Luke 532

Supreme Court ruled 8-1 today against the government in a raisin taking case. Yes, raisins. Interesting read... http://www.usatoday.com/story/news/nation/2015/06/22/supreme-court-raisin-farmer/28475623/ Excerpts... A majority of justices ruled that the Agriculture Department program, which seizes excess raisins from producers in order to prop up market prices during bumper crop years, amounted to an unconstitutional government "taking." While the government can regulate production in order to keep goods off the market, the chief justice said it cannot seize that property without compensation. Horne's lawyer, Stanford University law professor Michael McConnell, argued that the government must pay him for the raisins under the Fifth Amendment to the Constitution, which prohibits that "private property be taken for public use, without just compensation." During oral argument, he had the court's conservative justices eating out of his hand, while U.S. deputy solicitor general Edwin Kneedler's argument was treated like sour grapes. In the end, only Sotomayor refused to call the government's action a form of taking. She said that definition "only applies where all property rights have been destroyed by governmental action." Here, she said, the Hornes retained some property rights.

Lew (at 2:30 in video): "...it's not the right time to be talking about ending the conservatorship or paying dividends." Interesting that he voluntarily mentioned dividends. Freudian slip?

I agree. I think the odds of a victory for FNMAS either through the courts or via settlement has increased. I added to my position yesterday.

Todd Sullivan of ValuePlays.net on AIG/Fannie... http://www.valueplays.net/2015/06/16/from-aig-to-gse/

Thanks, but I'm afraid that's an arbitrary designation based solely on number of posts rather than quality of posts.

Herzeca was great during the MBIA/BAC trial. Here's an excerpt of his take on the AIG ruling in terms of what it means for Fannie: http://mbibaclitigtion.blogspot.com/2015/06/judge-wheelers-opinion-in-starr-and-is.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MbiaVBankOfAmericaLitigationCommentary+%28MBIA+v.+Bank+of+America+Litigation+Commentary%29 "Read through to FNMA? Yes as to the psychological notion that when the US acted in connection with the financial crisis, no private party can complain....that you can't fight city hall. You can fight city hall. As to legal theory, FNMA is asserting no illegal exaction claim, so there is no precedential value. But in many ways, FNMA presents an easier case regarding damages than AIG, since it is clear that when the 3rd Amendment was entered into, FNMA was not only profitable but, with the prospect for the reversal of the deferred tax assets, or DTAs, that the US was well aware of, there was over $100B of equity value for the taking....which is what the US did."

Is this the wrong way to interpret the AIG decision? (my thoughts below)... Bottom-line: gov't acted illegally. As an FNMAS shareholder I don't care about 2008, I care about 2012... and the fact that 2008 may have been illegal makes the 2012 net worth sweep a more likely win.

"Motion to Remove the ‘Protected Information’ Designations from Depositions" filed this afternoon. It will be very interesting if those depositions get out into the public domain. At least two depositions completed so far, total of seven expected by the end of July.

Gaspo: Court decision in legality of AIG bailout likely by end of June http://video.foxbusiness.com/v/4290734773001/gaspo-court-decision-in-legality-of-aig-bailout-likely-by-end-of-june/?playlist_id=933116626001#sp=show-clips "If Greenberg wins looks for shares of Fannie Mae and Freddie Mac to soar..."

The market agrees with you... at least today they do. Never know with Mr. Market. :D I think it's 50/50 or better that FNMAS returns to par (or near it). Admittedly, it's nearly impossible to place odds on a successful outcome so take my 50/50 with a grain of salt. Just a few big picture reasons why I like FNMAS at less than $4: -Quotes from Sweeney in court, and rulings to date, show she is at least open to giving Fairholme a fighting chance. She seems to have a backbone. -I think it's pretty obvious that the government knows they did something wrong and are simply delaying as long as they can and denying as much as they can. -I also think the government just might be smart enough (hah!) to settle once they realize all of their shady actions will become public knowledge. For these reasons and others I say it's 50/50 or better... coupled with $21 profit vs $4 loss, well, I'll take it. As an aside, the volatility also favors being bullish as it likely won't plummet to $0 on any information that is negative (unless it's case dismissed and NWS is allowed to continue for eternity). There is precedent for FNMAS to trade around $12 on some positive news (not even a final victory in court or final settlement). So there's that very real possibility that people can take opportunities to cash in between now and the end of this saga. Admittedly, that's a trading mindset and might not be welcome on this board.

For what it's worth, the Kelly Formula suggests 40% of an account if you believe the following about FNMAS... Value of security if successful: $25 Value of security if unsuccessful: $0 Probability of success: 50% Probability of failure: 50% (obviously, based on prob of success) Please do NOT take this as an endorsement to put 40% into FNMAS. Just wanted to point out the obvious, that FNMAS may be a really, really good risk/reward situation.

+1. Liquidity is likely the main reason FNMAS is more expensive. The volume and spreads on the other prefs would make it difficult to adjust a position of any meaningful size if one wanted/needed to do so. Heck, it's difficult enough to get a decent number of shares on FNMAS without moving the market $0.03+ against you, I can't imagine how tough it would be with the others.

That's the part I like. Get this thing moving along.

Guys, we are getting carried away. When I open this thread I want to find a good joke without having to sift through stuff like this. Please post all serious matters in the SHLD Investments thread, which can be found here: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/shld-sears/. Classic :) My bad.

Q: How do you make Sears stock returns from the past 10 years look good? A: You cherry-pick dates! ;) I picked October 9th because that's when I posted the following...

Here's my joke for the thread... Q: How do you get a $1,000,000 account in less than 2 weeks on Wall Street? A: You start with $2,000,000 and short SHLD at $24.63 (Oct 10th) and cover at $36.75 (Oct 23rd).

Nicely done. :)

Sears closing its Ithaca store http://www.ithacajournal.com/story/money/2014/09/25/sears-closing-ithaca/16233707/

Kmart leaving Prairie Hills Mall after 36 years, Cash Wise Foods to move in http://www.prairiebizmag.com/event/article/id/20960/

Sears closing its Mercer Mall store in Bluefield (December) http://www.bdtonline.com/news/article_e670ac1a-3eb8-11e4-8407-330d62348125.html Sears Auto Center on Marion-Waldo Road to close (September 27th) http://www.marionstar.com/story/news/local/2014/09/17/sears-auto-center-marion-waldo-road-close/15791853/ Sears to close Towne West store, auto center (December) http://www.bizjournals.com/wichita/news/2014/09/17/sears-to-close-towne-west-store-auto-center-in.html Sears, last store at Waterford’s Summit Place Mall, to close (December) http://www.theoaklandpress.com/general-news/20140917/sears-last-store-at-waterfords-summit-place-mall-to-close

Sears to close ‘rebuild’ center, lay off 112 http://www.dispatch.com/content/stories/business/2014/09/12/sears-closing-local-rebuild-center.html

Kmart to close Crystal Lake store (November) http://www.nwherald.com/2014/09/09/kmart-to-close-crystal-lake-store/ace1gx/

Something that caught my attention, but might be nothing, in the latest closure (link at bottom of post): The article below quotes SHLD as saying... Sears said simply the closings are prompted by "a change in business circumstances." ...as opposed to the script on all other closings (as far as I can remember): “Store closures are part of a series of actions we’re taking to reduce ongoing expenses, adjust our asset base, and accelerate the transformation of our business model. These actions will better enable us to focus our investments on serving our customers and members through integrated retail — at the store, online and in the home.” The article below also says... Sears says there are no bumping or transfer rights for them to get jobs at other Sears locations. ...as opposed to the script in other closures: “Those associates that are eligible will receive severance and have the opportunity to apply for open positions at area Sears or Kmart stores,” he added. Again, probably nothing, but interesting. Here's the article: Sears closing Fond du Lac store and auto center (November) http://www.wbay.com/story/26284619/2014/08/14/sears-closing-fond-du-lac-store-and-auto-center

Last Kmart in Brevard (Palm Bay) to close in September http://www.floridatoday.com/story/money/business/2014/07/23/last-kmart-brevard-close-september/13041571/

Sparks Kmart Distribution Center to Close in December http://www.ktvn.com/story/26235317/sparks-kmart-distribution-center-to-close-in-december