PennyMac is a hedge fund dressed up as a real estate investment trust… Even if PennyMac loses money, the management company still could get its base fee. As for the incentive fees, the prospectus said these “may lead PCM to place undue emphasis on the maximization of short-term net income at the expense of other criteria, such as preservation of capital, maintaining sufficient liquidity and/or management of market risk, in order to achieve higher incentive compensation.”
…
It’s not so much PennyMac and its prospects that should give us pause. It’s all the other fly-by-nights that a PennyMac IPO might inspire. If this puppy can get on a national stock exchange, we could be off to the races again. Too much of that, so fast, may not be such a good thing.
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