Mr Cooper Group Inc (COOP)

[Rumble]

Now my contrary argument to shorts covering is this:
If as I suspect, JPM themselves (as opposed to the main MM we all hate) are the primary seller of these short shares, they may be okay with a “small” loss on these shorts. They may not cover until after an announcement is made.

For arguments sake, if the common shareholders take 100% interest in NewCo, and the stated value remains near the $160M value currently being bantered about (I personally believe it is much more – even before the NOLs take on their true value) – and common shares run-up to say $1 – with shorts covering on the way up, this would cost JPM less than $40M. Compared to what they are making on the seized assets and what they would potentially pay for even the preferred shares, they really don’t have as much risk as it first appears.

Yes, I believe that JPM is going to be pitching in to help with the preferred shares. By keeping them really low a settlement will seem more palatable at less than full value. I have a few more thoughts on this but the important point is JPM has motivation to keep both preferred and common share values as low as possible until after the real settlement value is determined.

Again, this is just another possible scenario in my mind. I hope this one is closer to reality. Releasing this new settlement with at least some clarity will be a huge step forward. If the shorts (at least on the commons) don't plan to cover, this could actually be released anytime and the only hold-up is the behind the scenes negotiations.

I prefer this scenario!