Well said, Chevy.
I am very eager to see the remaining value of the portfolio. If the primary cause of impaired value in the portfolio is selling loans in order to create liquidity and pay off the debt, I think udf has a very strong case. However, if there are significant losses, or nonperforming loans otherwise, then I think bass has a case that while maybe their tactics were aggressive, they were Fundamentally right.
If the outside manager managing the fund was engaging in fraudulent transactions filled with self-enrichment and Ponzi like transactions, I just can’t see any settlement with such a low dollar amount. I am sure the SEC is going to have some corporate governance improvements. It is likely that udf is aware of what those might look like and these governance improvements reflect that.
The collateral underlting these loans has risen dramatically in the past three or four years. In the end, I think that is what will prove to be the difference maker. If bass would have had a bullish view on real estate and anticipated this type of recovery, I doubt he would have targeted this company as a short. I believe he was talking bearishly about real estate back then and that also was wrong.
Udf has had over two years to improve the folio and have better structuring of their loans. I believe there’s a good chance there is value here north of $10 per share. But of course, we are all just guess
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