orthopa

Is anyone aware of regulation Apple, Google, etc would run into if they began to process payments this way?

Wow, interesting connections here being that he was former chair of the DELAWARE DEMOCRATIC party. Same state as a current lawsuit and same political party. I wonder who the witness is.

At the same time losing 3% of something is better then getting nothing if you dont take credit when a consumer prefers that payment method. If you were a business owner how many customers walking out would you decide to take credit again? If you can change the mind of the american consumer who has always known of and used credit maybe you get somewhere but.... Anyone want to take a guess on how you determine if someone is creditworthy in a P2P system like SD suggests will happen when saying buying a house? Car? All you have ever done was just transfer $$$ you have already saved correct? Except for stuff society and powerful institutions want still like college loans. People will be expected to use only money they have saved for stuff they buy with their P2P system and either save tens of thousands for a car, hundreds for a house and college or use some form of credit/loan....exactly what has been replaced right? If Im a consumer in that society I am going to want to know why I have to use cash everyday to buy stuff I can afford but can buy a car/house with money I dont have? Can bears or those in favor of P2P explain their feeling on this?

They can see it but what can they do about it? Lets say Apple and JPMorgan partner to offer credit and payment through the phone... Visa would like to be in the transaction somehow, but what can they really do about it? They may offer similar services, but market share goes down, competition goes up, and margins go down. Further, p2p margins go to zero. Whether Apple, Google, Paypal, JPM, or V/MA or some combination are the ones that do it, it is irrelevant. That cow is milked. Why would the banks, Apple, and google want to be in a zero margin business. How do they benefit? The banks already offer credit now and not have to deal with the payment processing. If the payment processing is a zero margin business why take on the additional work for nothing, at a minimum if you have to hire people to market/staff/monitor that part of the business it would be a money losing venture. Not to mention any regulation costs....for a zero margin business? Damn.

I bought two of the majors BP and CVX when they got wacked real hard in august. Currently getting at 8% yield on BP and almost 5% on CVX. I know most don't covet div paying stocks but Ill take it when buying at lower prices when the rubber band is stretched too far this way. If oil goes up Ill get 5-8% and some upside though not as much if I went all in on a single stock. I have taken a very small flyer on PWE which has done well but I dont have enough conviction/knowledge to make it a huge portion of my portfolio. In regards to current prices they could easily shoot up back to 90-100 dollars a barrel with the Saudis cutting production. Eventually it will come down to them either wanting higher prices to fund their societies or to keep market share. The problem is NA production is sitting waiting to get going again. FWIW we may be closer to a bottom in oil with the muted reaction to the saudis comments today. In the past comments about cooperating would have sent oil through the roof but it barely budged today. Have speculators thrown in the towel?

SD. I guess a have a couple questions since I don't know enough about the technology. 1. Why doesn't V/MA develop a similar technology they can exploit? 2. If a decline is imminent and coming soon why haven't V and MA seen this/thought of this yet?

I know, and I agree it’s selling for very high multiples. Unfortunately, it is selling at these levels since at least 2010 (the beginning of this thread)… Therefore, as usual, I have opened a position, leaving room to average down. Cheers, Gio Yeah it has always been priced as a great business. I fortunate enough to buy some a couple summers back when there was the swiping fee scare. As a compounder IMO this will do great over time but getting a great price will help all that much.

I think the assumption that people don't want credit or wont go on credit to obtain things is silly. A quick google search shows average credit card debt per person is $7,529 and total credit card debt of 918.5 billion dollars. Nearly 50% of households carry a balance month to month. That's $7,529 of stuff people wanted NOW but didnt have money for. I think a VERY small % of the population would use a service that would allow them only spend money they have but that is a debit card is it not? I dont think I have ever heard of anyone saying they are sick of taking their credit card out of their wallet bc its old fashioned etc. They want what they cant afford NOW and pulling the plastic out is a very small price to pay for that. For many people having the $$$ available currently takes the attractiveness out of the purchase because they would most likely have to wait. For many people buying stuff they cant afford and having people watch them do it is very exciting. Take a trip to Vegas to observe. For those who say otherwise there is almost a TRILLION dollars waiting to argue with you. With almost $1,000,000,000,000 of outstanding in credit card debt as of 10/15, 6% of GDP of the biggest economy in the world....did the financial crisis really change people that much?

Yeah sold out of all of AIG except warrants and BAC. Wonder if this is due more to redemption's or he thinks they have reached full value. Hard to think these reached full value if rates do eventually rise. Maybe the readthough is that he believes rates wont rise any time soon. I dont think many shareholders are going to love that SHLD is his biggest position. That position hasnt worked out for a long time and unless your really patient money I can see some getting sick of waiting.

With Visa Europe wrapped up looks like China is the next frontier. I'm willing to pay a "fair" price for a good business but this valuation is hard to swallow. Hopefully when some of the Visa Europe excitement wears off there will be an opportunity.

Has anyone been adding in light of recent developments/seemingly change in media coverage and public opinion. Price really has gone nowhere for a while as the picture has become less bleak. I have added some FNMAJ to balance out some common exposure after some of Lukes comments a couple weeks back. Total portfolio exposure is ~5% now roughly split between common and preferred. Anyone else adding any more exposure lately?

The co author of this paper was an adviser for both Clinton and Obama. Not sure how much influence he still has but I wonder if this was what political alpha was referring to a couple of weeks ago as opinion maybe changing within the white house. Chances of a release sooner then later seem higher then ever. 2 years ago no one wanted to see FnF released. Now a former adviser to the current administration is releasing papers on a release. The pressure continues to build...

From page 29 FWIW Those estimates also rest on projections of the value of Fannie and Freddie common stock, once the Treasury stops sweeping or claiming all of their profits. Under current conditions with that profit sweep, the 20.1 % of their stock held by private investors is valued at about $2.20 per share. Once Fannie and Freddie can retain their profits and return to normal operations, the value per share is projected to rise to $10.34 (2016), $11.38 (2017), $12.51 (2018), $13.76 (2019) and $15.14 (2020). The new stock offerings also will reduce the ownership stake of those current investors, from their 20% stake today to 16% in 2017), 13% in 2018, 12% in 2019, and 10% in 2020.125 Finally, private investors who held preferred shares before the conservatorship, now designated as junior preferred stock, would retain those shares; and their dividends would resume when the recapitalization is complete.

FWIW from the recapitalization pdf page 7... "To test this recapitalization proposal, we conducted a standard valuation analysis. It showed that Fannie and Freddie should have Tier 1 capital of at least $180 billion by 2020, equal to 4.0% of their projected assets in that year: In addition to the $100 billion the enterprises would raise through new stock offerings, they could retain $80 billion from their earnings in 2016 to 2020. The analysis also estimated that the price of Fannie and Freddie stock would rise from about $2.20 per share today, a level badly depressed by the Treasury’s sweep of their annual profits, to $10.34 per share in 2016, $12.51 per share in 2018 and $15.14 per share in 2020. This strategy, therefore, can reestablish Fannie and Freddie as independent enterprises actively and profitably promoting broad homeownership. Variations of the approach should produce similar results, so long as they retain the basic elements described above."

What was that summons for? From Fairholme?

OK thanks. I need to go re read Bill Ackmans "plan" or thesis again to see if foolishly exposed to a large amount of common relative to preferred. Thanks.

I should mention that I'm in the preferred until they reach (or get near) par. I'm not interested in the 8.25% rate unless it is reinstated and FNMAS continues to trade significantly below par. I will reevaluate the situation when FNMAS reaches par and may very well consider a position in the common at that time. But for the here and now, I'm in FNMAS. In other words, long-term isn't really what I'm focused on here at this time (if long-term is 10+ years from now). I'm focused on getting the NWS and conservatorship mess fixed, profit from it, and then take a fresh look at the prospects of Fannie. That being said its unlikley this will go anywhere near 10 years correct? Doesnt the majority of FNF capital get wound down in 2018?

I should mention that I'm in the preferred until they reach (or get near) par. I'm not interested in the 8.25% rate unless it is reinstated and FNMAS continues to trade significantly below par. I will reevaluate the situation when FNMAS reaches par and may very well consider a position in the common at that time. But for the here and now, I'm in FNMAS. In other words, long-term isn't really what I'm focused on here at this time (if long-term is 10+ years from now). I'm focused on getting the NWS and conservatorship mess fixed, profit from it, and then take a fresh look at the prospects of Fannie. I see. Im partial to dividends so I would keep the preferred. The YOC for some of the preferreds would be in the 20-30% range. Beautiful if you ask me. If the common shot up Id probably just buy more compounders/dividend stocks so Ill stick with them to the end. I would be ok with waiting 10 years. At 5-6% of my portfolio I can ignore it for that long and not have it drag on my returns. Just wondering if what scenario do you think the preferred would trade at par and the common would not be many multiples of what it is now? I would have to imagine if the preferred shot up to par the common would be many many multiples of what it is now.

Another from Vish_ram... Thanks, reason I ask I hold both and at this point more common. Im not smart enough to know which will do better long term. The lottery type nature of the common is alluring. Ackmans common exposure leads me to believe it maybe worth the risk but again I have more common then preferred so I wil add some more preferred as some funds became available.

Yeah.....the tide is starting to shift....things are definitely more positive.......dont tell luke but im starting to board the hype train. I wouldn't call it "hype." It's more like paying close attention to (1) what is happening, and (2) what important players are saying, and as a result adjusting expectations when/if the situation warrants it. I believe the odds of FNMAS holders returning to par has been increasing for months and the payoff is roughly risk $1 to profit $4. Some call it hype, I call it an improving risk/reward. Luke. I know it maybe buried in this 192 page thread but do you see the same for the common shares? Seems like the potential pay off is much higher there.

Interesting video. So the next question is what is the best way to short the high yield market

If the plaintiffs lose their cases and its found that the govt broke multiple laws including state and constitutional with no recourse recapitalizing the GSE's will be the last of my worries. Thats a dangerous precedent.

Ah, but you have to think whether you approach this as investor (in common or prefs) or as a taxpayer who wants GSEs on sound footing. Despite what Ackman says, the two are not the same. There are solutions for taxpayers that leave current investors with nothing. And going against the constitution and state laws. I know the idea of some rich hedge fund managers getting rich irks some but the idea of the government breaking the oldest and highest law in the land is leaps and bounds worse. Solutions are great but if the law is broken its broken. If the government came and took your property/house/etc you would not be very happy and declare its against the law. This is no different.

Seems like a high minimum with only 40M AUM. On the plus side he would intimately know all of his investors.

You could play via big oil. Gets you exposure to upstream, downstream, natural gas, refining, etc. A couple have great balance sheets and a great div.