Eye4Valu

CHK like Icahn.

My takeaway: "The only ones panicking over the bailout issue are the press and shareholders in these companies. Possibly they should stop and think before they act." In other words, don't panic and don't listen to the press. I think Fairholme puts it something like "Ignore the Crowd."

What's your point? I read Bove's article earlier today. My takeaway was not what you bolded.

Didn't Buffett lose all of his investment in two Irish banks during the financial crises? As in "going to zero." Seems like his record is still intact. I agree with Parsad on this one. Sandridge doesn't keep me up at night.

"After all, back in 2008, the companies were not put into receivership, the equivalent of bankruptcy. Rather, they were placed under the care of a conservator — the Federal Housing Finance Agency. That conservator was supposed to put the companies “in a sound and solvent condition” and “preserve and conserve the assets and property” of each entity. Siphoning off the entities’ profits is the opposite of conserving their assets and property, the plaintiffs contend. And they point to a 2009 Treasury memo stating that the conservatorship of Fannie and Freddie “preserves the status and claims” of preferred and common shareholders. One of those claims is surely having access to future earnings." -GRETCHEN MORGENSON The illegality involves the Third Amendment, which flies in the face of HERA. Anyone who thinks the Third Amendment was a fair trade should avoid the preferred, the common and this thread because they don't know what they're talking about. Last time I checked, FNMA and FMCC were privately held companies owned by shareholders that were placed into Conservatorship, not Receivership, as Ms. Morgenson points out. The U.S. cannot unilaterally amend the terms of the PSPA and expropriate all assets at the exact time they realized that FNMA and FMCC were returning to profitability, yet this is exactly what they did. If the U.S. truly abides by the rule of law, the Third Amendment cannot stand. “People disagree about what should happen to the G.S.E.’s,” said Matthew D. McGill, a lawyer at Gibson, Dunn & Crutcher in Washington who represents Perry Capital. “But if the plan is to wind them down, Congress provided a means to do that in the 2008 law — it’s called receivership, and it provides a host of procedural protections to claimants. What the Treasury cannot do is abuse its conservatorship powers to nationalize the companies and then, when it deems convenient, wind them down without the protections enacted by Congress.”

I like it. Don't think it's too flashy. Does a better job of explaining things to a potential investor.

No guts, no jail time!

I tend to think the move down does signal global weakness. The Central Banks are trying to fight deflation, and appear to be losing the battle. I think Watsa's thesis plays out over time. Cheaper oil being an economic boon is a glass half full perspective. There is a flip side to that coin that people are less likely to acknowledge.

Discovery deadlines are set by which everything must be turned over. Not sure how Judge Sweeney, Plaintiffs and Defendant are handling this timeline.

I actually think it's more likely that we lose first rounds legally, but still come out OK with release from conservatorship, than the other way around. Most judges fall in line and don't want to rock the boat. While I think the legal cases are strong on the merits, the stronger possibility for resolution rests with Mel Watt and the Treasury. Everyone says Congress is deadlocked and won't come up with a solution. The courts take a long time too. Most likely outcome is release from Conservatorship by Watt and Lew in my opinion. At that point, easiest solution is to sell the 80% equity stake and put it in a first loss position.

My view is that Lamberth's opinion is irrelevant in the Court of Claims anyway. Lamberth's case involved the injunction, where as Sweeney's involves monetary damages pursuant to taking. Sealed exhibits must bolster Plaintiff's jurisdictional arguments, or they wouldn't be included. On Ackman's conference call, he mentioned that Lamberth weighed in on takings claim, although that was not the issue before his court. Ackman felt Lamberth's argument that the stock still trades is weak. So what if the stock still trades if you have no claim to residual interest. Ackman likes risk/reward at 2-2.5% of his portfolio. But it could never be a larger position for him with the U.S. owning rights to 80% of it. Its interesting that Bruce made the Prefs a decent sized position is his portfolio. Shows you his absolute conviction that the dividends will be restored. I think you can hedge common exposure with preferred, and wonder why more people with common exposure don't think to hedge it with the Prefs.

My take is that he maintains his position or is adding, but is no longer disclosing and probably shouldn't have been, similar to other hedgies. I wouldn't be the least bit surprised if he added recently.

Don't think so because they are non-cumulative and holders lose all rights to dividend during conservatorship. If the GSEs are released from conservatorship, the dividend should be reinstated and the pref go near or above par. One of the arguments now being made is the Third Amendment Sweep is a de facto liquidation, and thus breach of contract with regard to the pref's dividend in the Court of Federal Claims. The Gov and Lamberth argue this isn't correct, that the cases aren't ripe, because a fourth amendment is possible, and liquidation thus hasn't occurred yet because they're still in conservatorship. In my mind, even if they had been put into receivership instead of conservatorship, the pref holders would still be entitled to their contractual agreement, if FNMA and FMCC had the capital in liquidation to flow down to the prefs, which they appear to have. Anyway you cut it, the Gov's actions do not make sense in light of conservatorship or receivership due to the third amendment profit sweep.

Not sure that John Carney wrote that particular WSJ article, but he writes others for "Heard on the Street." They reflect the same negative sentiment. I think John Carney has a reputation for being very opinionated. In fact, a bio of him at his ex-employer, CNBC, states that he opposed all bailouts, thinks there was nothing wrong with letting Lehman fail, and favors insider trading. I know people of various economic/political orientations feel strongly one way or the other over bailouts, but favoring insider trading?

FWIW-I've had appraisers come in well below the K price, and well below what I think a reasonable estimate of market value might have been at the time it was appraised. I don't think either cared at all what the lender thought. Appraisals seem very subjective to me. Perhaps the housing crises proved this last point?

Exactly.

http://www.americanbanker.com/bankthink/broken-promises-to-fannie-and-freddie-investors-1070591-1.html

BRK, FRFHF, MKL, BAM, Y, L, BAC, AIG, CL, OTTR, FNMA, FMCC, EXPD, PAYX, GGG, PEP, SUHJY, WFC, AXP, IBM, FAST, DVA....and too many more to list if they are at the right price!!!!

But the key quote that’s getting attention comes in Goldman Chief Executive Lloyd Blankfein’s exchange with a reporter after a question on whether there should be limits to compensation: Is it possible to make too much money? “Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.” So, it’s business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker “doing God’s work” -WSJ, November 9, 2009

Do you think that the commentator providing the posts at http://timhoward717.com is Ralph Nader? If not, any guesses at to who it is?

Doesn't the sale by Fairholme at approx. $4 still represent a large gain for Fairholme? I believe Uncle Bruce got in much lower, but correct me if I'm wrong.

Interesting that he considered his investment in the Oakland Raiders as a distressed investment. Would love to hear his thoughts on this.

The IRS is classifying Bitcoin as property, not currency, making it subject to ordinary income or capital gains: http://www.reuters.com/article/2014/03/25/us-bitcoin-irs-idUSBREA2O1LR20140325

Grantham views the market as being overvalued as well, but seems to think the market will go higher in the short term. He suggests that we're not in an equity bubble yet, but well on our way.

Think it might be a cool mill.