SnarkyPuppy

Do you have any more resources that discuss Krones and/or Hella from an investment perspective (i.e. investment blogs etc)? I took a cursory look and both look to be on the path to becoming interesting in price

This is entirely misleading. If first dollar guarantee then has to go as federal debt towards ceiling. If there is private capital to absorb losses then how subordinated is federal guarantee? Mnuchin principles contra federal payouts again. I think this is just all MBA smokescreen for now. Still misleading?

Not sure why anything publicly said so far would be inconsistent with the mutualization model. Member banks provide capital and returns are regulated. Banks can appy to join as members under reg approval

There's no one-size fits all way of looking at this. In general, higher ROIC is better than lower ROIC (when ROIC>WACC). But when analyzing a business, ROIC is simply one data point and even knowing ROIC alone from a quantitative perspective is insufficient. Just as important is the sustainability of that ROIC - which requires qualitative assessments about the strength of the business unit economics, competitive advantage, management/customer/supplier incentives, and overall industry structure (e.g. product penetration rates). ROIC is definitely on average one of the more important data points to consider when analyzing a business. I think more important though is to simply spend a lot of time analyzing businesses and learning how to identify key variables that drive value. Every situation is different - and your ability to recognize and analyze the 2-3 key variables that will drive the value of the company can be a huge advantage. And then buy at a cheap price.

I joked a while back but it's actually a great use of the $100bn+ cash

Wouldn't this same logic apply to cobf? VIC can be used as a source for ideas just like anything else. I've found the comments, message boards, network to be immensely valuable. I agree. CoBF, blogs, VIC, etc. are places to start, and sometimes good comments/discussions can correct errors in your thinking and point out risks you may have overlooked. I used to heavily rely on CoBF but not anymore. I found that the best picks are usually not discussed anywhere. SMLR for example. If I like a stock and it is not discussed in CoBF, seekingAlpha, or VIC, that's a big plus. The biggest red flag is when i like a stock but CoBF already has a 100+ page discussion about it. Those picks usually fail spectacularly. :( Anecdotal. - Some stocks that aren't discussed do well. Some don't. - Some stocks discussed on VIC and COBF do well. Some don't.

Wouldn't this same logic apply to cobf? VIC can be used as a source for ideas just like anything else. I've found the comments, message boards, network to be immensely valuable.

VIC is an incredible resource - I find those that haven't gotten in are just justifying reasons. Sure your name doubled - does it seem reasonable that they are only going to filter and select companies that double in a year? I got in with a sub $50mm market cap in the past year. It's doable - it just takes time and dedication. I had submitted a few ideas prior that were rejected - one was a 3x and one was +35% in a year. Instead of complaining I kept submitting ideas and got in. Sorry for being terse but I would encourage you to spend time trying to get in if it's something you're interested in. Don't listen to other people.

New post on Fannie and Freddie on one of my favorite investment blogs. http://basehitinvesting.com/fannie-mae-freddie-mac-investor-sentiment-and-the-housing-market/ Well written and seems to grasp some of the basic tenants of the thesis - but derails at the end by basically agreeing you can't replace f/f but that a carbon copy replacement is a risk. Ignores details of how that would actually play out (capital, contingent legal liability, warrant incentives, has already failed multiple times in legislative branch). Also claims on twitter that it likely won't be resolved until 2028 because that is when the warrants expire. - ignores government is made up of elected individuals who will be replaced way before 2028 (he's wrong on incentives) - you can buy the $25 prefs at $6. That's 15% CAGR over 10 years taxed once. Is that below his hurdle rate? It's fine to shrug and say too difficult but these conclusive statements are annoying and lazy. Uncertainty != Risk

I've brought this up multiple times and am always immediately dismissed. Not a lawyer - but its one of the few things that keeps this from being a ridiculous sized position for me. You shouldn't be dismissed. I'm not a lawyer but I read Lamberth's ruling today very carefully and here is my take on what he said in his opinion: the contractual obligations, rights, and expectations of the securities do change as new laws, corporate actions, and regulations (such as HERA) are passed, BUT, when you buy a security you obtain all the rights from the previous owner. So the securities change over time, but they all change together and associated claims stand or fall together. To me, this allays your fear pretty clearly. Also, one of the plaintiffs' attorneys (can't remember I think Hamish Hume) asked, if contract rights or claims are lost when the security is sold to a new investor, then where do those rights go? Do they just vanish? I think in light of all this there should be little worry of securities being segregated into different classes based on when they were bought or sold. I don't think anyone in corporate America wants this precedent. But Lamberth's opinion is the most powerful statement so far. My take on the Lamberth ruling is that it's pretty huge. Lamberth clearly demonstrates that he knows the "death spiral" story about the NWS told by the government is BS. Meanwhile he allows the surviving claim to be that of the "implied covenant of good faith and fair dealing" as pertains to the NWS. The implication seems to spell trouble for Treasury. Since Lamberth spelled out pretty clearly just how much more money Treasury has taken out than they put in (i.e. ~80 billion), then it seems reasonable that he could just order Treasury to pay the liquidation preference to junior preferreds, or alternatively, order the payment of 5 1/2 years of dividends on the junior preferreds. Other thoughts on this last point? Thank you.

I've brought this up multiple times and am always immediately dismissed. Not a lawyer - but its one of the few things that keeps this from being a ridiculous sized position for me.

With that said, buying some more this morning. It's truly amazing that some of the variable prefs trade at an implied 19% probability of attaining par value. The odds are clearly much higher.

Surely it will be challenging to get all common shareholders on board with settling litigation? There will almost always be some form of contingent liability - in the sense that if Moelis plan is implemented, legacy common shareholders will still be suing over FHFA constitutionality and whether the initial takeover was legal? The potential windfall to common shareholders is just so huge I don't see them all going away for $8 per share. Amateur hour over here (me) when it comes to the legal side of the thesis though. Interesting to know that statute of limitations re: NWS is coming up. It would make sense to have a stopping point for any new litigation before finalizing any settlements w/ preferred litigants.

https://www.fhfa.gov/SupervisionRegulation/RegulationFederalRegister/Pages/Commentonrule.aspx Searched "meeting" and "meet" under Organization. The two results are Moelis (7/26/18) and Andrew Davidson & Co. (6/21/18) Davidson last year: http://knowledge.wharton.upenn.edu/article/why-competition-wont-lead-to-better-outcomes-for-fannie-mae-and-freddie-mac/ Thank you!

Sorry just jumping into the FHFA meeting news quickly on my phone (on vacation). Did the source of the meeting (FHFA website?) disclose similar meetings with other commenters? Or was moelis the only group FHFA met w publicly?

From the article: "To achieve that vision, ICE is partnering with heavyweights from the worlds of technology, consulting, and retail: Microsoft, Boston Consulting Group, and Starbucks." Starbucks implies coffee. But I agree with you. The world's gold is worth $trillions and (almost) nobody is buying their morning coffee with it. Right. I don't have a strong view on BTC as a payment rail - although second layer solutions seem more promising than consensus would dictate. Store of value thesis is slowly catching on and becoming less of a career-risk investment - once custody and prime brokerage services allow larger funds to purchase uncorrelated alpha (BTC) and the intrinsic value becomes more accepted (catalyst: time), I'd be surprised if we aren't well over $112bn in value. Store of value thesis will play out. The big risk is which consensus mechanism wins out?

Who said anything about buying a coffee? Also- gold is traded as a doomsday anti-financial system hedge yet it is still custodied w banks/vaults.

Think you're missing the forest for the trees here. You're too smart for your own good. Simply viewed as an alternative to gold (fixed non inflatable supply) - even agnostic of the clear benefits of censorship resistance - are incrementally better than gold at golds use case. Replaces gold easily in 10-15 years. Time, accessibility, and custody will be the catalyst.

Thesis continues to play out. Expected liquidity event incoming

The news certainly is concerning. On one hand I love the thesis and the odds of administrative reform into a utility/Moelis/etc. seem to get stronger as time goes on and news is released. On the other hand one of the largest players who is in on a major lawsuit has reduced his position. Perhaps it's redemptions (but he didn't reduce St. Joe's and he has bought other new stuff). Perhaps he thinks the time it takes to win is going to still be a few years (and he thinks St. Joe's and other new investments will appreciate in a shorter time period). Perhaps he has lost faith in his thesis. Perhaps he knows something from his lawyers that will be detrimental to his case. Berkowitz doesn't hold very many large positions, but he still does have a large position in the GSE's. Clearly St. Joe's is his favorite holding at the moment. Time will tell, but him selling this much is concerning. Probably redemptions Very obviously not due to redemptions. Berkowitz selling is a bad data point - I wouldn't try to rationalize this away

Please define substantially and share source? Fairholme website - letter posted last night. Substantially can be defined as "a lot" - I'm on my phone so I just eyeballed in period over period. I see. Typically when finance people ask for definitions they want %s but you're snarky so it was a good joke. BUT anyway. Sounds like people are losing faith in this very trustworthy and sane administration to do the right thing for shareholders (other than WFC) Thanks for the lesson

Please define substantially and share source? Fairholme website - letter posted last night. Substantially can be defined as "a lot" - I'm on my phone so I just eyeballed in period over period.

Berkowitz has substantially reduced his exposure.

Etrade, interactivebrokers

Maybe I'm being dense but as a layman I don't fully understand how an agency can be deemed unconstitutional, but the decisions made by such agency not reversible. Is the former not a corallary to the latter? To the extent SCOTUS now picks this up, is it knowable whether they would have the ability to review both the question of constitutionality but also make a decision on reversal of NWS? Or would the review necessarily be focused on the constitutionality claim? Is it simply a matter of applying a retrospective remedy versus a forward looking remedy? I'm not in this for the legal thesis at all but am trying to understand.