CDO’s assets, with Goldman’s approval. Goldman took a short position on approximately 36% of the $1 billion in assets underlying Timberwolf.1592"

Page 541 (PDF page 548/646):

"Partnering with Greywolf. Greywolf Capital Management was founded by a team of former employees of Goldman’s fixed income trading division.2357 It had experience in constructing and investing in CDOs. In the summer of 2006, Peter Ostrem, head of Goldman’s CDO Origination Desk, approached Greg Mount, a former Goldman trader working for Greywolf, and asked if Greywolf would be interested in managing a CDO2 transaction.2358 Goldman and Greywolf negotiated a risk sharing agreement, and worked through the profitability of the CDO2 under expected market conditions. Greg Mount, as well as Joseph Marconi, another former Goldman trader, obtained approval from Greywolf’s Chief Investment Officer to manage the CDO.
Greywolf agreed to purchase half of the Timberwolf equity tranche, sharing that risk with Goldman.2359 In addition, Greywolf agreed to share with Goldman the risk of the assets being purchased for the CDO falling in value before the CDO issued its securities. Greywolf also accepted the responsibility of selecting the assets with the approval of Goldman, which would then keep them in a warehouse account for the Timberwolf CDO. Greywolf agreed to provide ongoing surveillance of the performance of the assets in the CDO and liquidate any assets deemed to be impaired."


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IMO...Greywolf's owner, Savitz (Savitz holds more than 5% of WMI), has full knowledge of all insider information of many of the MBS Trusts within the subsidiaries of WMI, since Goldman Sachs was the underwriter for a plethora of MBS Trusts under WMI.

Therefore, I feel comfortable with the fact that if Savitz still holds WMI escrows and WMIH....then I am confident that he is looking for a sizable return from his WMI escrows and WMIH shares.