orthopa

Interestingly, it is starting to look like a triple bottom more than 3 years in the making. If this is the last dip it may ultimately lead to a reverse head and shoulder with a target of $7-$8. IF, if, if... Is that even relevant in this case? I dont think TA means a whole lot at this point.

https://www.wsj.com/articles/the-high-stakes-in-the-looming-fannie-and-freddie-overhaul-1515407401 Full text https://investorshub.advfn.com/boards/read_msg.aspx?message_id=137497379

What gives me pause is that Congress can still potentially add Jumpstart-like language to a must-pass bill before Mnuchin acts. Right now Mnuchin has the most freedom to act administratively that he ever has, and is ever likely to have. Retiring the seniors and starting a capital build does not affect Congress's attempts at housing finance reform in any way. Watt has basically stated that he will keep the status quo until Congress tells him otherwise. Why would Mnuchin do the same? would take huge guts to pre-emptively cancel the sr preferred before a deal is attempted between all the parties. I doubt it happens. Well, cancelling the seniors would have to be done in exchange for other considerations and not just a giveaway of $193B in liquidation preference. I always saw cancelling the seniors as a way of settling the lawsuits because it would end the NWS and would avoid Treasury being subject to an unpredictable court-mandated remedy down the road. I just don't know if the plaintiffs would be willing to accept only that in exchange for dropping the suits. Given that the lawsuits are proceedingly very slowly and there is little hope of a near-term catalyst then I concede your point: Mnuchin likely won't take large-scale action like this without negative developments (for Treasury) in the courts. agree with all of this. i have been thinking about the whole issue of housing finance as the mashup of politics/policy and finance. while i get that mnuchin (and potus) are now politicians, they have been deal guys all their life, financiers in the RE space. i just assume that they are looking at GSE reform differently than corker/warner and congress. now if you get this, where that gets you i dont know. but it might get you to a place where the deal guy mentality at some point, after continued policy/political inaction, simply says, hey this fix is doable and it is simply a matter of common sense deal making/finance. let's claim another victory and move on. We may also find that congress works on structuring/laws/charters/competition etc and Trump/Mnuchin do the work even silently of working out all of the shareholder/finance aspects

I dont think anyone can be heavily criticized for owning common and since are all on the outside looking in we only know what has been disseminated to us. The latest twice is what Joe Light has given us. That could surely change over time but if you give any credence to that article and speculation owning common is very risky. We have moved all the way on the spectrum from shareholders getting nothing to now preferred getting consideration. I guess we could get reports eventually that common are treated well too but is that too much speculation at this point to hold a large amount of common? The other issue I guess is the time needed to recoup your investment in common if there is heavy dilution, multiple offerings of common by treasury to the general public and the potential of lower earnings cause by dilution of the duopoly. I was invested in AIG warrants after that ~90 dilution in that common and the overhang was there for a long time. For arguments sake in the most optimal of situations if preferred are given par there is ~4x upside of most preferred. How much has to go right for common to outperform that and in what time frame? ALOT still has to go right for preferred to return that much. How much more has to go right above and beyond that for common to out perform? That's my definition of increased risk. At this point, until available information changes common is to risky to bet a chunk of the portfolio on. Lets face it. What can FHFA, Mnuchin, Congress etc do? What ever the fuck they want. If they cut shareholders in its because they are nice enough too. Not necessarily because they have to. We can scream and yell and bitch and moan all we want. Its gotten us no where for 10 years. That being the case I think they(Congress) can be pushed to hand out some but not too much. If your last in line and lucky your getting something I think its smart to not expect a lot. The preferred has been represented by the big money. Say again preferred gets made whole and common gets little or little enough that returns over time are undesirable. Who steps up then? We have already seen where the courts have gotten us. Who is going to spend millions of dollars in the name of common shareholders when many courts may consider they were lucky enough to get cut in, in the first place?

Big if is right. If you look back at compass comments over the last couple of years they are in the dark just as much as anyone else and have been mostly wrong on their predictions all along. They did and still may have a $1 target value on common.

I assume that your analysis assumed that the seniors were declared repaid? Because otherwise it seems to me that juniors and common get nothing at all. This would be another reason to own the lower-yielding prefs then. I had thought the "flattening of the curve" of price with respect to dividend yield was due to an anticipated conversion to common only based on par/stated value, but receivership that actually leaves enough money for juniors would be another reason. Correct seniors declared prepaid Thanks. How do you account for the seniors disappearing from the balance sheet? Just wipe them away and increase accumulated deficit by the same amount, leaving total equity unchanged? In that case Fannie's last 10-Q showed around $3.8B of total equity, only enough to pay off 20% of the $19B in junior prefs. If you don't mind, how did you come to your conclusion? I was looking at it in receivership and 1B liquidation value. Ill have to find/dig up my notes but I thought I got to just under ~20B left after and 19B of preferred.

I assume that your analysis assumed that the seniors were declared repaid? Because otherwise it seems to me that juniors and common get nothing at all. This would be another reason to own the lower-yielding prefs then. I had thought the "flattening of the curve" of price with respect to dividend yield was due to an anticipated conversion to common only based on par/stated value, but receivership that actually leaves enough money for juniors would be another reason. Correct seniors declared prepaid

More..."The Federal Housing Finance Agency, which controls Fannie and Freddie, would direct the companies to sell or transfer their assets and then put them in receivership, the people said. In a receivership, funds are available to common shareholders only after covering more senior claims, such as the FHFA’s expenses as a receiver, the government’s securities and preferred shareholders." I looked last Q and in a liquidation scenario there was just enough to cover Jr Preferred and common got nothing. Will have to look at most recent Q.

https://www.bloomberg.com/news/articles/2018-01-04/fannie-freddie-overhaul-might-mint-hedge-fund-riches-or-losses "This time things could be different. The authors of the latest bill -- Tennessee Republican Bob Corker and Virginia Democrat Mark Warner -- are considering a proposal that could make investors in preferred shares whole or close to it, while owners of common shares could fare worse, said people familiar with the lawmakers’ thinking who asked not to be named because the legislation is still being drafted." Same verbage. Its been reported twice although by same reporter. Does that make it any more true?

Up 23.5%. Was higher mid year but PM took a dump. Holding PM, MO, V, FMNAH, FMNAJ BRK. Totally missed the cryto run up. WAY out of my circle of competence.

As a prescriber of these medications if you knew they were too strong the first time why did you pick them up in the first place? You could always ask the surgeon beforehand if you wanted some not a strong right? Why didnt you? People dont show up with their "pain tolerance" ability tatooed on their forehead. People also process narcotics very differently and build a tolerance. How am I suppossed to know this beforehand if i give you pain med. Secondly what the best way to figure out how much pain someone is having? Only way I know is ask them. Is everyones 5/10 pain the same? What about 10/10? People lie too. People often forget that they also have a hand in their care in your example you could have very well not gotten the medication right? What if you have a high deductible insurance and the 3 days worth of pills wasnt enough and you got wacked with another cash payment? What if you ran out of pills over the weekend, could'nt control you pain, now you have an out of pocked visit to the ER? You probably would rather take his bullshit answer as you put then have a $1000 plus ER bill and multiple follow up out of pocket payments for more small scripts. What people who blame physicians for the opioid epidemic forget is that these people put the pills in their own mouth. I don't remember every seeing a physician jamming narcotics down someones throat. Secondly what do you do if someone comes in your office says they have severe pain and cant live with it? Tell them they are a liar and leave? Mind suggesting to the physician community what med you would recommend if OTC meds dont work and the pt is taking an SSRI and as a result cant have ultram? Medicine is difficult and there is nothing more difficult in judging someones pain. Its impossible and thus often people over prescribe at times. Secondly the vast majority of narcotics that are heavily abused are generic and physicians are not incentivized at all to prescribe them. The non generic ones that they could be persuaded to prescribe almost always have anti abuse formulations which would fly in the face of a mis aligned incentive by drug companies.

That was posted earlier in the thread. I dont know how he/she came up with 15% upside on some of the preferred. Jesus, some of the preferred are trading at 25-30% of par. I would hope this investment offers more return then that in everyone elses eyes.

https://www.wsj.com/articles/how-the-great-fannie-and-freddie-dustup-could-end-1513880901?mod=e2tw Anyone able to get the full text of this? Thanks in advance

maximizing warrants does not seem to be a priority for any congressperson or senator, even if it is for some people on the message boards and moelis / ackman / rnc. I used to believe it made sense to believe in the warrants' appeal but no one in power has spoken up, despite many opportunities to do so. I think you probably have'nt heard anyone come forward to discuss monetizing the warrants yet because that discussion includes treatment of both preferred and common shareholders. Maybe once the language of the new bill is out "we" and others in power can start to extrapolate about second order benefits for gov.

Agreed. The biggest risk of zero, imo, was Congress eliminating the companies and giving shareholders the middle finger by keeping the SPS on the balance sheet. It is much harder to screw shareholders when the companies themselves are preserved, and there is less incentive to do so. Agree, is now the time to go all in if you haven't already?

Agree but what is odd is that market only believes ~20-25% chance that preferred will get par...but is respecting dividends? The market seems to be putting the cart before the horse here.

FWIW no mention of them getting rid of fannie and freddie. Keeping them owned by gov not a great mention. Goes totally against Mnuchins out of govt control and ownership. Hensarlings bill looks like posturing and a smoke show. Put up a big stand, preserve your legacy, yada yada. The Corker Warner bill seems to be the more realistic attempt to actually move forward in some fashion.

I think its certainly healthy to worry about Mnuchin being pro shareholder or not but I think it would be very difficult politically, legally (ongoing Sweeney case) financially (new private capital) to hose shareholders. The Joe Light article which certainly could be fake news alluded to this. I also think you cant completely discount the Paulson, Ackman, Berkowitz, Mnuchin, Corker connections. I know that may seem like a wishful thinking but I think have been validated by the Joe Light article if it isnt fake news. The only thing that doesnt seem to really add up over the past couple of weeks is this Hensarling bill, time will tell I guess.

It doesn't add up. If there's been an agreement across Mnuchin, Corker, Henslaring- why is he fighting so hard for this bill? Posturing is my guess. Just for my own clarification this concern is regarding the Hensarling bill correct? Not the corker Warner bill that was rumored to be preferred shareholder friendly?

interesting. the market is in 'show-me' mode. FnF investors used up their 9 lives of hope a long time ago. This is in reference to the Hensarling bill correct? Not the Corker/Warner bill that was reported to be friendly to preferred. Hensarling said in his release he wanted the charters repealed.

Tobacco, and most of anything related to investing regarding orthopedic surgery.

Agree, we aren't all the way there yet but becoming increasingly likely that this works out favorably with a target of par for the preferred. Like I had mentioned back probably 300 pages ago my capital at stake is aligned with Berkowitz, Paulson etc. Ill take that any day in a situation that has the relationships we hashed out before. I know a fear for some has been preferential treatment for those bringing suit against the gov but that is not the clean solution I believe the gov is working towards. I was thinking too it really makes more sense now that Paulson and Ackman mentioned Corker working on a bill and targeted an early 2018 for the investment working out favorably. They knew Corkers actions, the time table laid out does not seem all that unrealistic now. I think one has to look hard at passing up a possible ~400% return to par in some of the preferred issues +/- a div for the common which seems to be a bit of a black box. Is the risk for more then a 400% return worth what you could lose in common? First thing I would say if I read this typed by someone else is fat chance the div gets restarted, and I agree. But why is the market pricing it in then? Its odd. The market is pricing this at a ~25% of success but respecting the dividend payouts the securities had. ..and to fuel my overwhelming confirmation biased I added more FNMAH today

https://www.marketwatch.com/story/prospects-for-housing-finance-reform-brighten-and-may-favor-shareholders-2017-12-08 The angle that some have mentioned in this thread that the gov will want to not have lawsuits hanging over reform mentioned in this article.

Enter mnuchin and admin reform? Looks like this maybe becoming more urgent

Is there anyway to block someone, this is getting tiresome.