Ever since the NBA formally approved Mat Ishbia as the majority owner and Governor of the Phoenix Suns, Ishbia made it known that he was intent on bringing a winner to town and money was not going to be an obstacle to getting that done.
For fans coming off of two decades of having an owner who was almost universally criticized for being cheap, the message was a breath of fresh air. And, to his credit, Ishbia certainly has not been shy about spending money.
But while Ishbia’s willingness to spend has not yet produced that winner Suns fans yearn for, some Suns fans have started to wonder whether that free-spending approach is here to stay.
Because United Wholesale Mortgage (UWM), the mortgage company owned by the Ishbia family and the business that allowed Ishbia to purchase the Suns, has… well…not been doing great.
On Thursday of this week, the stock price of UWM Holdings – the parent company of UWM – fell 35% in a single day. Year-to-date, UWM Holdings is down about 73%.
The crash on Thursday came one day after the company announced quarterly losses of $451.9 million, announced that it would be suspending its shareholder dividends, and announced a $2.05 billion equity investment from Oaktree Capital Management and SFS Group Capital LLC (an investment vehicle owned by the Ishbia family).
The story behind UWM’s recent decline starts with its seven-month-long failed attempt at acquiring Two Harbors Investment Corp, a mortgage REIT with a significant mortgage servicing rights (MSR) portfolio.
Two important points for context.
First, there are generally two arms to UWM’s business. One arm is its mortgage origination business, and the other arm is its mortgage servicing business. Purchasing Two Harbors would have effectively doubled the size of UWM’s MSR business.
Second, UWM’s two business arms tend to create a “natural hedge” against one another. When interest rates go up, mortgage origination goes down, but MSR value increases because (among other reasons) mortgages stay on the books longer. Conversely, when interest rates go down, more people are looking to buy and refinance, so the value of the loan origination side increases but MSR value decreases.
But if UWM acquired Two Harbors and effectively doubled its MSR business, that “natural hedge” would be gone, or at least reduced. So, what did UWM do? It went out and got an “artificial hedge.”
The logic being, if rates go down, therefore causing the value of the (now double in size) MSR arm of the business to decrease, then the smaller mortgage origination side of the business would not be able to pick up the slack of the losses on the MSR side. This “artificial hedge” likely took the form of some type of security (e.g., treasury futures, interest-rate swaps) that would increase in value if interest rates decreased.
But even though UWM’s acquisition of Two Harbors started as an agreed-upon stock merger agreement, the deal did not materialize. Two Harbors terminated the agreement in March 2026, which resulted in UWM taking the (business) hostile act of campaigning directly to Two Harbors shareholders to back UWM’s attempted acquisition, as opposed to an attempt by CrossCountry Mortgage (which was ultimately successful).
Putting aside the way the Two Harbors deal evolved (or devolved), the net result was that UWM did not double its MSR business, as it expected.
UWM, however, still had that security intended to hedge against an MSR business that included the mortgage servicing rights owned by Two Harbors. Making matters worse, interest rates have gone up. So, the security that UWM purchased to hedge against interest rates going down is losing value for UWM and the 2x MSR portfolio is not there to offset it.
So, now that we’ve established how and why UWM is performing as it is, the question becomes, should Suns fans be worried that their free-spending owner may suddenly become a penny-pinching miser?
As I see it, no. Has Ishbia lost wealth in the value of UWM since he bought the Phoenix Suns? Absolutely.
But while UWM has suspended its quarterly dividends, all shareholders, including the Ishbia family, enjoyed five years of those dividends at $0.10 per share. According to Bloomberg, between dividends and distributions, the Ishbia family has received around $6.2 billion over those five years.
And Ishbia seemed his usual self when addressing the Two Harbors failed acquisition during the UWM earnings call, stating, “It definitely was unfortunate how it happened, and you’ll see some litigation, things that they did inappropriately. We’ll go through that process when that time comes.”
The failed Two Harbors acquisition simply falls in line with Ishbia’s aggressive approach across the board and, ideally, proves to be akin to UWM’s version of the Kevin Durant trade – something that made sense but, ultimately, did not work.
As long as it doesn’t turn into UWM’s version of the Bradley Beal trade, Ishbia — and the Suns — should be just fine.
