orthopa

No question he is most knowledgeable. The problem is if anyone has every brought up an opinion or point contrary to him he deletes it off of his blog and immediately dismisses it. I get that its his blog but sometimes a little back and forth is helpful to evaluate the entire range of outcomes.

It has been slow the last couple of weeks but it could be the quiet before the storm (confirmation bias?). Does not mean anything about the outcome/this investment has changed. Phillips left bc he was/is done with the plan. He was hired to construct a plan, and is gone now bc the plan is at the WH. Not sure how much more you can glean from that. IMO fuck Tim Howard. He only hears/types what he wants to hear and has no more pull then anyone outside of the admin. He is on the outside pushing his agenda on his blog and what benefits him most. Could just be admin waiting for en banc? If so, so be it. It is frustrating to wait long now that the end of June is here but it is what it is. Does not mean plan is off the rails.

It is more concerning that just "market price dipping". It is normal for a stock to pull back after a good run. What concerned me was the internals of the chart. The behavior of the chart looked like a top instead of a retracement before the continuation of another up move. I am not going to disclose how I use TA to analyze and draw these conclusions. Even if I do, I'll be labelled as voodoo one more time. I think the internals of the chart for FNMAS as a generic pfd view look like an upturn is coming. The pullback has happened on low volume, MACD looks to be turning up soon, stochs are where a turn around has been before, OBV hasnt falled off a cliff and Accum/Dist looks fine too. Market is waiting for upcoming news.

Dont know about delusional but certainly some GSE investor fatigue. The more you think about this saga the more it will drive you nuts.

Instead of a share buyback, I see it as a cost of doing business. A reason to get Treasury to agree to the deal, since they have to approve release anyway. Your second statement is correct, that's exactly what I was implying. What you're missing is that the directors won't have any say over it because it will happen during, and likely right at the end of, conservatorship. FHFA and Treasury hold all the cards, and neither has a fiduciary duty to shareholders. FHFA has no reason to care at what price the share offering is conducted, and if the warrants are sold for a fixed price then Treasury doesn't either. At that point the "more dilution equals more money for new investors" principle kicks in. This is one downside scenario for the commons, especially compared to the juniors. Calabria has said a few times that Fannie and Freddie will be left to raise the capital themselves. How much behind the scenes input treasury and fhfa have in reality is something that probably won't ever be known. If it is left up to the co's then i don't see the need for a super low common price, especially if they have multiple years to raise capital, but we'll see. You pay your money, you take your choice. disagree. the entire capital raise will be multistep process and fhfa/treasury will run the show at the beginning. at some point after the initial raise the companies will take over +1 No way fannie and freddie are going to raise capital themselves. They are powerless at this time and likely will be to the very end. FHFAs proposed capital rules are the antitheses of not having imput. They have no control over how much capital they are going to need/get or how they get it. They are going to be told what to do every step along the way by treasury. Who has a fiduciary duty to common share holders at this time? I guess this is the point that many common holders have (not arguing with you or at you DRValue) not quite understood or get. In this situation no one is the legacy common holders friend. No one. Not treasury, not new capital, not "Fannie and Freddie", not the jr preferred. Both new capital and Jr Preferred only benefit to gain more the lower the prices goes. My return as a Jr Prd share holder and new moneys return gets significantly higher the lower the price goes in a conversion. Secondly I wouldn't trust treasury for shit. They do not have the common shareholders best interest in mind and have no duty to do so. Almost nearly if not all of the new equity is going to come at the legacy commons expense. At this time, not knowing the governments plan it is a complete 100% gamble as to what the outcome could be in regards to dilution. At least in the jr prfd there is a par value, a contract, and capital structure. Hell there are some on the board who are still leary of getting par for the prfd, let alone the outcome of the common. Commons outcome is best if the capital build takes forever, jr prd doesn't convert or is nice in conversion, new equity is ok getting hosed, and capital levels are held low. What are the chances of that happening? Ill get on my soap box for this but lastly AFAIK Tim Howard holds mostly common shares and thus his latest piece on how FnF shouldn't hold too much capital. But in all honesty aren't we all in this mess because FnF did not have enough capital in the first place? Yes the banks Fd em and they were at fault too, and fannie needed some reform but at the end of the day a FnF that holds more capital is going to be safer. If anyone else looked at this from the outside it would be insanity to think that less capital should be held to support common legacy stock prices. Lastly if FnF really dont "need" that much capital they why the explicit or implicit guarantee? Why not have more capital in front of it for the MBS investors? Have less like he proposes so their is less dilution? Talk about insanity. The same was said of banks when the CCAR results came out and we heard that investors will never invest because they hold too much capital and returns will dwindle and yet today the banks seem to manage. Sure FnF are fundamentally different then banks but if an extra .5-1.5% of capital is needed to finally get them adequately capitalized at the risk of some lower returns and modestly higher G fees then so be it.

Why would FHFA care? And what do you mean by "the business would never do it"? More dilution equals more money for the new investors, not less. Well, as you point out doing the raise and then buying the warrants may be a possibility, I guess SPO investors would see that as a massive share buyback. I agree the conservtor wouldn't have an issue with that in that order. I thought your original post implied that treasury would no longer push for a high share price which means more dilution than exercising the warrants, something I would assume the directors wouldn't go for. I think the one thing the common holders forget or get mixed up is the thought that treasury will push for a high share price but forget about how that essentially dilutes the new money. A share price higher then 3 and change would be good for common holders but treasury owns 80% of the business for nothing. They paid .00000001 for their 80% and can exercise whenever and however much they want. Also how much more did get they get in the sweep as a profit? Is anyone counting that towards what the treasury would count? What if the treasury counts this as profit in addition and is willing to take less to raise more capital? I know its altruistic but should be considered Looking back at other TARP bailouts how much did the gov make? 13.4B from Citi 5B from AIG 4.5B from BAC 3.5B from GMAC The gov has gotten paid back on the sr prfd, swept extra (although could be considered fee for backstop), and is going to make $$$ on the warrants even at a penny a share. Again I dont think for one second the fed gov is going to be nice and not make extra $$$ but the people buying the new shares are in the drivers seat. Not the gov. The gov needs to unload and can only dictate price so much. Yes they will push for a high price but the new $$$ will push back. Wound'nt you? I have talked about this with many common holders and the end arguement is always who is going to buy the new shares if they cant get a good return? Correct! But what they confuse is the fact that there is an inverse relationship between the new capitals' return and the legacy common share price. Same with the Sr. Preferred via conversion. What if the gov puts execution/speed over gross profit in light of the demands of new money/market expectations?

thanks for the link. Maybe Calabria thinks/knows that anything he may request from congress for more power for FHFA doesn't get passed either. Maybe the competition request is just a show too.

link:https://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Dr-Mark-A-Calabria-Director-of-FHFA-at-Mortgage-Bankers-Association-National-Secondary-Market-Conference-Expo-2019.aspx Calabria, yesterday, in prepared remarks: My early guess is that the treasury plan will say something like IPO/Initiate capital build Q1-Q2 2020 to give themselves months of leeway. Both of his statements fit that time period. Vague is the way to go apparently.

Doesn't sound like Net Worth Sweep is going to be stopped in 2019... We will continue to engage with Treasury to develop a responsible plan to end the conservatorships – with a clear road map and mile markers – and to adjust the Treasury share agreements accordingly. And by sometime next year, my hope and expectation is that we will be on the path where Fannie and Freddie can start to build capital. My read on this is mainly related to the IPO not the NWS. If FHFA and Treasury decide on ending the NWS in the fall as previously discussed, they could easily come to an agreement in the fall with the last payment swept being ~ November which is when the Q3 payment is swept. That would set up the Q4 payment to be held to build capital in the ~Feburary. There is incentive for this to be done concisely and quickly as elections become the main focus by early 2020. Why not stop the sweep now? Good question. You would think it would help to have an extra 4,6,8 Billion dollars to help capitalize. For one thing the treasury plan isnt out. FHFA has to "negotiate" with treasury regarding any amendments, and as monotonous as it is it isnt time yet in the carefully coordinated plan to do so.

Doesn't sound like Net Worth Sweep is going to be stopped in 2019... We will continue to engage with Treasury to develop a responsible plan to end the conservatorships – with a clear road map and mile markers – and to adjust the Treasury share agreements accordingly. And by sometime next year, my hope and expectation is that we will be on the path where Fannie and Freddie can start to build capital. My read on this is mainly related to the IPO not the NWS. If FHFA and Treasury decide on ending the NWS in the fall as previously discussed, they could easily come to an agreement in the fall with the last payment swept being ~ November which is when the Q3 payment is swept. That would set up the Q4 payment to be held to build capital in the ~Feburary. There is incentive for this to be done concisely and quickly as elections become the main focus by early 2020.

I went back and looked over the presidental memorandum again and it clearly delineates the need for reform/guarantee and treasuries duty to discuss if it is an administrative or legislative. Mnuchin just reiterated this. The market must have forgotten what the memorandum said.

Thanks cherzeca. I went back in the thread and found the post on the AB piece, it was your post lol! https://www.dropbox.com/s/zbjm061e5csucqc/Asset%20Backed%20Alert%2020181019%20FHFA.pdf?dl=0 All seems like pretty dead on reporting to me. Timing was a little off but that maybe due to Ottings taped slip up. That being said if we take AB for gospel. 1. Treasury plan should be out in next ~20 days. 2. Preferred maybe made whole based on investor discussions. 3. Freddie and Fannie shareholders seem to love it and it seems like administrative action is what will happen. 4. Calabria firmly believes the IPO will be fully subscribed. That being said looks like today shares were on sale. :)

What is everyones opinion on this line from the Asset Backed Alert piece... "Shareholders argue that money should have flowed to them as dividend payments instead. While many of the lawsuits have been dismissed, some still are outstanding. Most of the actions could be resolved by making preferred shareholders whole, potentially via a mass “sweep” of profits." What is meant by a mass "sweep" of profits? Also if memory serves there was another Asset Backed Alert that someone posted 6-12? months ago that I think was pretty accurate too. I think it was out same-ish time as bloomberg intelligence piece about plans to release GSEs from corservatorship I think? That being said piece should be somewhat reputable huh? EDIT: Found it...wont let me read whole article but was before elections... 10/19/18 White House Seeks FHFA Action The idea of scaling back Fannie Mae and Freddie Mac without legislative approval is gaining traction.

As cherzeca noted with the LIFOs its safe to say there is ~10% premium of the common price at any time and 5-8% in the preferred of fast money that is looking for a surprise article or action. They sold today on the BB article. Who cares. Mnuchin has always been the stronger voice for "congressional action" and it seems Calabria is the counterweight to that. I think its safe to assume the treasuries proposal is going to call for an explicit guarantee which maybe the extent of any congressional action that is called for. The BB article also mentioned executive action? Not sure if Trump could sign into law some of the reform Mnuchin wants but if true that is an angle I never thought about. The article today still doesnt change ending the NWS by year end, IPO early 2020, par vs conversion comment from calabria etc.

Both common and prfd not liking presumably Mnuchins comments today. Maybe soon time to buy more if your so inclined. I dont see the incentive to screw jr prfd shareholders in a private capital recap situation. If a new sweetheart Prfd is issued then Jrs maybe forced to convert at no option but right now those running the show who are involved private capital wise hold Jr Prfd. These guys are not idiots either and not going to standby while others sweep in to get a sweetheart deal. The capital raising is going to be hard enough as it is without pissing off certain groups of potential capital.

Looks like the promised road map is due in ~30 days. We know that Calabria is already working with Mnuchin and they have " a very good relationship" per the Diana Olick interview in which he mentioned the possibility of par and conversion to common. Both seem to be firmly on the table still and no doubt being discussed. Only barrier to trading immediately at par would be a stepped timeline of recapitalization which delays a conversion process or their getting redeemed in some fashion.

thats my immediate thought. You have those in it for a quick surprise and hearing 6 months may have turned the fast money off. After his tweet we know no more then we did beforehand. Sounds like he just caught up! ::)

What conversion ratio to common from preferred are you using in your assessment of the 50% converting? Ive let my feelings about the common known and you hash some of this out. If all it takes is 5-6% more dilution for the common to get "smoked" as you put it, its still enough for me to stay away.

6 inch metal ducting for the main lines and flexible hose drops. I used metal instead of PVC because I had some interesting turns to get through the truss webs in the ceiling and 6 inch PVC bends don't come in enough variants to make it work. Not having to worry about static is nice too. To add to the offtopic discussion have a 3HP cyclone myself. What HP is your dust collector? Are you sure that ducting wont collapse? Traditional HVAC ducting is typically too thin and will collapse. 3 HP as well with a thein separator ducted to the outside. I wanted a cyclone, but couldn't fit it in. I went back and forth but the heavy stuff from oneida is really expensive. I went for it after I found this: https://www.lumberjocks.com/topics/87690 I rotated my seams and used 30 ga straight, 26 ga elbows, and 28 ga wyes. No problems with collapse or even any ovaling of the duct with all the blast gates closed. I didn't try slamming the gates shut like he did though! I wanted to run 6" all the way to my table saw and used a semi-rigid flex duct for the final 6 feet and it held up fine through my first project. It was $13 instead of $50 but more importantly, was available the day I wanted to test my DC system for the first time. I'll replace it if/when it breaks. Nice Ok. I went back and forth myself but ended up doing 6" DWV PVC, A little more resistance but works well. And yes oneida is prohibitively expensive. Mind me asking what makes/machines you have? Happy or not with them?

6 inch metal ducting for the main lines and flexible hose drops. I used metal instead of PVC because I had some interesting turns to get through the truss webs in the ceiling and 6 inch PVC bends don't come in enough variants to make it work. Not having to worry about static is nice too. To add to the offtopic discussion have a 3HP cyclone myself. What HP is your dust collector? Are you sure that ducting wont collapse? Traditional HVAC ducting is typically too thin and will collapse. 3 HP as well with a thein separator ducted to the outside. I wanted a cyclone, but couldn't fit it in. I went back and forth but the heavy stuff from oneida is really expensive. I went for it after I found this: https://www.lumberjocks.com/topics/87690 I rotated my seams and used 30 ga straight, 26 ga elbows, and 28 ga wyes. No problems with collapse or even any ovaling of the duct with all the blast gates closed. I didn't try slamming the gates shut like he did though! I wanted to run 6" all the way to my table saw and used a semi-rigid flex duct for the final 6 feet and it held up fine through my first project. It was $13 instead of $50 but more importantly, was available the day I wanted to test my DC system for the first time. I'll replace it if/when it breaks. Nice Ok. I went back and forth myself but ended up doing 6" DWV PVC, A little more resistance but works well. And yes oneida is prohibitively expensive. Mind me asking what makes/machines you have? Happy or not with them?

Wait for news -> wait for stock price to go up -> TA tells you stock will go higher. Where's TA analysis today on no apparent news but a rumored 5th circuit decision? rumored decision? Source? Either way these things to tend to be a predictive in regards to timing. Should be coming way sooner then later. It was on Maloni's blog. Almost definitely bologna. That guy looks like a piece of old bologna.

Wait for news -> wait for stock price to go up -> TA tells you stock will go higher. Where's TA analysis today on no apparent news but a rumored 5th circuit decision? rumored decision? Source? Either way these things to tend to be a predictive in regards to timing. Should be coming way sooner then later.

Maybe Im just drinking the kool aid but Ill let everyone else worry too. I dont think at this point the worry should be whether or not this all goes through but on ultimate return at these prices. Second on my list of worries is just how long it will take to ultimately realize the final upside return and that is only because crazy or not Im contemplating buying more on margin. My biggest prfd holding is trading at 47% of par. In bedded in final return could be a sweetener conversion to common, dividend turn on? (unlikely). At a 7% margin rate borrowing at these prices and holding for a year you would break even on a 50% of par final pay out. So what is coming up? 1. Treasury plan by end of June to end conservatorship? 2. FNMA proposed capital rules by July-Augustish? 3. Amendment by Calabria by fall with treasury to stop sweep by end of year? 4. IPO/recap starting in winter spring of 2020. So 1 year from now you need 50% of par to break even buying on margin at 7% with FNMAH. Ill take that bet all day this point. :) As many has mentioned Calabraia has diarrhea of the mouth and mentioned conversion to common and do prfd holders get par. He also mentions he is very confident he can get to an agreement with Mnuchin. Well of course like Otting said everyone has signed off remember? He speaks and I listen. I would think the NWS needs to end and capital rules need to be established first before ending conservatorship. I was referencing the treasury plan via phillip/ mnuchin with the road map etc.

Too much resistance and loss of static pressure. Every 1 foot of flexible hose equal to ~5-10 ft of pvc and metal ducting.

6 inch metal ducting for the main lines and flexible hose drops. I used metal instead of PVC because I had some interesting turns to get through the truss webs in the ceiling and 6 inch PVC bends don't come in enough variants to make it work. Not having to worry about static is nice too. To add to the offtopic discussion have a 3HP cyclone myself. What HP is your dust collector? Are you sure that ducting wont collapse? Traditional HVAC ducting is typically too thin and will collapse.