Picasso

Merry Christmas everyone!

So much for that idea

Whitney Tilson.

MX

It's clearly not authentic.

Amazing

I used cost of equity as these are non cumulative dividends coming from net income. Not that any of this is happening but at least can be compared to other investments this way Goldman has a valuation of $32 for either fmckj or fnmas. I thought investors just misread what Goldman actually said?

But these are $0 strike warrants. Most anti-dilution provisions will reduce the strike or allow for participation in any new equity raise. When you have a $0 strike with no limits on the increase in warrant issuance in front of any equity raise, it makes the equity totally uninvestable. I don't think I've ever seen that before. It's such a great deal for the warrant holders that I can't imagine why they would amend the terms.

that's how i read it too merkhet. i didnt realize that. so if junior pref exchanges for common, for example, the number of govt warrants increases. i agree that govt warrants and common are not parri passu. i have never seen this for a public company. this also makes it impossible to issue more common stock, imo. who wants to pay up for a share of common stock knowing that he is also funding a free .8 share warrant for govt? so if there is to be a recap, this provision has to change, because there is no recap. taking it one step further, no junior pref holder would exchange for common for the same reason, which govt may want to do, so this provision (if used by treasury) makes any kind of workout that restores equity value unworkable. This is amazing, the government actually issued magic warrants. No wonder they did 79.9%, they basically get the benefit of owning the entire business without placing any of its debt on the government balance sheet. It also makes the existing common equity worthless because no capital would ever make its way back to common equity holders except for the ones that own those warrants. I don't have a view on the preferred yet but I can't imagine why anyone would speculate on purchasing the equity with those kinds of warrant rights. It also makes me wonder, with a deal like that why would the government want to make any changes? It's basically 100% ownership even without the NWS. It seems like a bet on Mnuchin not screwing over his buddies and if we're talking about the NWS being un-American, that sounds pretty un-American too.

I'm not sure I follow either. Order of dilution doesn't matter, the warrants will be diluted unless they're magic warrants. And if they're those kind of magic warrants then commons are worth zero.

No position but in agreement with this. It starts getting speculative when you have to read between the lines and analyze tones. If Trump had not won (a seemingly improbable event), I can't imagine these securities would be trading anywhere near current market prices.

Mind explaining to me how you get new private money/investors to recapitalize a company and commit hundreds of billions of dollars while taking the first loss in a new entity when previous shareholders were liquidated? Is this something you would invest in and expect other to do also? Seems like no one has a problem investing in GM these days.

The best part is he wanted to BTFD, not short the stock.

+1

+1

Fun fact: /u/fscomeau pioneered the term YOLO on /r/rwallstreetbets which was the inspiration behind my @yolocapmgt twitter handle. I'm fairly certain this is all a big bamboozle but it should be entertaining.

We should start a thread on religion.

I think I was down 30% from peak to trough by the time Jan 2016 rolled around. Almost every energy related stock was cut in half from the time I first started buying. And I didn't start buying "energy" until maybe Oct/Nov of 2015 so I feel for the guys who started buying in late 2014. I owned one stock at 3-4x FCF, it went to 2x FCF and a friend said "it might as well trade for 1x FCF, what's the difference at this point." He's right though, you can't really manage market volatility in some of these blown out stocks. I'll be happy to find something at a 50% yield, but someone might pick it up at 100% a few weeks later for whatever crazy reason. For some coal/gas E&P stocks, weather is playing a big factor in the returns. If we had another warm winter I doubt things would have turned out this way in the later months of 2016. Or the Trump victory? It's probably important to ask where some of these stocks would be trading without some of those improbable events. Which is why I think writser and Hielko are putting up some great returns since they seem to be diversified enough to avoid being labeled as outliers or lucky.

Another member of the FELP mafia, nice! Really impressive results writser.

I think he's just saying the path of least resistance is up, Dow 30k is meant more as a jokey price target to illustrate the point. Plus the best experts never give both time and price. Remember that poor lady by the name of Meredith Whitney?

This extends to every friend and family member. I refuse to invest for them.

Except that one side wants to get rid of the entities all together by starving them of their capital. The other side wants them recapitalized to ensure affordable housing, and would rather see them in private hands than in constant jeopardy as they are in their current state. Furthermore, it's all up to the Executive Branch anyway, and if not, the Judicial Branch. Congress is the least important of the three. They are not under "constant jeopardy" as they are under government conservatorship currently. The case can be argued that without the government's backing, these entities would cease to exist and the common and subordinated preferred stock would be worth 0 so why should they receive anything? The case can be made that without FDIC backing of deposits, banks would cease as well. So why should the bank shareholders receive anything? FDIC isn't government backing, members have to pay into the insurance fund. I'm with frank on this one, with the explicit government guarantee there isn't some catastrophic risk of having a subsidiary (like the post office) not holding excess capital on their balance sheet. If they need capital, it just flows back from the parent (in this case the government). I never understood that line of reasoning. But the legality of the NWS is another thing altogether.

This thread is awesome.

This whole Buffett 50% thing has turned into a game of telephone. It's not hard to know what he meant, but some are twisting it into their own realities with options and crazy stuff. I think he should clarify it to a broad audience if possible.

+1