Two Harbors is a valuable buyout target
The guest argued that Two Harbors is a highly valuable REIT that is likely to attract multiple bids and an auction process rather than a cheap stock-based merger.
The argument
The guest noted that the proposed merger with United Wholesale Mortgage failed to gain shareholder support, and a cash offer of over $10 a share has since emerged. He argued that Two Harbors' $200 billion in mortgage servicing assets makes it a highly attractive target that should command real money.
The thesis, stress-tested
✓ What validates it
- ✓Emergence of additional higher bids in an auction process
- ✓Finalization of a cash acquisition above the initial $10 offer
▸ Risks discussed
- ▸United Wholesale Mortgage is an aggressive competitor with high loan acquisition costs
Hear it yourself
"And you predicted the proposed merger between United Wholesale Mortgage, UWMC, and Two Harbors, TWO. Yeah. The two consumers would fail to get support from a majority of the Two Harbors shareholders."
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