hardincap

we need to protect elderly with very stringent precautionary measures for them. until recently, anyone could walk into a nursing facility. for the rest of us, all full steam ahead. i suspect its logistically impossible to selectively quarantine older folks, while very doable to shut down everything for two weeks or so. china showed this works. italy mandated shutdowns pretty late in the game but it seems we're doing it early enough to avert disaster

@cherzeca check out where Italy was a few weeks back. The fear is we’ll have the same exploding growth, though I am cautiously optimistic that measures taken last few days will help us avoid the Italy nightmare scenario

its pretty clear to me f&f are going to be building capital via earnings and then do a secondary offering. they may do a private placement in addition/prior to SPO but that is up to the companies, not calabria. on the face of it, his statements were positive--specifically that shareholders aren't going to be wiped out, 4th amendment is WIP, and there are legal hurdles that is WIP by treasury. BUT if there is an admin change, they might as well throw whatever plan they have out the window. maybe there is urgency behind closed doors because of this, maybe not, but i think markets are right in pricing this in.

https://www.cnbc.com/2019/12/17/progressives-demand-kavanaugh-recuse-from-cfpb-supreme-court-case.html lets hope not

dc circuit very liberal. warren-ites. calling CFPB unconstitutionally structured at scotus is an easy call imo. remember 12-4 in 5th C that fhfa is unconstitutionally structured. likely 5-4 in scotus, maybe kagan makes it 6-3 you're counting kavanaugh, but its very possible he'll recuse himself right?

thanks cherzeca. its not obvious to me at all why SC will rule CFPB unconstitutional, when en banc upheld constitutionality 7-3 (not even close), overruling kavanaugh's opinion. can you pls elaborate?

dm'd

Have you spent significant amount of time on other ideas? If you haven’t bc of f&f then it’s costing you opportunities. There’s been some very compelling ideas discussed on here that have already significantly outperformed f&f this year (and last)

I recall david thompson saying more than once in IU calls that they essentially tried to talk settlement

@cherzeca why shouldnt SCOTUS take this up now on the basis that it is holding up housing reform and needs timely resolution? if they do, a SC ruling seems to be a game over move for both sides. would both parties be cooperative in coming to settlement terms before case is decided? edit: i think cooper & kirk have reached out to try to settle a number of times. im not so sure it makes sense for treasury to settle before SC ruling. that seems to make this very risky for Ps, if SC does take this up.

@cherzeca your points are valid. i agree the dynamics have shifted powerfully, and sudden shifts like this tend to be under appreciated. maybe im suffering from gse fatigue, but i think at 50% par, I get better "return on time invested" elsewhere, esp given that the gses were always far outside my CoC. that time invested doesnt have to turn into a buy decision in a month or a year, but i know it will eventually pay off. opportunity cost of owning the prefs to me is time i could otherwise use to find the next 10-100 bagger. id be fooling myself if i said i can keep the gses and forget about them for the next year, given how quickly things can change. not necessarily risk: the correct way to invest is to put in the work and earn "secrets" that can translate into an edge in the markets

@cherzeca 1. 30% appreciation in next 12 months is reasonable speculation, but still speculation. 2. at 10% par gse prefs were enticing enough to me to speculate; at 50% par, much less so. 3. far majority of my gains have come from long-term holdings in wonderful businesses, not special situations nor speculations. it's been way more enjoyable and instructive, as well. 4. speculating, even if the projected return in the near term is higher, just doesn't seem worth the opportunity cost of finding other wonderful businesses (even if they aren't cheap enough to buy now, there is value in identifying them now).

+1000. Im pretty close to convincing myself to move on from this trade, because of this reason.

Looks like prefs falling on bove issuing a bearish report calling prefs fully valued, reversing his long standing bullish outlook. Has anyone seen the report?

@luke ortphopa and other uber bulls, what would you say is a prudent margin of safety for the prefs, to protect against unknown unknowns? 10%? 20%? Then adding time value of money, what price range do you consider the prefs still a buy?

IMO you always need a MOS for unknown unknowns. Say 25%. Add to it 10% discount rate assuming IPO in a year, and another 10% chance of a serious market dislocation. You can easily get to a 40-50% discount to par this way.

re: berkshire, this keeps coming up but someone asked this very question at the shareholders meeting a few years back and buffett flatly said he has no interest

The Ps are not gamblers. I have to think they’d be happy with a quick settlement that gets them close to par, rather than getting greedy and risking a loss at scotus. The important thing to me is that now treasury has the political cover to pursue what is rationally in the best interests of all parties.

the two most important players here are head of fhfa and head of treasury the former strongly condemned the nws in writing, and the latter has spoken derisively of the conservatorship in general and has seen a close friend (lampert) and a business partner (paulson) get screwed by it. these guys are the least likely pair to continue the fight over nws in court

Yes, Tuesday can’t come soon enough. I’m guessing they skirt the topic though and keep it focused on the contents of the report. But little doubt in my mind Mnuchin and Calabria let out a sigh of relief today, as their jobs got significantly easier

The head of fhfa agrees nws is illegal. This is not going to scotus. It will be settled. Mnuchin and Calabria got the political cover they needed

yup. that was delicious to read

man i would pay real good $ to see the look on the faces of parrott, stevens, et al as they read this opinion damning the nws...

sure seems like courts stalled until the release of the treasury report. congrats everyone! glad I kept every single share, hah

mm called it again--wow was this report underwhelming. with mnuchin occupied with china trade negotiations why should we expect any real progress rest of the year? the wait for godot continues. this also makes me wonder if craig philips was hamstrung/castrated by admin (excluding mnuchin) and resigned in frustration.