asterisk
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FNMAT and soon other series. Guess I like the pain at this point.
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Sandra Thompson will be nominated by Biden. Shares sold off modestly yesterday and have continued today. The reality is admin hasn’t been on the table and likely never will be without being forced. I expect the shares to trade down and then we will rally up to Lamberth.
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Reports of future changes to the PSPA...
https://www.americanbanker.com/news/lenders-urge-biden-to-remove-gse-cap-on-high-risk-loans
Caps on certain loans answer cash window was insisted by Mnuchin.
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FHFA is directing Fannie Mae and Freddie Mac to contribute a record high $1.09 billion to the national Housing Trust Fund & Capital Magnet Fund, more than *double* the amount the GSEs contributed last year. The $ is distributed through Treasury & HUD to further affordable housing
Still stealing money from the GSEs, the robbery has not ended...
I didnt see this TV, can you provide link?
While annoying, hasn't it becoming consensus that affordable housing will be the bargaining chip?
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FNMAP and FNMAO
Two of the low yielding variable JPS are calculated such that they would actually have a negative interest rate if dividends were turned back on. The calculations are 2-yr CMT minus a fixed number, which is currently higher than the 2-yr CMT for both securities.
I don't think the offering circular contemplates a negative rate, thus I assume they would be 0%
Yes, I know, dividends are irrelevant.
Still, amazing
Not sure the point of chasing the lower yields at this point in the game. IMHO positioning to the highest yield amid the JPS stack is the best position, although at a small premium.
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What are the reasons to stay in this investment? On a first look at what came out today there are a lot of roadblocks and we become dependent on two parties... treasury and JPS. Each with their own motivations. To me the whole the preferred shares could be worth $40 is dangerous. We currently have a FHFA who just got screwed by Mnuchin and was ready to make significant progress. We have less than 1/2 a year till we potentially have an unfriendly FHFA director.
it's not a slam dunk and many will exit but the reasons would be a) the low price b) potential court victories and their impact on stock price even if still in conservatorship and c) Tsy might want to move the ball forward at some point for progress / collect their billions for pet projects.
I have no intentions to exit my position. While Yellen/Biden were briefed on the LA, what's to say they don't decide to make another agreement?
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What are the reasons to stay in this investment? On a first look at what came out today there are a lot of roadblocks and we become dependent on two parties... treasury and JPS. Each with their own motivations. To me the whole the preferred shares could be worth $40 is dangerous. We currently have a FHFA who just got screwed by Mnuchin and was ready to make significant progress. We have less than 1/2 a year till we potentially have an unfriendly FHFA director.
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One area I strongly miscalculated was incentives. I figured that while an argument could be made that the perpetual sweep of profits to the UST is valuable cashflow for the govt, the govt is made up of elected officials with term limits and therefore the cashflow isn’t actually perpetual from the perspective of the elected officials in charge. And therefore in practice, the cashflow was only valuable to Mnuchin/Trump for the 4-8 years they held office. And therefore once that time was up, they would make a move as the cashflow does not directly benefit them once they leave office.
One possibility is that while we had incentives generally correct (taking care of Paulson), they were achieved in a way we had not thought realistic - continued non commital public statements causing the securities prices to fluctuate up and down - allowing for people close to insiders to trade around the news. Not saying this is what happened - but would be an alternative explanation for everything to date.
It’s not over until it’s over and the floor is not $0 as there are multiple prongs of margin of safety.
Good points. However, with the size of his investment it is doubtful there was enough volume to keep trading it. Also, Paulson per his prior investments (housing) is not afraid to stick it out.
Good luck to all
There is $16mm in ADV across the 2 most liquid preferreds (FNMAS and FMCKJ) before accounting for any of the other series. Over the course of 4 years, wouldn't be too difficult to make some $.
Again - I have no idea and certainly not trying to accuse. I'm just starting to do a post-mortem on alternative explanations so I can at least learn something here. Ex-ante I think a lot of the "Mnuchin won't act" were surface level opinions that may prove to be correct, but never thought through specific incentives like the one I mentioned above. Right for the wrong reasons. But all that matters in this game is the result.
Thats a valid point. Although seems like peanuts for the "potential" overall prize.
I think a debt of gratitude is owed the significant contributors on here. This board could be used as a case study. Ahead of tomorrow I would like to thank you all for the insights.
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One area I strongly miscalculated was incentives. I figured that while an argument could be made that the perpetual sweep of profits to the UST is valuable cashflow for the govt, the govt is made up of elected officials with term limits and therefore the cashflow isn’t actually perpetual from the perspective of the elected officials in charge. And therefore in practice, the cashflow was only valuable to Mnuchin/Trump for the 4-8 years they held office. And therefore once that time was up, they would make a move as the cashflow does not directly benefit them once they leave office.
One possibility is that while we had incentives generally correct (taking care of Paulson), they were achieved in a way we had not thought realistic - continued non commital public statements causing the securities prices to fluctuate up and down - allowing for people close to insiders to trade around the news. Not saying this is what happened - but would be an alternative explanation for everything to date.
It’s not over until it’s over and the floor is not $0 as there are multiple prongs of margin of safety.
Good points. However, with the size of his investment it is doubtful there was enough volume to keep trading it. Also, Paulson per his prior investments (housing) is not afraid to stick it out.
Good luck to all
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I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news. Just my thought, I could be wrong.
What value does this add? Unless you have skin in the game this type of post spams the board that includes incredible analysis by Midas, Luke, Chris, etc. No disrespect, but 4th quarter dunking adds nothing to the group.
It does add value. He is making the right judgement call here. Mick Mulvaney just resigned.
Okay- Mnuchin said he will remain. So I added value too. This is politics related, wrong forum.
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I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news. Just my thought, I could be wrong.
What value does this add? Unless you have skin in the game this type of post spams the board that includes incredible analysis by Midas, Luke, Chris, etc. No disrespect, but 4th quarter dunking adds nothing to the group.
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but the takeaway as I think you allude to is that the smoke (such as this letter, Bright's letter and Warner/Rounds letter) would indicate that there is fire
Also, Warner and Crapo took Mnuchin out to dinner Wednesday night, after the hearing in which Warner said nothing negative about GSE's and Crapo was positive.
Forgot to give link:
On Wednesday night, Senators @MarkWarner & @MikeCrapo took Secretary Mnuchin to dinner, two sources tell me. Among other topics, they discussed the bipartisan COVID relief framework. Warner is one of the Dems most involved - so here's another way lawmakers are working the WH.
Thanks Luke! Likely GSE reform came up.
As Otherpa has said very well, there is no reason for Mnuchin to care about GSE reform besides helping out some friends. We are seeing a slow burn of cards starting to play out. As Cherzeca said where there is smoke is indicating fire. The fire is getting bigger little by little.
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Waters is getting worried :)
Calabria was a former chief of staff of the senate banking committee, to which he clearly maintains fealty. he will likely not be predisposed to accommodate Ms. Waters and the HFSC, especially when she notes that Calabria's tenure is soon to end...something that he has disputed and may resist next year. the HFSC is the very weak sister to the SBC, and the Chairman of the SBC as recently as Monday told Mnuchin to continue with important steps.
but the takeaway as I think you allude to is that the smoke (such as this letter, Bright's letter and Warner/Rounds letter) would indicate that there is fire
100% agree. Exactly my point, it's a continuation of a trend in the last few weeks.
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Waters is getting worried :)
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Norwegian looking like it will run out of cash soon. Using back of the envelope math, the company said they had $1.4B of cash as of March 30th and the company is burning $130M a month. Let's add an approximate of $50M of deposit refunds and the company has about 8 months left to live.
The industry is in the "too hard" pile for me, but it has been a learning experience to see how important capital structure is in times of stress.
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Anyone else confused on the share performance of late for the cruises? CDC has a ~3 month ban on sailing so no revenue :(
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Craig Phillips back in the spot light! maybe there is some truth to Todd's post. He is a keynote speaker next week to talk housing reform...
https://nextdc19.splashthat.com/
"Keynote Speaker: Craig Philips
09:00 AM 09:45 AM
What to Expect from Treasury's Housing Plans and Nonbank Financials, Fintech and Innovation"
Are officials like Philips subject to any NDA or are they barred from speaking about their work for a period of time? It is interesting that he is speaking out now. Maybe it is because he was relaxing or maybe not...
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Financial Advisor, attached...
Thank you. What is the source for this?
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I'm on the younger side, but I'll give you a basic answer and see what the group thinks. Comps allow investors to see if a company is undervalued or not. Usually the analyst will look at a group of company's and assign a common metric so it's easy to see if Company A is cheap relative to Comoany B. It is also helpful to see the valuation when companies do not have identical products or market size.
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Bloomberg has become a anti-Trump political news organization with more opinion than facts in its reporting with out stating which is which. This is sad for a formerly fact based news organization.
Packer
+1
The days of fact based journalism are close to dead. Barron's seems to be still decent.
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according to cnbc, ben carson recently said in an interview he wouldnt be opposed to investors getting paid
timing of moelis is a clue that things are heating up
Do you have a link?
it's not much.. http://video.cnbc.com/gallery/?video=3000623709
Thanks! It looks like all the parties needed are slowly entering the room.
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according to cnbc, ben carson recently said in an interview he wouldnt be opposed to investors getting paid
timing of moelis is a clue that things are heating up
Do you have a link?
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CC 6/1 10:30am by moelis, financial advisor to certain GSE preferred shareholders
Thank you for posting
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
I believe the concerns with her is that she is not going to be the one to have the willpower for a sustained fight for R&R. Additionally, to my knowledge Thompson has never really stated an interest in pursuing R&R.
I agree that 2022 will be interesting and you provided a great concise summary. Part of me is hoping with get below $2 on the high dividends for purchases.