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Grenville

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Posts posted by Grenville

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Below is from Peter Chapman today... interesting that some documents will be unsealed.

     

    Judge Sweeney entered two Orders this afternoon:

     

        -- Doc. 310, denying Prof. Yoo's motion to file an amicus brief; and

     

        -- Doc. 311, granting in part and denying in part the Shareholders' request to unseal the handful of documents lodged with the D.C. Circuit.

     

    Both orders are under seal and are not available to the public at this time. How this affects oral argument before the D.C. Circuit Friday morning is unknowable at this time.

     

    Sorry if I missed this, but where do you find the Peter Chapman info regarding the orders this afternoon? I don't see it yet on GSElinks (Is there a site or another msg board?)

    This woman is really amazing!

    in General Discussion

    Posted

    Listening to Holmes rebuttal on Mad Money is worthwhile. Also Ericopoly, thanks for listing the board members and good point.

     

    I'm a bit disappointed with the Journal's reporting…it seems like its hard to find a news source where hidden agendas don't purposefully or inadvertently color the reporting. You also won't ever see a news source ante up to their mistake if they did make one with a full page article.

     

    I had the exact opposite reaction to the Mad Money interview.

     

    Listen to her response to Cramer starting at 4:08 when he asked "Why didn't you just speak with the Journal reporter months ago?" Her response was basically "well, the Journal wrote a good piece a year ago, I published an op-ed on the Journal, but in this case the sources focused on detractors who said I would never succeed." She then offers a pretty weak response that the Journal only provided a "three day window" in which she was unavailable before the Journal had to publish.

     

    So, that's a bit of a dissembling response in my book. She basically didn't respond for months because she didn't like the article that was being written. Then she says that she finally decided to respond after months of inquiries but by the time she decided to respond, the schedules didn't match up. These are things that wouldn't hold up w/ a cross-examination, but that's not really Cramer's job.

     

    No opinion on fraud or anything like that, but I found her answers to Cramer to be questionable.

     

    Thanks for sharing your take. I've been wanting to re-listen to the interview, but haven't gotten around to it. I thought I remember other comments but I'll have to confirm that once I listen to it again.

     

     

    Here is another interview about theranos. Steve Jurvetson is the first investor in Theranos. He is very supportive and very impressed with Holmes, 11 years ago and to this day. But when asked is it a fraud? He says, "that's a great question that I cannot answer, I just don't [know]"

     

    Wow, that is quite profound, your first investor cannot vouch for you.... many different people can read that different ways..... if anything it is another datapoint...

     

    http://www.bloomberg.com/news/videos/2015-10-19/early-theranos-investor-remains-supportive-even-without-answers

    Thanks for posting! I haven't heard Jurvetson speak before. His comments are interesting but he does point to Holmes being independent. Did they just invest 500k and that's it?

    This woman is really amazing!

    in General Discussion

    Posted

    Listening to Holmes rebuttal on Mad Money is worthwhile. Also Ericopoly, thanks for listing the board members and good point.

     

    I'm a bit disappointed with the Journal's reporting…it seems like its hard to find a news source where hidden agendas don't purposefully or inadvertently color the reporting. You also won't ever see a news source ante up to their mistake if they did make one with a full page article.

     

     

    Berkshire acquires Heinz for 72.5 p/s

    in Berkshire Hathaway

    Posted

    "1. They have stated they plan to buy in the $8B Berkshire preferreds in 2016 (these yield 9%! - that is an after tax cost to common shareholders) using debt issuance (BBB-) of the same amount (so figure, I don't know, something like 4% pre-tax or 3% after tax for the debt for a cash savings for common shareholders of the difference 6% (ie 9% minus 3%) of $8 billion or around $500 million; this is consistent with Kraft's merger presentation where they state savings of $450 to 500 million). All that to say net debt increases from $20 billion in 2015 to $28 billion in 2016 to buy-in the Berkshire held preferreds, however there is an extra 0.5 billion going to common per year because of this planned exchange in 2016."

     

    -

     

    One thing to remember is that there will be a premium to redeem these preferred shares at their earliest possible date.  Prior deals indicate it could be 10-20%.  Lets say 10% since 3G are friends, but that is still another $800 million to BRK up front.  It could very well be a higher premium, as they usually decline over time and this is the first call opportunity (2016).

     

    It's probably safe to model $9 billion in borrowings to replace the $8 billion in BRK pref.

     

    From Heinz:

    Heinz expects to refinance the Preferred Stock at its first call date in June 2016 with the proceeds of new debt and cash on hand. There will be a 4% premium on the repayment, and interest on debt used to refinance the Preferred Stock will be deducted in calculating Adjusted Net Income. The after-tax cost to repay the Preferred Stock will be approximately $210.8 Million or 2.48%.

    FFH Announces $650 million Equity Bought Deal Financing

    in Fairfax Financial

    Posted

    I think the below answers some questions:

     

    http://www.bloomberg.com/news/articles/2015-02-20/watsa-s-fairfax-sells-shares-for-brit-deal-to-guard-credit-grade

    On a Feb. 17 conference call the day after the deal announcement, Fairfax Chairman and Chief Executive Officer Prem Watsa said that he had “many alternatives” for financing, such as offering debt and bringing in equity partners. Issuing new stock would be the last option, he said. The next day, Standard & Poor’s lowered its outlook on the firm to negative.

     

    “The market has responded very favorably to the proposed acquisition,” Paul Rivett, president of Fairfax said in an e-mailed statement Thursday. “We felt it was important to act expeditiously with a stock issue in order to quickly react to recent rating-agency actions.”

     

    Watsa said earlier in the week that he would work to maintain Fairfax’s credit quality while seeking financing for the Brit deal. S&P, in issuing its negative outlook on Fairfax, maintained a rating of BBB-, the lowest of 10 investment-grade levels.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    This has come out...anyone know where to find the conference call?

     

     

    Dow Jones Newswires - Feb 20, 2015 11:00:00 AM (EST)

     

    11:00 EST - Fannie Mae (FNMA) CEO Timothy J. Mayopoulos says during the 4Q conference financier's dwindling capital reserves, which are being wound down under a government agreement, may increase the chances of a need for another taxpayer infusion. By 2018, FNMA will have no capital reserves, meaning any loss could trigger a bailout. That might increase pressure on policy makers to revise the bailout to allow FNMA and counterpart Freddie Mac (FMCC) to retain some sort of buffer. (joe.light@wsj.com; @joelight)

     

    Good catch. Apparently they had a media call last quarter and based on your above they had another one today. I haven't been able to find a link on the website.

     

    Here is the one from Q3. There is a .mp3 link and the transcript:

    http://www.fanniemae.com/portal/about-us/media/commentary/110614-mayopoulos.html

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Sunday NYT today:

    http://mobile.nytimes.com/2015/02/15/business/after-the-housing-crisis-a-cash-flood-and-silence.html?referrer=&_r=0

     

    What a huge swing in public opinion over the past few months. After such a long wait, maybe this will blow open faster than anyone expects.

     

    Nice article. I like the detail around the privilege logs. Also they point to the document Doughishere found that has the 153.3bln figure.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

     

    Found it! From the above doc. page 307

     

    Through December

    31, 2014, the GSEs have paid a total of $225.4 billion in

    dividends payments to Treasury on the senior preferred

    stock. The Budget estimates additional dividend receipts

    of $153.3 billion from January 1, 2015, through FY 2025.

    The cumulative budgetary impact of the PSPAs from

    the establishment of the PSPAs through FY 2025 is estimated

    to be a net return to taxpayers of $191.2 billion.

    The Temporary Payroll Tax Cut Continuation Act of 2011

    signed into law on December 23, 2011, required that the

    GSEs increase their fees on security guarantees issued

    through 2021 by an average of at least 0.10 percentage

    points above the average guarantee fee imposed in 2011.

    Revenues generated by this fee increase are remitted directly

    to the Treasury for deficit reduction and are not

    included in the PSPA amounts. The Budget estimates

    resulting deficit reductions from this fee of $39.5 billion

    from FY 2012 through FY 2025.

     

    Awesome! Thanks for posting the location and details.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    http://www.globest.com/news/12_1042/national/multifamily/About-that-191B-Profit-from-the-GSEs-355123-1.html

     

     

    "Last week when the White House released its budget for fiscal year 2016, it included one eyebrow-raising line item: it assumed that Fannie Mae and Freddie Mac could return $191.2 billion in profits to the US Treasury over the next decade if they continue operating under federal conservatorship."

     

    Thanks for that. I haven't been able to find the 191.2bln number in the Budget main document.

     

    I did find this in the Appendix link from here: http://www.whitehouse.gov/omb/budget

     

    If you download the Dept. of Treasury Report, they expect 23.3bln and 19.8bln in 2015 and 2016 from "Proceeds, GSE Equity Related Transactions: Enacted/requested"

    http://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/tre.pdf

     

     

    Error at Brokerage

    in General Discussion

    Posted

    LOL. the money magically returned. I plan to still find out what happened.

     

    I definitely agree that you should get to the bottom of what happened. I'm a bit paranoid with all this stuff and with computerized trading, a small error can cause a whole firm to go under. Hopefully that will never be the case, but better to be cautious.

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