SnarkyPuppy

Let me say it in a different way. The goal of analyzing this piece of information is to make money right. What are your views on the market reacting to this info? Mine are that there isn't much materially different than what we knew earlier. It's not that the security is undervalued; it is fairly valued given the risk of loss, and the capital rule release didn't change that much. Do you believe differently, or that the market is underreacting and there is money to be made out of trading this piece of news? Do you trade on every piece of incremental news that your companies report? This is simply an incremental data point that is directionally consistent with the thesis. It's obviously positive that the FHFA moved forward with the capital rule post-election (as projected) and that Bloomberg is reporting that an amendment is in the works (as projected). "It's not that the security is undervalued; it is fairly valued given the risk of loss". You write this as if it's a statement of fact. Clearly there are some in this thread that think the shares are materially undervalued. You can assess your own risk of permanent loss of capital and likelihood of upside.

Where do you see the explicit reference in the rule to a consent decree? Thanks in advance for your response! I think I see it searching for consent order - page 22 and pages 140-145: "The final rule provides a transition period to permit each Enterprise to develop the internal models required by the final rule. Specifically, the advanced approaches requirements generally will apply to an Enterprise on the later of January 1, 2025 and any later compliance date specific to those requirements provided in a consent order or other transition order applicable to the Enterprise. During the transition period, each Enterprise’s market risk capital requirement will be equal to its measure for spread risk, determined as contemplated by the proposed rule’s standardized approach." Sounds positive but not enough for me to increase position size from 5%. Didn't we know this already? I believe the only acknowledgement previously was Calabria's verbal statements. I am not advising you on your position size lol

So you have a significant unknown (timing of capital plan) that has become known. You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete. And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. And then you have the preferreds trading at ~30-35% of Par.

Makes sense-thx

Sorry? How does Q1 FY2021 = now?

Not sure you can read much into this. Today is "late 2020".

Sure but there is also the counter-incentives for the banks (JPM/MS) executing the largest IPOs of all time. The reason I've been comfortable in this investment is that there are certain conditions which must eventually be resolved. One such condition is that an IPO cannot occur without certainty of the capital structure going forward including restructuring of the governments senior preferred position at the top of the capital stack, as well as a reasonable basis for expected common equity returns at the bottom of the capital stack. This is extremely important - and I think part of what people who have avoided this investment miss. Additionally, as capital continues to build each quarter, the doomsday risk (receivership) becomes less and less possible (if it was ever practical at all). For these reasons, I've always viewed this as a low-downside (i.e. dead money with some MTM volatility) and high-upside outcome. It's just a matter of when the upside occurs. But even at today's prices (3x to par), it can take 10 years from now to achieve an upside outcome and still have a respectable IRR (~11.6% annualized through 10 years). If the slow passage of time has proved anything, it's proven that through multiple administrations that there is no alternative to the general current GSE model - and congress will not make wholesale changes because they cannot. There continues to be multiple paths of margin of safety anchoring the true downside: - There is no alternative - Litigation - As capital builds, downside risk is further reduced

What is their incentive trying to push FNMA/FMCC and IntelSat very hard? Could it be just self re-enforcing bias? ACG first started with a bold prediction in 2019 about FnF. Then as it turned sour, they have to double down to show their clients that they should be listened to. Or maybe there isn't some weird conspiracy behind everything; and they think that it's a complicated subject for which they can provide value to interested funds while simultaneously benefiting from being right given the risk/reward dynamics? +1 To be fair everyone on in this thread has been wrong at some point and until this works out is wrong if invested. They have earned respect on the timing of some calls. I think my CAGR from cost is mid 20%'s. If this is wrong, I don't want to be right.

What is their incentive trying to push FNMA/FMCC and IntelSat very hard? Could it be just self re-enforcing bias? ACG first started with a bold prediction in 2019 about FnF. Then as it turned sour, they have to double down to show their clients that they should be listened to. Or maybe there isn't some weird conspiracy behind everything; and they think that it's a complicated subject for which they can provide value to interested funds while simultaneously benefiting from being right given the risk/reward dynamics?

Speaking of chances, I've laid out the possible near-term scenarios from today and assigned conservative probabilities to each node to arrive at a "low-ish" estimate of a JPS win. Spoiler: It's 80%. I have no doubt others will see different probability distribution and for that reason, I welcome any feedback (especially from those with more insight & expertise). FWIW I've owned JPS since 2011, and recently added significantly more around current levels. See attached. You have 80% odds of an amendment which requires Mnuchin's approval. Why is it only 20% odds that Mnuchin says F* you and leaves the mess to the next administration if Trump loses?

My biggest concern is that if Trump loses the election, the current administration being as partisan as it is, recognizes that a supreme court loss will likely be decided during the next administration. Therefore, as a F* you, Mnuchin can refuse to sign any PSPA amendment and let the next administration deal with the mess. Why is this not a risk? A loss in the courts is really a reflection of the policies in 2012 during Biden's previous stint & mnuchin/calabria can say they did what they could to build capital. Of course from a probability perspective, this scenario AND a supreme court loss would both have to occur for us to lose $.

Are there any controls in place within the US government that restrict the incumbent from implementing laws subsequent to an election but before removal at inauguration that could potentially impact any contracts signed between UST and FHFA? Said another way, in the event Biden wins - are there any arguments to be made that PSPA amendments made during a "lame duck" period can be revoked?

Sometimes the simple explanation is the best explanation. At this point in the history of these companies, who the hell else would be buying these shares? -You either have purchased or passed on the story by now. -There are no natural incremental buyers who care. -Combine this with Mike Green's thesis on passive flows taking from discretionary managers & the fact that these trade OTC and are excluded from ETFs/indexes. -Add in perceived legal risk / election risk / timing risk / political risk. The discount seems understandable if you aren't one of the few psychopaths who have followed this for years.

I guess I was wondering if the management team was off their rockers and as I didn't know much about these type of transactions and didn't know how common they are I didn't want to throw stones at a particular management. Perhaps I should have mentioned the name though. I'm assuming this is going to be some type of acquisition or big investment in the platform. What do you think the proceeds will be for? The press release says working capital or strategic acquisition/partnership - and it ain't for working capital when they have $100mm cash.

I own this company (it's CDLX- why not mention the name?) and am baffled by the decision to issue $200mm converts when they are $100mm net cash and are not bleeding anywhere near that level of cash burn

~10% at this point. Added a hair during COVID drawdown, but not much. Already very large and bumping my own person position limits. Am optimistic about the direction and recent events, but definitely consistently disappointed on timing. +1 here. ~10% and with the understanding this may drag on for another 3-4 years, with lots of volatility around the elections. Just don't see how the institutions can be recapped without taking care of JPS shareholders; CBO report pretty much said the same. Major risks are delayed timing, being dependent on the kindness of strangers, and another attempt at nationalization by Democrats in that order. +1 The IRR on this is still very attractive relative to the market even if you assume years and years of delay. I'd be more worried if I had to manage clients through volatility

20% position which is higher-end for me. Was higher but has come down due to changes in my portfolio unrelated to the GSEs. Higher conviction - Craig Phillips literally has spelled out what is going to happen. Biggest risk IMO is miscalculating path dependency in a Biden win.

In order to raise common equity, the senior preferred stock cannot be outstanding. The current regulator, current administration, and the companies are all clearly moving towards raising equity. If the senior preferred stock is no longer outstanding, the junior preferred stock are money good.

Cert granted

Looks like it was released w/ nothing on our cases - https://www.supremecourt.gov/orders/courtorders/070220zor_apl1.pdf

When is the legal update released today?

Of course it needs to be minimized....everybody with a voice just spent 3 months maximizing it! Yes, sadly this is a virus we dont have a cure for or from the get go, knew little about. So yes, older people and those with underlying conditions are going to die. However, at the same time, we just saw governments destroy their economies, murder peoples small businesses, and talk about sensational bullshit including "extinction level" events. The reckless kids on spring break were supposed to spread this everywhere...didnt happen. Georgia was supposed to be the new Italy, no wait, Florida was, you know, with all the old people. All for what? People who had knowledge, like orthopa, from day one had this pegged correctly. Yet arrogantly, and driven by political motives, know nothings just screamed louder and here, disparaged those who suggested things different than their narratives told them. The only "new Italy" turns out to be NYC. Pretty much ALL of the major hotspots turn out to be liberal hubs. Yet still, you want to blame this on "the Trump administration"... its pathetic. The only silver lining, is that because of all this bullshit, propaganda, and zombie apocalypse porn, some got to buy stocks at obscene valuations and make vast sums is relatively short order. But geez, for folks who claimed "millions" would die, it is quite the rearranging of goal posts to now claim "oh 100k died because the administration did such a poor job"(again, when most of the deaths occurred in liberal cesspool cities).... well, except for Dalal, who implied all this disaster but refused to ever make projection or commit to anything. Re: the "millions" quote- I understand the average layman being confused by the projections != results but you are an investor. How is it possible that you are so unaware of the sensitivity of models on large numbers due to small changes in key variables? Incredible to continue to be minimizing something that's killed 100k people in 4months despite lockdown measures. It can be true that it's a big deal AND not as big of a deal as it could have been. In this thread = people back-propogating what they want to be true based on their own personal biases/situations. On both sides. If you use the term "liberal" in discussing the effects of a novel virus, get the f* out of the lab. If you post links of more people being infected/higher hospitalizations w/ no consideration of confounding variables, get the f* out of the lab.

Has anyone found a good hedge on high rates of forbearance / defaults? Thinking about further increasing my exposure here but doing so any higher without a hedge would be an irresponsible position size. Curious if anyone has found a good proxy to hedge this w/ OTM puts (despite high implied vol)?

Meeting starts at 4. Does anyone know how long the meeting will last?

Accepts anecdotal data in direction that confirms preconceived bias. Ignores anecdotal data in opposite direction https://www.sfgate.com/bayarea/article/Santa-Clara-county-coronavirus-February-deaths-15217371.php