muscleman

Calabria not on today's closure. :( Is there any limitation on how many people can be in a closure? I know there are lots of judges to be confirmed. Can't they put everyone on closure today?

Thank you! When will we know for sure?

Does anyone know any news today? FNMAS and FMCKJ both had a quick spike up of 6-7% in the middle of the day, though they both closed near the low.

Yes I do, but I have been wrong over and over on fundamentals and I don't place much value on my ability to do fundamental analysis anymore. But as other members pointed out, recap and release may require congressional approval if they want to find $150 bn. The alternative is to just let these companies retain earnings. My guess is that by 3/31, Calabria will announce a plan to retain earnings, but increase senior preferred liquidation value by the same amount. Then nothing will happen for a few months. Then Collins ruling came out, and it will be either big win or big loss for investors. Before the Lamberth ruling, there was clear technical sign of topping, though Perry ruling came out of nowhere. So there are definitely people who know or smart enough to guess out what's gonna happen, and act in advance.

Now this looks like a timely exit. At that time, it was unclear why I should sell from a fundamental perspective, but now it is clearer. (Otting’s 2-4 week plan probably dead. 3/31 sweep probably will happen. Calabria may increase the capital buffer by retaining earnings while increasing senior preferred liquidation value by same amount etc.) The price action has been so lame that if I don’t see another Long setup this or next week, then it seems unlikely I’ll get a setup. Not criticizing your approach here but how do you technically trade a binary decision? The common/preferred are trading as they are because there is a lull in the news and the next known binary decision date is 3/31 and 3+ weeks away. The date/occurance of any upcoming news is known to no one otherwise. The current technical pattern is one of indecision...because its a binary outcome with no news. Im all for technically trading some issues if one sees fit but this is either yea or nay. Could you pick up a couple small percentages here and there on some very short term time frames? Maybe but with the preferred you will likely lose any gains on the bid ask spread. Price action will not be able to guide you in any fashion with this. I don’t worry about no news. The crux of technical analysis is to assume that other players in this field is either smarter than me or have insider info or both, and when they act, they will leave their foot print on the chart. Not trying to highjack the thread but I can tell you what will happen already and Im nor an insider or necessarily smarter. If developments are favorable the price will go UP. If not price will go down. Hopefully not favorably after hours because the securities will gap up and will be priced in instantly and any foot print and will be useless. I think just like efficient market hypothesis believers, your belief is too idealistic. Your argument assumes that everyone has the same IQ and no one trades on insider information. Therefore prices won’t move until any news come out. I believe otherwise. There are people who trade on grey and black edge and know far more than us. There are also people who trade on white edge but are far smarter than us. Look at Ericopoly on our board. He loaded up call options on MBIA days before their big settlement, based merely on white edge (publicly known info).

https://www.insidemortgagefinance.com/imfnews/1_1562/daily/White-House-Hikes-Value-of-GSE-Senior-Preferred-1000049865-1.html?ET=imfpubs:e12028:73683a:&st=email&s=imfnews What a difference a year can make. In the White House’s new budget document, the Trump administration values the senior preferred stock it owns in Fannie Mae and Freddie Mac at $113 billion, an increase of roughly 21% from the year before. However, there is no detailed explanation on the accounting behind the change. Since Thanksgiving, the value of GSE common and junior preferred have increased nicely, but both classes of stock are considered highly speculative, the common more than the juniors. The only class of GSE stock deemed to be of value is the senior preferred owned by the U.S. Treasury Department – though opinions vary widely on what the common and juniors could be worth if a “recap and release” plan is executed by Treasury working in tandem with the Federal Housing Finance Agency.

link? If you post the link it maybe easier for someone to get a full article

Now this looks like a timely exit. At that time, it was unclear why I should sell from a fundamental perspective, but now it is clearer. (Otting’s 2-4 week plan probably dead. 3/31 sweep probably will happen. Calabria may increase the capital buffer by retaining earnings while increasing senior preferred liquidation value by same amount etc.) The price action has been so lame that if I don’t see another Long setup this or next week, then it seems unlikely I’ll get a setup. Not criticizing your approach here but how do you technically trade a binary decision? The common/preferred are trading as they are because there is a lull in the news and the next known binary decision date is 3/31 and 3+ weeks away. The date/occurance of any upcoming news is known to no one otherwise. The current technical pattern is one of indecision...because its a binary outcome with no news. Im all for technically trading some issues if one sees fit but this is either yea or nay. Could you pick up a couple small percentages here and there on some very short term time frames? Maybe but with the preferred you will likely lose any gains on the bid ask spread. Price action will not be able to guide you in any fashion with this. I don’t worry about no news. The crux of technical analysis is to assume that other players in this field is either smarter than me or have insider info or both, and when they act, they will leave their foot print on the chart.

Now this looks like a timely exit. At that time, it was unclear why I should sell from a fundamental perspective, but now it is clearer. (Otting’s 2-4 week plan probably dead. 3/31 sweep probably will happen. Calabria may increase the capital buffer by retaining earnings while increasing senior preferred liquidation value by same amount etc.) The price action has been so lame that if I don’t see another Long setup this or next week, then it seems unlikely I’ll get a setup.

Yeah... that’s what I am thinking. And that would totally throw the balls back to the courts. Regarding Otting’s plan, it surely looks like a dead one now. I am surprised if he talked about such specifics in front of journalists, how can he be not concerned that it gets leaked out? That’s the journalist’s job!

any capital markets plan to raise $150B in capital will take a long time. I'd say 2-4 years from start to finish. in the first two years, I cant see how any dividends would be paid out. so that is something like $30-40B of capital right there. if the admin is serious about this, I cant see how they wouldn't want this div halt to begin 3/31. I think both of you missed my point. The crux of that Watt 3 bn buffer is to INCREASE senior preferred liquidation value by that same amount. I am pretty sure the 3/31 dividend will be suspended, but what if that follows the same plan where senior preferred is increased by the same amount? I think it is quite likely that they’ll do this easiest path forward first and let litigation move forward to tell them if the senior preferred should be deemed fully paid off. What do you think?

whats the likelihood that Calabria implements a capital plan exactly like what Watt did for the 3 bn buffer except a much larger number? So say, the next 150 bn earnings will be retained while senior preferred balance increase by that same amount?

I'm staying away from them. I don't see a reason to own the commons over the prefs. If the pref-holding plaintiffs end up with negotiating leverage over the lawsuits, and they think the commons are going to appreciate in price by more than the prefs will, they will likely push for a conversion to common. I can't see why Treasury or FHFA would object to this. The conclusion here is that the juniors would then have a de facto call option on the commons, capturing the upside without being exposed to the downside (like dilution risk). The fact that the commons are up so much against the prefs recently makes my belief even stronger. Less room to run. I agree. With that said, the performance of common has been much better than preferred so far YTD. Even in the most recent few weeks, when FNMAS keeps going down, FNMA is staying up. Does anyone remember when this happened before?

https://www.wsj.com/articles/u-s-china-close-in-on-trade-deal-11551641540?mod=hp_lead_pos1 When is the full senate vote on Calabria? If trade deal is likely signed around March 27th during the summit, then probably material things will happen after this date. March 31st is another dividend sweep. I wonder if something material will happen between these two dates.

Her post was dregs-of-IHub bad. Thanks for the details on how to do this. CoB&F doesn't make this option easy to find! Done. Thank you! I am so frustrated talking to her. She still doesn't understand capital structure, bankruptcy investing, and why preferred have a lower risk than common etc.....

I recently had a very tough baby that caused me to only sleep 4 hours a night for nearly a year. I wish I could have a robotic night nanny that takes care of the baby. I tried to hire a night nanny but it was extremely hard to find, very expensive, and I find it very hard to trust them. I heard of night nannies giving babies sleeping pills. So a good V1 robotic night nanny would be able to play a song, shake the bed, change diaper, and feed the baby (Hardest part of the task).

This sounds as if Calabria doesn't know what's going on, or he disagrees with what's going on, so Otting and Mnuchin and Philips said to Calabria, just wait for us to make up with a detailed plan, and you tell us what you don't like. That would be inline with the confirmation hearing where he said he doesn't know the current plan. However, Otting seems to say Calabria is on board with his plan.

True... the hope is that $100 billion on the table for the taking will become irresistible. like every other politician, job one is to get reelected, and winning china/n. Korea/iran not getting impeached etc is more important than winning GSEs. Well, Mnuchin is busy with China trade deal, but Calabria and Otting should be full time in figuring out the GSE reforms, right? I am sure Otting is working hard right now to understand what's going on, talking to mortage industry CEOs to learn their feedback, and coming up with a plan before Calabria is confirmed. He originally said 2-4 weeks with a plan but now 6 weeks have past. It seems to me that there is always some delay in the GSE promises. Mnuchin had multiple delays, and now Otting.

Muscle, with all due respect, this comment scares the hell out of me. Fundamental analysis studies a business and what is really happening which leads to a rough estimate of what a business is really worth. Opportunities arise when the temporary stock price provides an arbitrage situation. Fundamental analysis is a weighing machine founded on logic. Technical analysis gives the same weighting of importance to Company A with 10 billion in assets and 1 billion in liabilities as it does to Company B with 1 billion in assets and 10 billion in liabilities... and that weighting is zero importance. Technical analysis doesn't care whether a business is good, bad, a fraud, legit, etc. It relies solely on price action, momentum, and predicting when the next guy will hit the buy button or the sell button at some level of support or resistance. Technical analysis is a voting machine founded on emotion. I hope you don't take this comment the wrong way or personally, but it seems lately you've been singing the praises of technical analysis quite a bit so I just wanted to pump the brakes a little bit. Well, I don't want to go into depth on this discussion in this thread. I had another thread "I have given up value investing", where you are welcome to discuss this. You don't have to pump the brakes for me, as after trying really hard for 8 years, I realized that I am just not good at fundamental analysis.

On top of that, with forced redemptions from Fairholm and possibly other underperforming funds, they have no choice but to sell this piece by piece. Whitney Tilson's fund was forced to close last year, and Fairholm under pressure. Paulson hasn't been doing well for years so probably redemption too, etc. This is why I focus on technicals and have given up doing the fundamental analysis. A lot of things have been obvious in hindsight only, but I can get ahead with technicals.

There is no longer any rational thinking by the Democrats today. The only thing they do is to angrily object anything. I dare say if Trump declares himself as self-identified woman, and therefore the first female president in the US, the democrats will not celebrate, but instead yelling angrily. (Even though they should celebrate, as that seems to be inline with their value.) Let's leave D/R politics out of here ... your statement would just as well apply to R during Obama - in fact they are on record saying "We will sabotage and object to anything this president wants to do." It's sad that this sort of 'politics' seems to be the norm now (and as per your statement the D are now doing the same as the R back then). Representatives are elected to do work - which typically means compromising to find workable, albeit imperfect, solutions. I agree sunrider, but this is highly relevant to current situation. I have always thought the "housing reform" operates at two levels: a policy-based congressional level, where policy can be debated (do you "wind down" GSEs and if so replace them with some other structure) and comprehensive legislation a la health care "could" be passed, and a practical real world executive level, where you simply implement a practical fix that works. if the former doesn't get done, then do latter. the latter is essentially a large scale financial restructuring, something congress knows nothing about and something that admin is expert in (given former bankers at treasury). this can be done and I believe will be done because of the political failure that you mention in congress. political failure in congress is a defining characteristic of how the GSE conservatorship will be resolved. Yeah. Spot on! I don't expect any bipartisan deal on the GSEs, so Admin reform seems to be the way to go. What makes me curious is why Otting said he has a plan coming out in 2-4 weeks but now after nearly 8 weeks, nothing came up? if I remember correctly, he was giving a private talk about that 2-4 weeks timeline, and then some news media leaked that out?

Yeah.... What you said is totally possible as well. The other possibility is that they want the plans to be leaked out, and share prices slowly ascending, so they don't get any headline risk of their plan helped push the stock up 150% in one day and enriching the evil hedge fund managers like John Paulson. We'll see.

Muscle... are you sure you are reading betting odds correctly? If confirmation moves along party lines- and we just had factual data on this-, odds favor Calabria becoming the next FHFA chief. Further, should that happen, Calabria will remember where the loyalty was and who he should respond to. Which, in turn, may mean a nightmare scenario for Democrats. So while this is a high-risk bet, odds aren't against. And I will go as far as saying Mitch McConnell is probably counting and securing votes as you read this. If confirmation isn't delayed, message to the WH may be we-have-a-winner. I sold yesterday, not today after the 13-12 confirmation. I sold because I see some technical weakness. Therefore i am waiting for another long setup to reenter. Is it possible to miss a sudden big move? Certainly, but I am not afraid of missing moves. I am pretty sure Calabria will be confirmed. No doubt on that. I think it is even more important to follow technicals for this play than any other regular stocks. As the admin said, they are talking to a wide variety of mortgage industry people. Therefore, the admin plan should have been widely known to a lot of people way before they are announced publicly, and they may leak to hedge funds, who will act on the stock and leave their footprint on the chart. The only surprise may come from the court, but that is off the table for the next 2-3 months. If I miss the eventual big move, I am fine with that. There are lots of opportunities setting up right now, so I can just put the money into another name if I miss this one.

There is no longer any rational thinking by the Democrats today. The only thing they do is to angrily object anything. I dare say if Trump declares himself as self-identified woman, and therefore the first female president in the US, the democrats will not celebrate, but instead yelling angrily. (Even though they should celebrate, as that seems to be inline with their value.)

Why does this board go from "Calabria has no problem getting confirmed" a few days ago to "It would only take 3 or 4 to deny Calabria's nomination, and who knows what would happen after that." :) Has there been any Trump nominee that was denied? "13-12 along party lines." is also nothing surprising. Has any Trump nominee not been passing barely along party lines since two years ago? Seems like you have not been following the US politics lately. There hasn't been anything that the Democrats liked except the Criminal Justice Reform bill. Anything else is being objected no matter what. For example, when Trump was first elected to office, Democrats were like, "Oh, another Hilter. He will be a war monger." Then when Trump announced troop withdraw from Syria, Democrats were like, "Oh, what a stupid decision, the war should continue."