hardincap

is good news already baked in the stock? fhfa director strongly hinting at cancellation of nws and wsj reporting on continued backing from treasury hasnt really moved the stock. if we get all the things already reported, i wonder if the stock even moves up at all. it may even fall if congress speaks out strongly against it

ackerman yes? https://www.wsj.com/articles/fannie-and-freddie-plan-is-likely-next-month-11566432606 positive so far but we'll see soon enough

Sure it is a risk, and if it happens it happens and I’ll move on from this trade. I think it’d be silly to sell now based on this rumor.

I’d fade the Mnuchin leaving trade. It would basically ruin his reputation to leave at such a critical point, not for housing but trade and trump election, and to break his very public commitments. It is very much in his interests to stick it out for another year

You must not know that his returns are quite mediocre even including 08. Like you said he’d rather be seen as good than actually be good

They’ve been publicly bullish since end of last year, and you were quite bullish early this year. So now that the stock has fallen, you think their subsequent bullish comments are bearish? Aren’t you contradicting yourself here? Or at least confusing TA with FA

“Treasury plan will disappoint”. Are you 51% confident or 90%? Without putting some rough odds isn’t your statement basically useless?

Mm lets see you put some odds on each of these.

As long as Treasury pursues recap with earnings AND capital raise, as Mnuchin said is necessary, its hard for me to see pref shareholders getting hurt from these levels. Of course the caveat is capital raise needs to happen in the near term, otherwise time decay will drag returns. A capital raise years away is the same as an earnings led recap to me. I’m not counting on par. As I mentioned before, ~60-75% of par is good enough for me to get out.

My bear case is Mnuchin is fired or resigns, there is a trade war escalation or some other economic shock that deprioritizes housing reform, or treasury pursues earnings only recap. I’m sure there are others.

collins lower court opinion barely moved the share price, and same with en banc grant. this is all about the treasury plan, and the key authors (calabria and mnuchin) have given numerous consistent clues that this is a recap, and definitely not a receivership. i dont see how the prefs get hurt in a recap scenario other than by time decay (tho this is a significant risk imo). mm: you keep saying treasury will disappoint but thats vague. how specifically do you see it disappointing? receivership? earnings-only recap?

how, specifically, will it disappoint in your view? and how confident are you in this: 50%? 80%? lets talk in probabilistic terms

hasnt been 10 years yet but thus far klarman and hussman have been so far off the mark it is quite embarrassing. hussman now needs a 100% gain in his "growth" fund just to get back to even! i find this fascinating. perhaps the finest example of taleb's IYI

its pretty simple: mm has the temperament of a trader and most of us have the temperament of a fundamental analysis investor. temperament loads evidence one way or another and shapes ones worldview. what primarily filters through to mm (chart signals, etc) barely even registers with most of us. (i wasn't as cool as midas when perry appeal came down but my wife didnt notice anything was wrong and we continued on with our vacation as if nothing had happened... though i may have lost my appetite). i internalized before graduating college that debate between two parties with opposite temperaments results in nothing more than people getting frustrated and talking past each other. its not impossible, but it takes humility, patience, and self awareness, qualities we've been lacking in these posts

the business is way too complicated for me to understand well, and then theres the politics. so too hard pile for me. ill keep a little for fun though. more if buffett buys in (doubt it).

margin of safety. barring actions by treasury toward IPO in the near future, the prefs are a clear sell to me at 60-75% par. i strongly believe that while one can make decent money on these types of special situations, the real big money is made by investing in businesses that have excellent economics and long runway, and then sitting on your ass and watching it compound. the opportunity cost of holding out for the last 5, 10% of par is too high, unless as i stated there are clear actions taken toward IPO/conversion

at the risk of stating the obvious, cancelling the NWS and senior prefs is much more important than timing of the exit. calabria/mnuchin may have disappointed on timing, but so far they (or at least calabria) have been very very consistent on letting the entities rebuild capital. as soon as that starts, prefs should recover to 60-75% par. there are too many variables to be confident about 90%+ par recovery in the short term, imo. but thats okay, 60-75% par is still great in my book, especially considering my cost basis is <15% par. and thats what MOS is all about. sometimes you gotta tune out the noise and keep it simple.

Occam razer suggests he was simply giving his clients a voice on workable terms and that his conversion comment was in response to calabrias CNBC interview. I wouldn’t read too much into it

you continue to misrepresent; please stop. i never said bloomberg was "totally fake", i said it was nothing new. reread the memorandum, it basically says no r&r without reform. your tea leaf readings are just that. it worked this time, congrats. i for one prefer to trade on facts and sound reasoning over speculations on whats behind maloni's statements (who, btw, i think is a wannabe and really just a nobody). the rational longs here (including me) have held since <15% par so i wouldn't gloat too much if i were you

oh. sorry.. I explained it to you just two days ago over DM, and you replied: oh. Maybe I missed the no news part. I thought you said heavy selling. :facepalm:

why do you continue to misrepresent what I said? I said repeatedly if it sells off in volume on *no* news, that indicates insider trading.

imo people who declare a bottom, or that they just bought more, are only trying to convince themselves.

my guess is the jps go to 60-75% par on retiring senior prefs (must do so they have ipo option and treasury can monetize their warrants). anyone else want to venture a guess?

imo for prefs the timing of exit is less important than canceling the NWS. besides calabria has repeatedly said his job is to set mileposts toward building capital and its up to the companies to get there. and it seems right to me to set expectations for a base case on a very complicated process

nope. it was picked up by bloomberg: https://www.bloomberg.com/news/articles/2019-05-08/fannie-freddie-may-be-released-without-congress-calabria-says “I think that if we can get them out of conservatorship and then we can set a path, I think a lot of those issues will go away,” he said.