Eye4Valu
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Posts posted by Eye4Valu
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I agree with your scenario analysis and if scotus takes up APA claim I certainly hope they also take up constitutional claim/remedy. I just think net net, a good enough and safe scenario would be a hold until district court order.
Agree. Moreover, looking out to the 2020 elections, if the economy holds, the stable genius is likely to get reelected. Fed is holding steady. A trade deal with China and clawback of tariffs needs to take place, and probably will in some form. This leads me to believe that reelection is likely, and that irreversible administrative action, while favorable, may not be a necessity.
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What cracks me up is that in any given transaction there is a seller and a buyer. If all of the big institutional players were selling, there would have to be other players buying, presumably just as large. Movement in a stock price doesn’t reflect massive selling or buying per se, just a difference in opinion as to that security’s value. Muscleman needs to go work out with Gasparino and post selfies with a fanny pack on.
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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.
So you think as long as the treasury plan exists, it has to be bullish and make preferred to par quickly?
Can there be a case where the plan requires 8 years to get preferreds to par?
Or can the plan be in such a huge resistance by the big banks that it is not able to raise the equities, and it was forced to be delayed over and over?
The IBankers want the IPO fee for sure, but if they could kill it and take over, the longer term profits are much greater. Could they be trying this and delaying it post 2020 to see if they can get a Democratic president in and give them what they wanted?
Is it time for MM and Emily to go hit up the gym?
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The inverse head and shoulders pattern has me very bullish here. ;)
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howard is extremely knowledgeable about GSEs and understands the animus directed to the GSEs by the tbtf crowd. for sure this colors his views. there is a difference between what should be done and what is likely to be done, and Tim resists that compromise. as investors we dont want the perfect to destroy the good. Tim wants the perfect because he is the smartest guy in the GSE room and is not motivated by an investment return. I think his blog has made huge strides in attempting to educate people about the facts relating to the GSEs, and has done all GSE investors a great service.
Well said
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I agree with what Tim Howard says. Just saying.
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Would be glad to buy you a beer as well!!!
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Joe light blocked me...can someone post text if important. thx
It's all right here: https://www.bloomberg.com/news/articles/2019-05-08/fannie-freddie-may-be-released-without-congress-calabria-says
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I read that Buffett/Munger got a question about Fannie/Freddie yesterday. Anybody see or hear it to provide some context?
Thanks!
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I read that Buffett/Munger got a question about Fannie/Freddie yesterday. Anybody see or hear it to provide some context?
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What are your thoughts on how a favorable 5th Circuit decision might influence administrative reform?
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" it appears he's sucking up another sweep this quarter". I would say it is still an open question.
Based on my technical analysis, the market thinks it is certain that this 3/31 dividend will be paid. So we'll see.
It has been flashing red lights to me since 2/25.
Could we get some kind of surprise? We certainly could. But the market is usually right most of the time.
What did your fortune cookie say though?
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I think this is just a general reflection of what people are feeling right now, cast into my own sub concious.
I think your subconscious is really making you feel miserable for having sold. But don't worry. Maybe enough of retail gets scared that you get your chance.
Based on your posts Muscle, I would wait for an inverse head and shoulders pattern to emerge. If you see a smiley face form in the charts, even better.
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Anyone have thoughts on the common at these levels?? Up BIGLY ytd ... but who knows.
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.
Agree, well said Midas!
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I changed my mind and sold the position for a small loss. I think the technicals are very interesting right now but slightly premature to enter, so I fixed my error. I may get a big slap on the face tomorrow.
Maybe someone should slap you irrespectively? Emily?
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I wish I could place some of the commentators on this thread in receivership.
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@cherzeca after losing so many court cases, the thesis shifted from legal resolution to political. The former is generally simpler and easier to handicap, so in that regard it makes sense to me that it is trading less than pre perry ruling. Politicians are fickle and the political landscape can change disorientingly quickly
ok, except the thesis is now both legal and political
are we all finally figuring out that those two things are basically the same?
I still believe in checks and balances. Looking forward to both spheres of influence righting this wrong.
what you know, that just ain't so.
what you write, that just ain't right.
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@cherzeca after losing so many court cases, the thesis shifted from legal resolution to political. The former is generally simpler and easier to handicap, so in that regard it makes sense to me that it is trading less than pre perry ruling. Politicians are fickle and the political landscape can change disorientingly quickly
ok, except the thesis is now both legal and political
are we all finally figuring out that those two things are basically the same?
I still believe in checks and balances. Looking forward to both spheres of influence righting this wrong.
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I know a lot of the Twitterverse and Fanniegate supporters have pointed out for some time that POTUS could utilize proceeds from the warrants for the now infamous wall, and perhaps more apropos, infrastructure spending. I haven't been overly optimistic about this possibility due to the status quo, but the status quo seems to be changing. With POTUS agreeing to reopen the gov, and with wall funding still seemingly unsecured, I wonder if there is some possibility that when Otting releases details of the plan, some of the proceeds from the warrants could be earmarked for the wall. Just a thought.
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I invite the board to respond to this query.
I am trying to assess what is a realistic near term target price for the prefs under various scenarios. let's take a current price of 40% of par (which is fnmas).
let's assume two scenarios: first, that an administrative plan is announced that indeed seeks to implement a moelis blueprint type plan...nothing is to happen for a few months because it is conditioned on settlement of all litigation, but the proposal is to negotiate a 4th A that rolls back NWS and deems senior prefs paid off. second, collins en banc decides that NWS violates APA and remands case down to district court for relief (so that actual invalidation of NWS is likely to be relief, but requires district court to issue order).
essentially these two scenarios are the same, senior pref very likely to go away in a 3-6 month or so time frame.
after either of these announcements, what would you expect a pref which is trading at 40% to trade up to?
First Scenario: 72% of par
Second Scenario: 85% of par
I think this makes sense. while I don't think the prefs ever reach par until they see a redemption notice at par (or a very attractive conversion offer), I think getting a 39% return (72%--->par) and a 18% return (85%-->par) after these two events is quite possible. the 85% may be high, but my thinking is that with prefs still under 40% now and the horizon for these two events becoming somewhat clearer, I would think prefs still have much upside in the near term (3 months)
Just pondering with you but how do the preferred not get par in a recapitalization scenario? I think whether or not the dividend ever gets turned back on is highly up for debate due to restructuring/retirement but as soon as the gov exercises the warrants or NWS stops/released from conservatorship how is the par value for that release entity not valid? The div would have to be declared by the board and surely not until capital is built back. Value is not based on earnings and there is a contractual par value in the preferred circular offer sheet that reads for example "Preferred stock is redeemable at its stated value at the option of Fannie Mae on or after specified dates"
If the company is released how much of an arbitrage opportunity can their be when there is only way to remove the preferred...at par. So either it stays as is and divs get turned back or, or it goes away at full price. Time of course is highly up for debate here but especially now I see everyone of my par holdings worth their full value over time.
Lastly Otting/FHFA/Treasury has only surprised to the upside as in my humble belief it will continue this way.
I don't disagree with either one of you. Your guess is as good as mine.
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I invite the board to respond to this query.
I am trying to assess what is a realistic near term target price for the prefs under various scenarios. let's take a current price of 40% of par (which is fnmas).
let's assume two scenarios: first, that an administrative plan is announced that indeed seeks to implement a moelis blueprint type plan...nothing is to happen for a few months because it is conditioned on settlement of all litigation, but the proposal is to negotiate a 4th A that rolls back NWS and deems senior prefs paid off. second, collins en banc decides that NWS violates APA and remands case down to district court for relief (so that actual invalidation of NWS is likely to be relief, but requires district court to issue order).
essentially these two scenarios are the same, senior pref very likely to go away in a 3-6 month or so time frame.
after either of these announcements, what would you expect a pref which is trading at 40% to trade up to?
First Scenario: 72% of par
Second Scenario: 85% of par
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Thank you.
You have done an incredible job here we have all benefitted from your effort whether the stock moves higher or not.
Hands down Christian deserves the MVP award for Most Valuable Poster. His work on MBIA was incredible as well. I have a law degree and still learn a ton reading his posts. Thank you!! Once this saga ends, I hope you find another potential investment to keep the intelligent posts coming!
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FWIW, Morningstar believes there is residual equity value post bankruptcy. Price target of $11.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
The bifurcation in views between preferred and common makes me laugh. Ackman thinks the common are the fulcrum security, while others view them as toilet paper. I guess we'll find out.