AAMC - Altisource Asset Management

[thepupil]

RESI 4Q

% of revenues

Recurring

Rental revenues                    0.7%

Interest                              0.1%

 

MTM

Unrealized Gain on mtgs      75.2%

 

Realized Liquidations

Realized Gains                    24%

 

 

For the year, unrealized gains were 82% of revenue, realized gains were 16% and the remaining one or 2% was rental and interest.

 

If you believe the accounting and that the unrealized gains will eventually become realized, it was an excellent quarter for RESI / AAMC. AAMC is priced at 5.5X  4Q's annualized earnings, which is why it is too scary and binary for me to consider shorting because you have to have RESI fire them (momentum is building for that, but still lots of hurdles to clear and it gets more expensive with every Q of results) for it to work.

 

[ItsAValueTrap]

The new CEO (George Ellison) is an interesting guy apparently.

 

The five men contend that on a professional trip to Las Vegas with colleagues in March, Ellison "participated in after-hours socializing at an adult entertainment establishment during which he engaged in unprofessional behavior," according to papers filed in U.S. District Court in Charlotte.

When the group returned, the five contend in papers filed in the case, Ellison called a meeting of male employees in the group and "stated that he was attempting to prevent a `Tailhook' scandal from affecting the bank and that he would retaliate against any female employee who revealed his activities in Las Vegas."

 

http://www.bizjournals.com/charlotte/stories/2002/07/22/story7.html?page=all

[thepupil]

http://seekingalpha.com/pr/12759226-altisource-residential-corporation-announces-rescheduling-of-conference-call-for-fourth-quarter-and-full-year-2014-results

 

"Residential is in the final stages of modifying its asset management agreement with Altisource Asset Management Corporation. As a result, the Company has determined it is prudent to delay the earnings call until the agreement has been completed, which the Company expects to occur within the next several days."

[thepupil]

Glenn (or anyone else),

Do you have any thoughts on AAMC or RESI here. This is a pretty unusual situation where we have knowledge that a very important fundamental change is about to occur to these securities but we have no idea as to the magnitude thereof. Parsing the press releases words a bit, we can surmise that

 

1) RESI is not firing AAMC since they said "modifying" not "eliminating". The "AAMC is a potentially zero" idea spouted by yours truly is probably wrong.

 

2) Fees will very likely be lower.

 

3) RESI had a great q and year. If you believe the financials, you probably want to own it, depending on fee structure. RESI trades at a modest discount to book (92% of book).

 

4) AAMC trades at 34% of AUM, which probably makes it still one of the most expensive alternative asset managers if not the most expensive out there.

 

It's a really interesting dynamic here because the lower the new fees are, the more likely RESI will re-rate back above book and its ROE will improve and therefore they may be able to turn on the equity issuance machine again and grow AUM.

 

But of course, the lower the fees, the lower AUM multiple AAMC deserves.

 

I think the risk reward of being long RESI into the announcement is pretty favorable. If the fee structure changes don't go far enough, the activist incentive and asset value are still there as a kind of embedded put.

 

AAMC isn't as ridiculously overpriced as it was so it's tough to short going into this. But it's still pretty damn expensive. A 2% of equity flat fee would be just ~$26MM of revenue. Let's call it $20MM of earnings which would be 22.5X at the current price.

 

In short, there is a lot uncertainty here and I'm curious if anyone is placing their bets on a particular outcome.

 

End rambling. Others ramblings are encouraged.

 

 

David Reiner, Chairman of the Board, stated, "Residential is in the final stages of modifying its asset management agreement with Altisource Asset Management Corporation. As a result, the Company has determined it is prudent to delay the earnings call until the agreement has been completed, which the Company expects to occur within the next several days."

[Guest roark33]

Regarding RESI, how do you get comfortable with the quality of their earnings.  All of their earnings are mark-to-market on their unrealized gains.  They appear to be losing money in their core operations, but making it up by marking up their loan values.  Could be true, could not be....

 

I haven't done a ton of work on it because the earnings seem like such low quality....

[ItsAValueTrap]

I'm surprised the CEO of AAMC jumped ship to RESI.  I'm not sure what his personal situation is.  He wouldn't have to live in the Virgin Islands anymore, so perhaps that is a positive for him?

The reason why you might want to stay is if you think that you can make a lot of money on AAMC options.

 

2- I definitely do think that fees will be lower.  So it really should be a positive for RESI and negative for AAMC... I'm not sure why the trading in the stocks didn't reflect that a little bit.

 

3- So other parts of the Erbey complex had some things that weren't great from a risk management standpoint.  With the HLSS/OCN financing deal, HLSS shareholders got some protections that turn out to have been a bad idea for Ocwen.  Because Erbey didn't make the deal one-sided, it turns out that the contract may potentially cause problems for Ocwen.

 

There's some risk in RESI because they take on risky short-term debt in the form of repos.  It shouldn't be a problem now because they aren't using that much leverage, but in the long run their risk management could be something to watch out for.  There is some incentive for RESI to take on subtle risks to juice its dividend.

 

4- I don't know what kind of deal they could make without shareholder approval.

 

If RESI were to pay a lump sum for lower fees, that might be controversial for shareholders.

If RESI were to increase its cancellation fees, that might be controversial for shareholders.

 

If RESI were to lower its current fees and give up future upside, then maybe that type of deal could get through.  But if RESI were to do the accretive dilution thing again, then it could run into the exact same situation again.  Though kicking the problem down the road is not a completely terrible idea.

 

5- Going forward, I think the NPL --> rentals / loan mods / reperforming loans  thing might be less attractive as more people enter the space.

 

It's a really interesting dynamic here because the lower the new fees are, the more likely RESI will re-rate back above book and its ROE will improve and therefore they may be able to turn on the equity issuance machine again and grow AUM.

If AAMC could make a new vehicle and have it immediately trade above book, then it seems like it's worth a lot as an asset manager.  As long as people are willing to value these yield chasing vehicles above book... then AAMC might have a good future ahead?

[thepupil]

Regarding RESI, how do you get comfortable with the quality of their earnings.  All of their earnings are mark-to-market on their unrealized gains.  They appear to be losing money in their core operations, but making it up by marking up their loan values.  Could be true, could not be....

 

I haven't done a ton of work on it because the earnings seem like such low quality....

 

I'm far from comfortable, hence the qualifier.  I've been incredibly skeptical of RESI /AAMC (read this thread). I'm just curious what others think.

 

If you believe the financials, you probably want to own it, depending on fee structure.

 

[ItsAValueTrap]

page 50-51 of the RESI 10-k

 

Upon the acquisition of sub-performing and non-performing mortgage loans, we record the assets at fair value which is the purchase price we paid for the loans on the acquisition date. The sub-performing and non-performing mortgage loans are subsequently accounted for at fair value under the fair value option election with unrealized gains and losses recorded in current period earnings. We have concluded that accounting for these sub-performing and non-performing mortgage loans at fair value timely reflect the results of our investment performance.

 

We determine the purchase price for our sub-performing and non-performing mortgage loans at the time of acquisition by using a discounted cash flow valuation model and considering alternate loan resolution probabilities including modification, liquidation or conversion to rental property. Observable inputs to the model include current interest rates, loan amounts, status of payments and property types. Unobservable inputs to the model include discount rates, forecast of future home prices, alternate loan resolution probabilities, resolution timelines and the value of underlying properties.

 

After our sub-performing and non-performing mortgage loans are acquired, the fair value of each loan is adjusted in each subsequent reporting period as the loan proceeds to a particular resolution (i.e., modification, or conversion to real estate owned). As a loan approaches resolution, the resolution timeline for that loan decreases and costs embedded in the discounted cash flow model for loan servicing, foreclosure costs and property insurance are incurred and removed from future expenses. The shorter resolution timelines and reduced future expenses each increase the fair value of the loan. The increase in the value of the loan is recognized in net unrealized gain on mortgage loans in our consolidated statements of operations.

 

We also recognize unrealized gains and losses in the fair value of the sub-performing and non-performing loans in each reporting period when our mortgage loans are transferred to real estate owned. The transfer to real estate owned occurs when we have obtained legal title to the property upon completion of the foreclosure. The fair value of these assets at the time of transfer to real estate owned is estimated using BPOs. BPOs are subject to judgments of a particular broker formed by visiting a property, assessing general home values in an area, reviewing comparable listings and reviewing comparable completed sales. These judgments may vary among brokers and may fluctuate over time based on housing market activities and the influx of additional comparable listings and sales. Our results could be materially and adversely affected if the judgments used by a broker prove to be incorrect or inaccurate.

 

AAMC’s capital markets group determines the fair value of sub-performing and non-performing mortgage loans monthly and has developed procedures and controls governing the valuation process relating to these assets. The capital markets group reports to our Investment Committee, a committee of our Chief Executive Officer and our Chairman that oversees and approves the valuations. The capital markets group also monitors the valuation model for performance against actual results which is reported to the Investment Committee and used to continuously improve the model.

 

So before the loans turn into REO, they are marked to model.  AAMC makes the model.

When they turn into REO, they are marked to the latest BPO (which estimates the market value).  I believe Altisource provides some of the BPOs (the fee schedule has been redacted unfortunately).

 

I think marking the assets to model and to BPO is a necessary evil.  So it comes down to whether or not you think AAMC (and Altisource) are honest.  The AAMC CEO changed recently so that may change things in the future.

[ItsAValueTrap]

Whoa.

 

Altisource Asset Management Corporation Announces New Asset Management Agreement With Altisource Residential Corporation

http://ir.altisourceamc.com/releasedetail.cfm?ReleaseID=904331

[thepupil]

So from an AAMC perspective, management fees will be about $19MM on the current equity of $1.3B. This should cover management compensation, not much left for AAMC earnings I would imagine, let's call it $5MM-$10MM.

 

Incentive fee modified from 50% over 4% to 20% over 7%. So if ROE is the below you'd get the following incentive fees

 

10% (0.2 * 3%) = 0.6% (1.3B) =    $8MM

12% (0.2 * 5%) = 1%    (1.3B) =    $13MM

20% (0.2 * 13%= 2.6%  (1.3B)  =  $33MM

 

So even if they made a 20% ROE, RESI will pay a whole lot less than the all costs pass thru + 50% over 4% = like $80MM annualized last year.

 

So AAMC should make $10-$40MM + conversion fees on the current base (obviously that's assuming things continue to go well and is a very very very rough calculation)

 

The "conversion fee" is kind of annoying but at most is worth $20MM or so to AAMC so that's not terrible.

 

Overall, I'd say it's a victory for RESI over AAMC.  I think my (unfortunately very  small) risk reversal in RESI will do well tomorrow, but who knows.

 

AAMC looks like it has avoided the binary risk of RESI firing it, should be able to gather a more assets with its neutered fee schedule. At $400MM, still a little pricy, but not incredibly crazy. I will stop shouting that AAMC is an absurd entity that charges ludicrous fees and is overpriced. I think it's more reasonable from here but may still be overpriced if they can't grow/ earn a spectacular roe.

 

The RESI accounting is still a little sketch, but whatever.

 

Glenn, others,  any thoughts?

[thepupil]

actually the more I think about it, AAMC is  very expensive. There are 3 pillars of value now (mgt. fee profits, incentive fee profits, conversion fees)

 

Let's assume 50% margin on the management fee of $20MM (although maybe corp. overhead will be lower since everyone jumped ship to RESI) so that's $10MM of profit.

 

Give that a nice and generous 20X multiple so AAMC is worth $200MM on the mgt fee alone.

 

The conversion fee is "1.5% of the market value of homes converted". I erred in my initial thought here. The total value should be of the assets controlled since these are levered assets, so in theory they could earn 1.5% on $2.7B of assets on the current estate (ya i know some of these are already converted but I'm not going to be precise) so that's a potential of $40MM undiscounted for time from the current asset base.

 

So that leaves $160MM or so for the incentives. 18% ROE (smmmmoookin!!!) You'd get 18%-7% = 11% *0.25 (using the higher rate here) = 2.75% * current AUM of $1.3B that would be $35MM. So even if RESI killed it, you'd still be paying for 4.5 or so years of incentive fees upfront.

 

So AAMC looks pretty expensive to me, unless you think they can grow AUM more now.

[ItsAValueTrap]

        A quarterly conversion fee equal to 1.5% of the market value of the single-family homes leased by Residential for the first time during the quarter.

This strikes me as weird.  AAMC is incentivized to rent out homes rather than flipping non-performing loans and flipping REO.

 

Buying NPLs and flipping them has been good times for RESI and AAMC.  I'm not sure it's a good idea to discourage that???

   

    Residential shall be entitled, at its option, to pay up to 25% of the incentive management fee to AAMC in shares of its common stock.

So this is kind of like a backdoor way of doing secondary offerings.  Because RESI has the optionality, the option will benefit RESI at the expense of AAMC.  If RESI shares are overpriced, then AAMC will likely benefit anyways.  So this basically waters down AAMC's upside slightly.

 

I like that they put that in.

 

-------------------

The 50/50 splits are gone.  And I was going to compare these guys to Kinder Morgan.  (Incidentally, the 50/50 splits were getting problematic for Kinder Morgan and they moved away from that with the KMI/KMP/KMR/EPB merger.)

 

-------------------

Here's my attempt at the math.

 

1-  $2.6B of invested capital.  So I assume, perhaps wrongly, that cash isn't invested capital.  NPLs, mortgages, REO, and rental homes are invested capital.

 

$39M/year at 1.5%.  I'm not sure how the 1.5% ramps up to 2%.  Does AAMC get rewarded for having lots and lots of rented homes???

 

2- AAMC gets bonuses if the return on invested capital exceeds 7% - 8.25%.  This is a bit of a high hurdle!  I'd like to think that ROIC approximates cap rates.  Getting cap rates that high will be very difficult.

 

Right now the ROIC may be around 10.2% so I think AAMC has met the hurdle.  20% of 2.2% is 0.44%.  $11.44M / year in fees.

 

 

 

So... #1 and #2 total to $50M/year in fees.

Page 47 of the 10-K (http://www.sec.gov/Archives/edgar/data/1555074/000155507415000007/aamc10k_12312014.htm#s07f74575cfb1483cab592b998986e914) lists $11.150M / year in expenses.

 

So net fees are $39M/year.  Slap a 20 multiple on that = $780M.  Knowing myself, I probably screwed up the math.

[thepupil]

so invested capital = assets? not equity? whoa, that would be crazy and stupid high for a management fee.

[ItsAValueTrap]

so invested capital = assets? not equity? whoa, that would be crazy and stupid high for a management fee.

 

I don't know.  Let's see how they define stuff when an 8-K comes out?

 

So in YE2014 they received the following:

67,949 - incentive fees

7,011 - expense reimbursements

74,960 - total rev for AAMC, excluding newsource

 

39M / year is quite a drop?

[thepupil]

http://files.shareholder.com/downloads/AMDA-1HYVK0/4080197940x0x818934/FEA63971-367F-4489-BD6B-0415FF4A97B0/RESI-4Q-14_Earnings_PPT_April_1_2015_FINAL_.pdf

 

Here it is. Invested capital is indeed equity. They show an illustration on slide 25. So on the current asset base of $1.3B, a 1.5% management fee and a 20% ROE = ~$40MM / year.

 

This fee structure is MUCH better than the prior arrangement. The hurdle is more appropriate (7-8% of equity rather than a fixed number that would become lower and lower. The % is much more reasonable (20%  vs 50%).

 

Glenn, I disagree you can put a 20 PE multiple on the incentive portion of earnings. I would capitalize the management fee income minus overhead with a high multiple and the incentive fee income with a very low multiple, since now RESI has to do well for them to earn it; the incentive fee can be high in zome years and 0 in others. Capitalizing carry with a decent hurdle at a high multiple is aggressive.

[thepupil]

also, I still don't know how to deal with the $250MM preferred stock. Luxor can force redemption in 2020. Since this is so far OTM and pays no coupon, Luxor has strong incentive to force redemption.

 

So this is basically convertible 0% coupon debt due in 2020 with strike that is 5 or 6X the stock price. But Luxor also owns a large percentage of the common, so they would hurt their stake in the common by forcing redemption 5 yrs out (but would greatly reduce their risk).

 

If you treat the preferred as if it will be forced to be redeem then AAMC has $180MM of net debt.

 

http://ir.altisourceamc.com/releasedetail.cfm?ReleaseID=833178

 

he Company is required to redeem all outstanding shares of the Series A Preferred Stock for cash on March 15, 2044. Prior to that date, the Company may, at its option, redeem all, but not less than all, of the Series A Preferred Stock for cash on March 15, 2020 or on each successive five year anniversary of March 15, 2020. Each holder of the Series A Preferred Stock will also have the right to require the Company to redeem on each of these early redemption dates all, but not less than all, of the Series A Preferred Stock held by such holder. In each case, the redemption price will equal $1,000 per share.

[ItsAValueTrap]

http://files.shareholder.com/downloads/AMDA-1HYVK0/4080197940x0x818934/FEA63971-367F-4489-BD6B-0415FF4A97B0/RESI-4Q-14_Earnings_PPT_April_1_2015_FINAL_.pdf

 

Here it is. Invested capital is indeed equity. They show an illustration on slide 25. So on the current asset base of $1.3B, a 1.5% management fee and a 20% ROE = ~$40MM / year.

 

This fee structure is MUCH better than the prior arrangement. The hurdle is more appropriate (7-8% of equity rather than a fixed number that would become lower and lower. The % is much more reasonable (20%  vs 50%).

 

Glenn, I disagree you can put a 20 PE multiple on the incentive portion of earnings. I would capitalize the management fee income minus overhead with a high multiple and the incentive fee income with a very low multiple, since now RESI has to do well for them to earn it; the incentive fee can be high in zome years and 0 in others. Capitalizing carry with a decent hurdle at a high multiple is aggressive.

 

1- So the presentation shows 2.0% base fee (due to the current number of rental homes) and 20% incentive.  Pro forma FY2014 would be $44.8M versus $74.1M... 60.46% of the original fees.

 

2- There might be a little back-end loading of fees for the 1.5% on conversion of rental homes?  Of course, RESI has the option to pay 25% of fees in shares.

 

3- I was very wrong about their definition of invested capital.

 

4- As thepupil points out, the new structure doesn't have the issue of RESI getting deeper and deeper into the high splits whenever RESI sells shares above book value.

 

5- Thepupil:  Congrats on guessing that AAMC's fees will come down.

 

6- Valuation:  I think it's very difficult to estimate?

 

AAMC can be fired before 15 years are up if their return on equity is too low.  (I'd rather call it ROE than return on invested capital.)

 

On the other hand, AAMC was able to grow its value very rapidly because RESI was able to raise huge amounts of capital.  Going forward, the capital raising will likely slow down a little because of RESI's size.  Or... maybe RESI won't be able to raise any capital at all.

[thepupil]

don't they have 500 properties rented? They don't get to higher % management & incentive fees until 2500 and the highest come at 4500.

 

So at 100 a month (they were at 82 /month most recently) you're talking a 2+ years unless the pace picks up. And even longer to get to the 2 & 25. So I think in the short to medium temr (0-3 years) you're looking at 1.5 & 20 over 7%.

[ItsAValueTrap]

Sorry I got confused by page 26 of the slide presentation where they assume base fee of 2% and incentive fee share of 25%.

[ItsAValueTrap]

The new fee structure strikes me as a little cynical.

 

- The fees are somewhat back-end loaded, so that RESI will show a lot of dividend yield in the short term.  Later on they will pay the price.  The back-loaded fee structure feels deceptive to me.

- AAMC seems like it is more difficult to fire???  Before the agreement, RESI could fire AAMC and pay a few years of incentive fees.

 

The main problem with the original structure was:

- Bad risk management for AAMC, if RESI were to fire AAMC and AAMC couldn't pay debt.

- It would be sensible for RESI to fire AAMC if the share price fell.

- Secondary offerings would push RESI deep into 50/50 splits.

[thepupil]

from the beginning AAMC has been a cynical vehicle. How much value can we get away with taking from this other vehicle and how much value will the market ascribe to our castles in the air $100B opportunity set growth story. The main problem with AAMC is that it exists and does not need to  ;D . It has a couple of employees that could just as easily work for RESI. It is just pure financial alchemy. Nothing wrong with that in itself but AAMC has been "cynical" from birth so why should we be surprised by the ramp-up in fees based on some arbitrary number of homes rented number. How can we expect anything else from the guys who brought you the original  "full expense pass through +50% of profits, $10MM+ / employee" fee structure.

 

How can you have issues with this structure and terms but not the previous one? You liked the previous "ability to fire AAMC"?. RESI would've had to pony up like $160MM just for the right to not have those 6 or 8 guys make $10MM / year anymore. Can you get more onerous/awful/shareholder unfriendly/abusive than that? And the funny part is, because the previous fees were soooo bad, it probably made economic sense to fire them.

 

The "correct" thing to do would be to just get rid of the arrangement entirely, but that would blow a pretty big hole in Erbey and Luxor's balance sheet and I'm sure management/board didn't want to do that. But with the new arrangement, this has gone from "highest in industry, downright criminal, financial rape" type of fees to "typical externally managed yield pig vehicle" type of fees.

 

It's a  massive improvement off a very low base but they didn't quite go all the way. It'd be like if a 500 lb guy lost 250 lbs. He's still a big fella but he's a lot better off than before and he stands out a lot less now since there are plenty of other 250 lb guys walking around (many  BDC's charge higher fees, mREIT's are pretty close, long biased hedge funds charge similar fees). 

 

Getting rid of the ability to pass through management comp as an expense is a nice gesture. I also think corp overhead at AAMC might go down (but they may just shift it to RESI since a few management guys moved there.

 

For RESI shareholders and potential shareholders, it's a question of "do you believe the story/financials?". If so you clearly want to own it (slightly below tangible high return assets, "yielding" a lot (kind of), etc.). I still ahve to use quotes on the yielding because of the cash flow unrealized appreciation issues.

 

For AAMC it's a question of

a) will the now better than awful fee schedule help growth

b) what will (management fee - corp overhead be)

c) are RESI's great results sustainable/believable

d) is the preferred debt, will Luxor redeem in 5 yrs (I think they will)

 

It's tough to answer those questions. I think I may just close out my little bullish RESI option position (which isn't really up that much) and move on. Kind of a waste of ink spilled, but I hope I at least maybe prevented some people from buying AAMC when it was a lot higher.

 

EDIT: Those guys were'nt making $10MM/yr, but that's about what AAMC was charging RESI.

[ItsAValueTrap]

Anybody looking at RESI or AAMC at current prices?

 

I think a lot of the issues are gone now.  Regulatory risk seems low given that RESI diversified its servicers.  RESI and AAMC struck a new deal, which is a good one for RESI.

[thepupil]

Not interested in AAMC because I think Luxor will redeem the pref's in 2020 and therefore it is debt and the EV of $636MM ($250MM pref + $386MM) makes AAMC the most expensive alternative asset manager out there, even after its precipitous decline in price.

 

Not interested in RESI because it's not cheap enough on a P/TBV basis in order to compensate for the low quality of earnings and current lack of access to equity capital at good prices and I think the fee structure is still too high, but better. If you believe the #'s RESI is a pretty obvious buy. I just need a little more proving out of the biz model and the assets and am willing to miss out if the stock moves up as that happens.

 

Just as an example, you can buy AAMC, which manages $1.3B of RESI equity for $636MM EV  (48% of AUM)or you can buy Tetragon Financial which manages $14B ($10B adjusting for minority interest) for about $1B (10% of AUM). Oh and Tetragon owns $1.5B of NAV outside of its portfolio of asset managers. So you can buy AAMC for 48% of AUM with 0 asset backing and dependence on a single product, or you can buy TFG for 10% of AUM with asset backing that is greater than the market cap. The comparison is not completely apples to apples because TFG itself pays fees, but the difference in valuation is quite stark. When you compare AAMC to other alternative managers, you can come up with similar conclusions.

[thepupil]

RESI 4Q

% of revenues

Recurring

Rental revenues                    0.7%

Interest                              0.1%

 

MTM

Unrealized Gain on mtgs      75.2%

 

Realized Liquidations

Realized Gains                    24%

 

 

For the year, unrealized gains were 82% of revenue, realized gains were 16% and the remaining one or 2% was rental and interest.

 

If you believe the accounting and that the unrealized gains will eventually become realized, it was an excellent quarter for RESI / AAMC. AAMC is priced at 5.5X  4Q's annualized earnings, which is why it is too scary and binary for me to consider shorting because you have to have RESI fire them (momentum is building for that, but still lots of hurdles to clear and it gets more expensive with every Q of results) for it to work.

 

RESI 1Q

% of revenues

Recurring

Rental revenues                    2.7%

Interest                                0.3%

 

MTM

Unrealized Gain on mtgs      55.1%

 

Realized Liquidations

Realized Gains                    41%

[jay21]

RESI 4Q

% of revenues

Recurring

Rental revenues                    0.7%

Interest                              0.1%

 

MTM

Unrealized Gain on mtgs      75.2%

 

Realized Liquidations

Realized Gains                    24%

 

 

For the year, unrealized gains were 82% of revenue, realized gains were 16% and the remaining one or 2% was rental and interest.

 

If you believe the accounting and that the unrealized gains will eventually become realized, it was an excellent quarter for RESI / AAMC. AAMC is priced at 5.5X  4Q's annualized earnings, which is why it is too scary and binary for me to consider shorting because you have to have RESI fire them (momentum is building for that, but still lots of hurdles to clear and it gets more expensive with every Q of results) for it to work.

 

RESI 1Q

% of revenues

Recurring

Rental revenues                    2.7%

Interest                                0.3%

 

MTM

Unrealized Gain on mtgs      55.1%

 

Realized Liquidations

Realized Gains                    41%

 

Does seeing realized gains come through affect how you feel about their unrealized gain marks?