no_free_lunch

Honestly, I don't know too much about them. I just view these types of letters as a source of ideas, it is especially helpful when there is some explanation/thesis behind the ideas. You definitely still need to do due dilligence.

Thanks for the cyb reference notorious. It is about 10% over NAV at the moment but I will be adding it to my watchlist.

Good read from greenwood investors. If nothing else check out their portfolio summary, including point form investment thesis, on the last page. I recognize many of the names on their list and own a few as well. https://www.gwinvestors.com/wp-content/uploads/2017.04.06-Q1-2017-Letter-Conscious-Capitalists-w-Appendix.pdf

Perhaps it will take some time but there are likely important signs along the way -- for instance the reform principles that Calabria mentioned by this summer and also the inclusion or not of the long term GSE swept profits in the full OMB budget scheduled for May release. The current price levels, to me, represent low expectations of positive resolutions -- even the GSEs' main antagonist, the large bankers' organization, kept FnF alive among other competition in their recent proposal paper. In my view, any change will come abruptly, without notice and with nothing being telegraphed in advance. So it is a moot point to try to figure whatever public information there is. You either believe it is going to happen or you should be out. And I know this sounds more like a gamble than investing. But perhaps this is what it is. I also believe Treasury/WH won't be negotiating that much behind the scences (w/Congress). Most likely, any move regarding GSEs is being cooked between Gary Cohn, Mnuchin and Calabria. I am not sure about the telegraphing, I still think they will need to do some of that but I agree that it is being done internally to the administration. I am just saying that they have to at least give the political process a shot before they have earned the right to move unilaterally. In reality we all know that after 8 years the chance of this being solved by wide spread consensus is slim to none. Just my opinion.

I think this will just take time. I don't want to relink it but awhile back I posted an article from Reuters on Mnuchin and fannie. They were quite clear that his strategy is to try to work with congress to come up with a solution and only if that stalls will he step in.

I would include AOBC (gun maker) to the list. It is not exactly defensive in the sense of stability but it's performance shouldn't be as heavily impacted by market valuations. Basically it is super cheap and how it performs is a matter of how well gun sales do. Even if the market loses 1/3 it's value, it will still be cheap if sales hold up.

Unable to get to it all day. It would just time out.

On average I don't see how anything will beat passive. From the little I can gleam the hedgies that do well with formula/algo investing are constantly tweaking and adding to the algorithms to stay ahead of the curve. It just becomes an arms race but with tech / quant people instead of traditional managers. Instead of picking the best manager you have to pick the best/most innovative team of geeks. We are just right back to where we started with active where it is a guessing game. Do you pick the team with the best performance? Was there something about the last couple years that made their algorithms do particularly well? Have other tech teams caught up / surpassed them? It's still ugly.

It is listed as about 14.5. The shiller PE10 for New Zealand exchange is about 20, that isn't the same group of companies as ENZL but should be comparable. So not crazy cheap but not too expensive. The thing I like is how diversified across industries the ETF is. There is definitely still risk here, especially with currency but US markets are just so expensive I would rather park money elsewhere. https://www.ishares.com/us/products/239672/

The problem I have with the obamacare/fannie link is the US ran a trillion dollar deficit per year under Obama. So it's not like everything was perfectly balanced to begin with. It wasn't plugged with anything other than debt the way I see it. The only value to this stuff, in my opinion, is to gauge what the Trump admin might do. If you start to see it enough about this in the media it could be him prepping the public for a recap of fannie mae.

Care to explain this as regards FNMA? What does this imply?

SD, have you ever actually done this or seen it done? I looked this up a bit and it sounds like you could buy a private company but you could not hold more than 10% of it. So if you are married I guess you could hold 20% between the 2 of you but for quite a hassle. You would have to find other investors for the remainder. Even then it has to be "arms length" so it really limits your options. I guess if you have a large family, over decades it could be worthwhile to set this up.. I just can't get over the thing about an arms length person running a private real estate company that you are investing in. That just doesn't exist for me. http://www.advisor.ca/tax/tax-news/up-the-risk-in-tfsas-108727

SD are you suggesting that you can buy a property and hold it in within your TFSA? I was under the impression you would need to withdraw out of the TFSA and hold the property out of the TFSA. Any rent / capital gain would be taxed. If there is some way to hold real estate in a TFSA I would like to know about that.

Article in reuters about the GSE's. They are now talking in mainstream media about privitization, or recap/release if you prefer. I recommend everyone read this, there is a lot of content in here about the current situation, stuff I hadn't heard before. For instance, they are talking about it being a couple quarters still before the dividends are touched. http://www.reuters.com/article/us-usa-housing-finance-idUSKBN16T11J

The thing I'm curious about is whether the electorate would see an increased inclusion rate as a good or a bad thing. The world, and the Liberals in particular, are certainly regressing to class-warfare rhetoric. So does the electorate overall buy into the argument that increasing taxes on savers and investors is good? (Essentially, "we spent so much on our overpriced house that we need to take money from anyone who actually invested their money prudently to pay for our retirement?") It's true and it's not true. I think the rhetoric is just manna for their electorate. At the end of the day they are running a fairly modest deficit when you compare to the US or countries in Europe. They didn't touch the capital gains tax. TFSA is still there. They increased EI but that hit's lower incomes more than higher incomes since it maxes out. All in all I am pleasantly surprised. The differences fiscally between them and the conservatives seems subtle.

Moved money to ENZL (new zealand index fund). 4.5% dividend, well off it's 52 week highs, stable country with relatively low debt, there is a lot to like here. Just a place to park money until I find some better opportunities state side.

Very new to this one so bear with me. Why the preferred series 1, reading the board people seem to prefer series 3.

This is old, old news but still relevant. At the end of 2015, Fannie / Freddie loosened their high balance loan terms. So admin says that the plan with the net worth sweep in 2012 is to prevent a death spiral. Why, 3 years later with the NWS still in place, are they taking steps to increase their business? It doesn't make any sense. https://www.forbes.com/sites/markgreene/2015/12/12/2-new-blockbuster-changes-to-fannie-mae-loans/2

On Fox News: "Some people say they took money from all sorts of agencies to pay for Obamacare.. like Fannie and Freddie. That's been circulating all weekend." Maria Bartiromo. The narrative is building. If nothing else this is interesting to watch. Still need a bit more to completely buy into it but very encouraging.

Personally, I look for companies and situations where it is easy to understand the basics and you see a discrepancy in the market. I think FNMA or AOBC meet those criteria right now. If I can't find enough stocks that meet my criteria I just buy index funds. Index funds are key because honestly it is hard to beat them at the best of times, if you don't have something compelling don't even try.

I think this is significant. Thanks for posting.

I'm sure it will trade up from current levels but no it's not an immediate $25. If they just cancel the NWS but it is not retroactive we are actually in big trouble because there is over $100B still owed in that case. If it is retroactively stopped, I don't know the calculation but we are close to paying down the senior preferred's. However there is still all the costs to recap. There are many, many scenarios in how the recap is done but I don't see it as a guaranteed parity in that case. One other thing to consider, in the event that they turned the prefs back on some would trade well above parity due to their high yields. However I am told that this is unlikely to happen.

This isn't the political thread Wayne although of course it kind of is. :) Seriously though I don't get your angle. How do you see this as applied to FNMA?

I think privatization fits with the general trend of reducing government footprint. I am just not sure how well existing shareholders/prefs will do in the process. I think capital requirements will have to be quite high which squeezes existing equity.

My only concern with these is that the yield is fixed. If interest rates go up, would 6.15% be a good yield for a bank preferred? I can recall government bonds yielding 6% or higher. They have no end date to them so if inflation kicks in then all you have is the stock price and conversion scenario to save you. It would have to go up by quite a bit with either stock for that to make sense. I am not sure if bank stocks would do well in an inflationary environment so you could get trapped in these. If you think inflation will stay low they seem like good options. I agree that you might as well buy both if you buy any.