Mr Cooper Group Inc (COOP)

[Large Green]

Dmdmd1, Latest Post Based On Latest Due Diligence:

Quote from: CSNY on Yesterday at 10:01:14 AM
Well said.

I was confounded as to why the Underwriters would be adverse to taking Class 22 interests until I spoke with their local counsel. I told him the economic consequences of 36MM Qs and $71MM face in Ps/Ks/TPS were identical. He replied: "We disagree." Mathematically I was correct, so that meant there was some other distinguishing factor that made Class 19 status more advantageous economically.

Morgan Stanley, Credit Suisse, and Goldman Sachs are the triumvirate of the Underwriters, owning 44%, 22%, and 11% of the $72MM, respectively. There are financial benefits to each of them from their holdings that are beyond the imagination of most people, which is why fought to remain in Class 19.

https://economistwritingeveryday.com/2021/11/23/50-endowment-returns-driven-by-private-equity-investments-how-rich-universities-get-richer-but-you-can-too/

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FROM Dmdmd1 - IMO… my conclusions as of July 13, 2022 @ 0930 CST:

1) Hedge Funds and private equity can generate more than 50% annual returns during a bull market.

IMO…I contend they’ll make even more during a bear market from simply shorting markets.

So if the “source” claims that currently WMI recoveries is $600 billion then that yields $63,467 per WAMPQ…in ten years Alice hypothesized that a private equity deal can increase it to $3 million per WAMPQ.

We only need annual returns of 47.5% compounded for ten years to reach a $3 million valuation per WAMPQ…so it’s plausible!

2) Per CSNY’s post:

https://www.boardpost.net/forum/index.php?topic=18132.0

Excerpt:

“Fast forward to circa 2019 when I stated my suspicion (based on the Underwriters' counsel's innocent remark) that common would not be invited to the private equity deal.”

Why did the Underwriters want to stay in Class 19?

My answer: big money returns!

Per Alice’s recollection of her discussions with the Underwriters’ local counsel circa summer 2019, explicitly demonstrates that the underwriters’ local counsel had a Freudian slip (either intentionally or not) that Class 19 will be able to participate in a private equity deal and Class 22 will not be able to participate.

Since Morgan Stanley owns 44% of the $72 million indemnity claim in Class 19, that means Morgan Stanley owns:

$72 million claim = 72,000 WAMPQs (par of WAMPQ is $1,000)

44% x 72,000 WAMPQs (the total equivalent of the $72 million indemnity claim) = 31,680 WAMPQs owned by Morgan Stanley

If WMI recoveries = $600 billion then

WAMPQ = $63,467

Thus: 31,680 WAMPQs x $63,467 = $2,010,634,560

If Alice is correct that after ten years the private equity deal will make WAMPQ = $3 million then:

31,680 WAMPQs x $3 million = $95,040,000,000

IMO…So now we can see why the underwriters were fighting so hard to stay in Class 19…so they can participate in a private equity deal that potentially can see WAMPQs valued at $3 million in ten years.

FROM LG:

HAVE I TOLD YOU LATELY HOW MUCH MORE, MORE AND MORE I LOVE MY TIMELY SIGNED PREFERRED EQUITY RELEASES BY THE YEAR 3/2012?



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