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BeerBBQ

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    Blockchain technology

    in General Discussion

    Posted

     

     

    Per disclosure, I teach how to strategically implement block chain technology at the University of Toronto.

    4 months ago the course didn't exist - & in that short time, I've taught close on 50 people.

     

    SD

     

    Do you have any thoughts on the energy consumption and transaction speed (7-10 per second) that are often cited as reasons that blockchain will not be able to scale? More specifically, is it possible for blockchain to achieve mass adoption for various use cases with those two hindrances core to the protocol? 

     

    Thanks

     

     

     

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

    in General Discussion

    Posted

    I keep seeing references to the equity gets wiped out or that the entire capital structure is wiped out.  Since the GSEs are in conservatorship, how would a restructuring occur?  Do these companies need to be put in receivorship first? Or would they have to be declared bankrupt and restructured through a bankruptcy court (prepackaged or otherwise)? What is the mechanism for either of these changes to the capital structure? 

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

    in General Discussion

    Posted

     

    the pref has some more legal leverage, but probably not enough to justify its current trading price...which implies that the junior pref holder thinks the commons' value derived from the warrants (that mnuchin wont trash treasury's own position) also benefits the junior pref

     

    this is no longer a legal thesis, it's a mnuchin wont trash the warrrant value thesis, certainly for common and at least partially for junior pref.

     

    EDIT:  at the risk of being redundant, simply put, if treasury owned no warrants, just the senior pref, the common would be worthless and the junior pref would be worth 10% of par, imo

     

    Why don’t you think the legal leverage justifies current trading price? I was thinking that the legal leverage, capital structure priority, contractual nature of prefs, and the relationships of those who will be negotiating on behalf of the prefs (esp relative to common) would mean that a higher pref price would be justified. (obviously market disagrees with that assessment)

     

    As an aside, I think many have assumed that Trump wants to maximize the value of the warrants (I have thought that too) but it may be that his “must have” is reform, recap, and release because of the potential positive impact from housing for his growth agenda and he might be willing to give up the warrant value to achieve bigger agenda goals.

     

    I may be misunderstanding what you are saying but are you saying that junior prefs derive value from common share value? I’m confused as t oif treasury trashes warrant value thesis, how junior prefs get hurt?

     

     

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

    in General Discussion

    Posted

    I really find it bizarre that the common has been moving incrementally up while the prfd is doing the opposite. The market seems to be perceiving that both breach cases are not very strong. What's your take?

     

    The two breach issues that I referenced both pertain to the preferred. The common does not have a case based on Perry. I haven't a clue why there is divergence between the security prices of the two.

     

    This is part of the reason why I think preferreds are in a better position now relative to common.

    Do you have an opinion on if this ruling has improved the negotiating leverage of either preferreds or common vs. each other and/or vs. others within negotiating framework?

     

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

    in General Discussion

    Posted

    the preferreds lost relative advantage this week imo (outside of future positive court rulings).  their negotiating leverage declined and the odds of the warrants being exercised are higher meaning preferreds are fighting more against trump / taxpayer in dividing the equity.  but clearly the 2:1 ratio I used would be further down the line and any potential progress would be reflected in the common price, hopefully, relative to where it is today.

     

    and fwiw 1/3 of my position (currently, it changes often) is in preferred, so i'm not against preferreds.

     

    Could you please expand on why you think the preferred lost relative advantage and why you think the preferreds negotiating leverage diminished? 

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

    in General Discussion

    Posted

    My laymans understanding of part of the ruling is that these two judges are saying the plaintiffs misinterpreted the law as it relates to the term conservator. It seems like they are saying that when the plaintiffs read the law and argued the case, they had a traditional view of conservatorship in mind where the conservator can't act in the  conservators own interest. They are saying that the error the plaintiffs made is not recognizing that this conservatorship is different in that it allows for acting in the agency's best interest.

     

    based on the way the legislation is written, is this a valid argument or are they just trying to fit the ruling to the outcome desired (like many have suggested)?

     

    They also seem to hint (like lamberth suggested) that the plaintiffs real issue is the constitutionality of HERA itself. If this ruling is appealed to Supreme Court (and they take the case), will they just look at the issues that were decided or will they also look at the constitutionality of the entire law?

     

    Also, I thought lamberth stepped down literally the day after his decision - if that is accurate, who will review the parts of the case on remand?

     

    In addition to Washington federal and the case in Texas, what suits challenge the entire conservatorship and/or the constitutionality of HERA?  I've heard that WF is a placeholder with little financial backing behind it, does anyone know if the Texas case (or others) are more than just placeholders? If any of those move forward, is there any reason to think the speed at which they move will be materially faster than perry or the one in claims court?

     

     

     

     

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

    in General Discussion

    Posted

    The preferred shareholders obviously will have some very connected people at the negotiating table.  Who will be at the table fighting for common equity shareholders?  Assuming Icahn still owns shares, is there anyone else outside of he and Ackman who have weight in terms of advocating on behalf of common shareholders? Seems the common shareholders have the smallest voices at the table right now??

     

    I think Ackman should proactively announce he is taking over the financing of the Washington Federal lawsuit. Since he clearly is willing to spend years and real $$ fighting for what he believes in, the various constituents involved in the negotiation would have to take him seriously and his negotiating position would be improved.

     

    If retained earnings are allowed to build for only 3 years (vs. ackman's proposed 7), even if required capital is a generous 2%, the upside to common is quite limited (assuming the preferreds get an advantageous conversion price due to their seemingly better access to the decision makers).  I'm wondering if the seemingly current weak negotiating positon of the common shareholders is also part of the reason for the lack of appreciation relative to preferreds?? 

     

     

     

     

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

    in General Discussion

    Posted

    Doesn't SIFI designation imply onerous bank like capital standards?

     

    GSEs are currently operating under no capital standards.  an important part of any administrative solution would be to figure out what standard should be and more importantly how applied.  for this you should read howard on mortgage finance to see lay of land.

     

    Agree. I was referring to the MBA article. Seems like SIFI designation is code for bank like requirements i.e. A non starter in terms of recapitalization and common equity having value.

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