I'm still trying to get my arms around the spin-off. Sure, I can see the reason to have an entity mostly devoted to MSRs, but at the same time do they expect the CDO company to thrive in the same manner? What's their advantage to separate the two? Is it expected tha the CDO market, etc, will explode? One could make the case that they are sacrificing one for the benefit of the other.
I can see the scenario where the MSR company will double, maybe more, but what about the other?
IMO mgmt is separating the two (somewhat different) businesses expecting investors will place more value on them as independent companies than as a single diverse company. In other words, value extraction.
From the market reaction so far, they seem to be correct.
is the other entity is being overlooked by investors! The CDO' s currently owned is going provide almost a billion in cash over the next several years! As we have seen, senior housing is easier to finance than MSR's. CDOs will return only timing is the issue. And senior housing REITs trade at a lower yield than the peers of the residential entity. All of this tells me that its future is promising. Now how do you compare? Seems a very difficult task to do.