orthopa

He/she doesnt, best to ignore going forward.

So with Preferred being wiped out they are going to put them in receivership? Then what? IPO them out of receivership? What are you even talking about lol. If he was going to give them the heads up he should have told Paulson back last summer when they were starting to work on FnF that. Hey John I know you bankrolled by campaign 3 times but we are going to work on FnF for 2 years straight, get everyone confirmed that we need to take them public then at the last minute bend you over so you dont get paid. Oh and you could have been Treasury secretary but I lied to you and Im going to fuck you at the last minute after Bessent and Pulte go all over the media talking out taking them public just to get your hopes up!!! lol Jesus Christ, that statement alone tells me you don't have a grip on the current situation. And no Sr Preferred does not get forgiven. Thus stay out of common.

I do. For whatever gain Trump would get out of this Biden would have also. Why didnt his admin do it? The path of least resistance with these investments has been the status quo. If Paulson dies today yes it still goes through. Cant stop the train now. If Paulson dies in late 2023 or Summer of 2024 Im out of the trade completely. Its unknown what Paulson holds but its safe to say "at least" Billions of face value of preferred. How does Trump benefit from this when the PSPA is restructured and the JPS fate is determined. Legacy? Maybe...but I would take Billions over legacy any day.

The whole reason this is being done is Paulson. Paulson has bankrolled 3 of Trumps presidential runs. https://www.newsweek.com/trump-campaign-says-fifty-million-haul-palm-beach-paulson-fundraiser-doubled-biden-1887679 https://www.bloomberg.com/news/articles/2024-04-05/election-2024-john-paulson-is-raising-43-million-for-trump?embedded-checkout=true https://www.fa-mag.com/news/ex-soros-star-scott-bessent-jockeys-with-john-paulson-to-run-trump-s-treasury-78130.html Do a little reading, its not hard to figure out why this is happening. https://www.politico.com/live-updates/2024/11/12/congress/paulson-withdraws-from-treasury-contention-00189010 “Although various media outlets have mentioned me as a candidate for Secretary of the Treasury, my complex financial obligations would prevent me from holding an official position in President Trump’s administration at this time,” Paulson said in a statement. Complicated for sure when you need the treasury secretary to sign off on a PSPA agreement to recap FNF.

Which Lawsuits are you referring to? In Lamberth preferred holders got a pittance compared to what they could get in a recap scenario and is being paid by Fannie and Freddie anyway which would hurt the recap math. They have already reserved the $$ for payout but collecting on them as a shareholder does nothing with an IPO option. Gov will appeal(cant remember if they did already) and threaten to drag out for years more. Who wins in that scenario? Shareholders want their money and gov wants 30Billion. I believe there is one other lawsuit that is DOA about the common and current PSPA allows for up to 5B of lawsuit damages in a recap scenario. Lawsuits are not going to stop this. That ship has sailed. Essentially shareholder rights to pre sweep $$$ is gone. Everyone's eye is on the $$$ to be made going forward.

I agree with nearly everything here. Ive made it easily mentally on myself and thought that Paulson will do whats best for Paulson. Trump as you mention is a direct extension of that. Paulson(preferred) will sneak out ahead under the guise of a huge 30B (and billions more in the future) windfall for the gov. I think all options are on the table for treatment of the preferred. Do they call the high div preferred and keep the low div? FNMAS has to be called by 12/31/2025, if not its 5 more years and that's the highest div rate. Do they convert based on div rate % wise ie more shares for higher div etc. Citi did this in 2008 I belive. Do they just turn the divs on? Current preferred rates not too out of line of current TBTF bank div rates. This would allow many of the higher div preferred trade well above par. Its probably not worth the mental gymnastics to try to nail down a specific scenario as everything on the table IMO. Id love divs to be turned on, that would essentially give me retirement level annual income. If converted to common and the float is low and FNF grow over time it will be a mulitple of the conversion price hopefully with a div. At this point I feel like if its heads I win, tails I win too.

I think for the reasons you discuss staying in preferred is still the safest way to go with this. Common under a dollar or whatever was worth the risk for some, ~10 bucks not so sure. I think the simplest way to think about this is when holding the preferred you aligned with Paulson. I don't expect either share class to 2-3x etc from here but the one to get hurt the least will certainly be preferred. 2 not horrible things are likely in store for the preferred. Div turn on, or conversion to common. Conversion to common will likely come with some sweetener to grease the skids. There has been some talk that if gov takes a haircut on their stake preferred should too. Im not sure gov should or will take a haircut. Why should they? Pulte already said gov will maximize their investment in Fnf and what is common to do about it if they do? Banks will be clamoring to sell the shares and one would have to believe in the Billionaire circles that many in the admin including Paulson have lined up money otherwise. One of commons argument's is who would invest in new shares if older shares got screwed. I got news for ya, both common and preferred have gotten screwed. Not a div or claim on earnings for 16-17 years and we are talking about a 30B IPO in a couple months. New money doesn't care about old money and preferred had the biggest advocate of all standing behind Trump during the inauguration. Im not trying to make it any harder then it already is. Just own the preferred like Paulson and let it ride. There is one reason and one reason only why this is a first year priority for Trump. The gov also has some interesting options with their investment too. Gov has multiple bites at the apple here, warrants, SPS and Liquidation preference all of which could translate into common equity, maybe traded for debt, all of which or a portion of could go into a SWF or be sold to the public. Maybe the gov sells the warrants to the public? Next step is the PSPA announcement I believe which hopefully is in a couple of weeks. With the way things have gone so far no reason to not believe on a Nov/Dec time frame for this all to go down. Ive added another large tranche of preferred as a trade into year end.

We need to remember that ALOT of people who are poor are so by their own doing. Who is not? The retarded, the handicapped, the truly disabled. We live in a country where prek-12 schooling is free, the transportation there is free, breakfast and lunch are free. Sports and afterschool programs are available after school. Then if needed daycare, housing, monthly stipend for food, healthcare are paid for etc. college is more accessible then ever for those in need. Even if you grow up poor, your parents are poor etc individuals in this country are given plenty of opportunity to not be "poor". Maybe its about time we ask why these people keep making poor decisions or understand that they make the decisions they make because they want to forego opportunity for better in exchange for guaranteed resources. Sometimes people who are "poor" are ok with subsidized housing, food stamps and minimum wage jobs. Its the others projecting their dissatisfaction that think its bad they are poor. People are upset by people being poor should be very upset by the decisions and culture that leads to poverty. Put your energy towards that. You will get tired eventually, throw your hands up and walk away too.

I find it interesting for anyone to call Trump a king when and if they supported Kamala as the pick for the democrats. The "king" in power then nominated the "queen" to be "king". No primary. Not a single person in smallville USA voted for her as the nominee and the democrats took it all the way to the election. Did we forget that? Are we really concerned about kings and queens and loss of democracy or just don't like what hes doing?

Yield spreads between mortgages and US treasuries have been in the same range for a while, no meaningful change yet. https://www.longtermtrends.net/bond-yield-credit-spreads/

https://x.com/pulte/status/1928089429211484425 Lots a bullish tidbits in these, listen and decide.

Pulte did 3 interviews yesterday, Fox, Bloomberg and Newmax. I bet these as well as trumps tweets have been trial balloons to test the water. The market is pretty efficient. If there was worry you could think this chatter would cause some movement.

Im sure there are. Other thoughts are consent decree to essentially keep companies in conservatorship but allow price discovery of common after capital structure is corrected. Capital structure has to be corrected first. That should instantly let all share classes know their fate as gov deals with SPS and liquidation preference. Pulte seems to be conflating public and privatize but maybe purposely so. Fannie never had an explicit guarantee so MBS spreads shouldn't widen too much and with an ongoing investment in FNF or paid for guarantee even more of a reason for no change. Either way looks like a busy couple of weeks maybe coming up.

Is it happening? we will see, Chuck thinks it is. https://thehill.com/homenews/senate/5321688-schumer-trump-plan-privatize-fannie-mae-freddie-mac/

There for sure is a plan. Pulte isnt going to tell you the plan. He already told you its up to President Trump multiple times now. You need to ask the POTUS the plan. Something of this magnitude will 100% go under the credit of President Trump. Interesting the court case he references. Notes FHFA and Treasury both serve at the pleasure of the President. This is 100%Trumps deal and decision. Pay attention to what he says

After watching this sounds like the sovereign wealth fund. “We’re studying actually potentially keeping it in conservatorship and taking it public.” The Securities are already "public" they still trade publicly. Being in a SWF would essentially keep them in "conservatorship" as the assets would be for the benefit of the country. Does gov keep their shares, SP, if converted SP, warrants etc in the SWF and the remaining common and preferred trade as is but no longer under official gov conservatorship? Seems almost like partnering with the gov or implicit guarantee is because gov would have $100s of billions invested in Fannie and essentially obligated to guarantee them or lose money. Not a bad idea I guess. Need a BOD equally represented by gov and private investors or corporate structure to assure a take over conservatorship like last time doesnt happen again.

Pulte keeps pumping....

They will probably do a pay for guarantee. Explicit goes on the US balance sheet. MBA, Whalen, Zandi, Parrott, Bright, Pimco and Blackrock can all choke on it now. Again, they are on the outside looking in, big middle finger for them. Paulson is on the inside and Paulson gets paid this time. 4 years ago yeah it didnt work out but something like $160B was missing, not this time. That being said it gets done this time. No way the POTUS is tweeting about the kind of guarantee these companies get and they are just "thinking" about releasing them. FWIW he said he is working on taking them public now. Bought more FNMAS yesterday and got lucky it seems. That being said I would expect an EO or plan, (hopefully not a framework of a plan.) sooner then later. If POTUS is tweeting out the fact there is an implicit guarantee this seem to have moved along WAY beyond discussion about taking them public. Makes sense as WSJ reported these were being discussed last summer by Trump team. As preferred shareholder waiting on 2 things.... 1. Official agreement between Treasury and FHFA delineating privatization process, 2. Treatment of preferred, fingers crossed for dividend resumption but conversion at a lower share price with common at $10 a share works for me too.

Well Bessent on Bloomberg said privatization is a goal for the admin and will come after the tax deals, peace deals, tariff deals. Trump says its a goal, Pulte says its up to Trump and Bessent says its a priority. Pulte is trying to make them more profitable. Maybe for jus the gov? Maybe everyone is lying again. The lobby against this is crickets and everyone not on the inside has gone radio silence. They can lie to me for 3.5 more years. That being said Im borrowing to buy more preferred this week. With the 30 year 5% and the outstanding preferred at 6-8% divs I dont think its unreasonable to think instead of converting the preferred the divs or turned on. That being said we will see.

I was thinking about that as I typed earlier but what an encumbered asset that would be. There is a lawsuit with claims FnF have to pay as well as private and preferred shareholders to deal with. Not a bad thought but seems like a mess and would it cause another lawsuit? Im not a lawyer so I dont know but that seems like a true nationalization, vs the quasi one now that has skated through the courts. Bessent has half(if not all all the power via Trump) to bring them out of conservatorship and one would think he brings the assets in unencumbered and liquid. Why go through all the trouble of creating a SWF to dump an illiquid asset with no direct claim to cash earnings now via PSPA vs immediate access with release.

I would say as expected. Hard to argue Assets of the people, staying with the people. Makes monetization easier, on less pushback. I believe recent board changes with DOGE and pultes comments are to make FnF lean. Decrease expenses. If meaningful less expenses improve margins, earnings and help towards a better valuation if/when goes private. Lord knows after 15 years under the helm of multiple admins with different goals that is probably a lot of fat to trim. I think this is a move towards privatization vs more of the same for the next 4 years.

https://www.wsj.com/politics/policy/trump-allies-are-working-on-plans-to-privatize-fannie-and-freddie-a9c4e5ff Trump Allies Are Working on Plans to Privatize Fannie and Freddie A deal would call for the government to try to sell a chunk of its holdings in the mortgage giants to investors, including sovereign-wealth funds Seems pretty clear to me where the funds would go if monetized and sold.

At times I wonder the same....will they run out of time. But realistically how much time is needed? Surely the lawyers at FHFA and Treasury have done the work to make sure leavinging conservatorship is legal and in a way to avoid legal challenges. Calabria did a ton of work on the subject with plans he said he left on the shelf. Congress is needed for an explicit guarantee. Put them on a shot clock and let it be known if they want an explicit guarantee to act. If not its implicit. Kudlow et al has been working since summer according to wall street journal. Jesus, how hard is this? An executive order with a consent decree outlining exit conditions can be done in one day. This investment needs deadlines, otherwise those that benefit from the status quo will keep it the way it is. Either way I doubt we see anything until both Pulte and Bessent are confirmed.

Anything is possible at this point. Ackman will be lobbying hard for the common, Paulson et al for the preferred. Scenarios I have discussed with others for value for preferred. 1. Re turning on divs, some may not trade to par, others will big div would probably trade higher. 2. % of par for preferred in a conversion scenario. Highest div pars get favorable conversion to common terms 3. Some of the series have to have a 2/3 vote on the outcome of any conversion or change in terms of the preferred. Would 2/3rds vote to get less then par? Lots of questions for sure. But for a pure capital perspective how can the preferred not be worth par if a security below is worth even a dollar?

https://www.marketwatch.com/articles/fannie-mae-stock-freddie-mac-fnma-privatization-db92f622?mod=mw_latestnews In reality, Thursday’s agreement will change little, and there are already indications that the Trump administration will disregard or amend it. Mark Calabria, who headed the FHFA under Trump, on X called the request for a report on release “hypocritical” given that the Biden administration abandoned a previous study on Fannie and Freddie’s risks to financial stability. Jonathan McKernan, a former Republican FHFA staff member who now is a director at the Federal Deposit Insurance Corporation, noted that the new agreement can be “easily reversed.” “We view this as political and do not see it as a significant roadblock to recap and release,” wrote TD Cowen analyst Jaret Seiberg in a research note on Friday.