investorG

Which liquid preferred? sorry man it was a confusing message, i have edited it above.

for those of you trading, fnma common is at a 7-8pct discount to the liquid preferred (fnmas) on the informal 2:1 ratio.

disagree. part of "delay" of course attributable to holiday season. but as for predictive tells, the merits are far more important than any time issue. as for timing, judges view their job as to get the process and result right, and timing for parties' sake is irrelevant. as for the merits, remember that the standard of review on a mandamus writ is whether sweeney made a clear legal error. this is hard for govt to show since the legal rule she was following was a balancing act, which she performed. govt's interest in maintaining communication integrity vs Ps' need for evidence. it would be very surprising for appellate court to say she made clear legal error in the way her balancing analysis came out. this standard of review is not to perform a de novo second guessing review, but basically to see if she got the rule of law right, and the rule of law here is to perform a balancing act. the appellate court would have to rule that the privilege claim supersedes Ps's need for evidence, and i just dont think that is the rule of law at issue here. but i also felt strongly that lamberth should have ruled otherwise, so there. there is a date set, per yesterday on gselinks.com, of a sammons request going to the court on mar10 --- does the ruling on the writ come after this mar 10 ruling or non-related? thank you.

Author thinks Mnuchin might likely support Johnson-Crapo bill and says in a tweet his core view is that a phase-out is the much more politically viable. From what I've read, Johnson-Crapo would not work and certainly doesn't fit "reasonably quickly". When he says phase-out, isn't he basically referring to a liquidation. All I want to know is, where the hell is the writ decision? Seriously....wtf!? the article's author is hearing what he wants to hear, imo. the two things that were clear to me from the hearing were he thinks the GSEs play a crucial role and he's not a fan of either extreme solution. the article's author favors an extreme solution. i hope mnuchin makes it through, to solve this situation for justice and also other matters too.

fwiw an article on thestreet.com came out at 1pm on friday, right when the common dropped 20 cents in an hour. you can find the article on gselinks.com. i'd call the commentary non-thorough.

put simply, yesterday Mnuchin highlighted the importance of the GSEs and that the status quo is not acceptable --- this is good news. moreover he let everyone know that he is the expert on this rather than them. good luck in the coming days, Mr Mnuchin!

prepare for another wild ride today. plenty of nervous owners of illiquid preferreds need to use the common to hedge. imo pay attention to the news on mnuchin's confirmation process and any other potential disclosures or issues there rather than the short term stock price --- there is some crazy misleading press stories out there today. (and the 2 big court cases, as always). good luck!

probably because that's what he was coached to say to maximize the chances of confirmation. remember there's heat on him for allegedly pumping his investment in the paulson fund so he has to defend his nov30 comments to some degree. he simply said he didn't comment on r+r, not that he doesn't support that. those hoping for some big bullish commentary on GSEs today are too short term oriented, as the goal today is confirmation and many in congress don't like the companies -- he has to thread the needle.

under high pressure, that's as good as we can ask for today. he never said he doesnt support r+r. he said bipartisan solution, need action. and he kept his option to bypass congress open. sure there are some who were hoping for more, but in this situation, 'more' might not have been consistent with getting confirmed. perhaps there will more more questions after the break in the 2nd round.

good luck everyone, especially to those who have been cheated out of justice for many years. i do not expect any explicit positive commentary related to the GSEs. rather, i'm hoping for a solid performance that increases the odds of his confirmation while at the same time no GSE bashing (which could be aimed at solidifying the republican congressional votes).

wilbur ross confirmation hearing for commerce scty just ended. mostly a love fest, for today at least. (remember he was the one who brought up the GSEs unsolicited in the fox nov30 interview). no mention of GSEs today, to my knowledge.

the accounting fraud lawsuits are likely a sideshow barring a true smoking gun. anyone who has studied accounting or researched financials stocks knows that DTA writedowns and reserve builds that drive earnings negative are reasonable even if 'cash' earnings stay positive. especially in a mini-depression when people believe the world is crashing. i'd encourage investors to focus on the big prizes of justice: NWS legality + political compromise. it was a good sign that Carson (the most anti-govt-involvement person) reiterated in his hearing (and thru a spokesman afterwards) the importance of the 30yr mortgage, which is the GSE's specialty. there have been other small victories like this in recent weeks but the reality is this stock is working off a massive overbought reading (the daily macd still hasn't even reset to 0) and for whatever reason the GSE shares rise on either good news or after a plunge, virtually never on any 'anticipation'. Moreover there is likely re-balancing going on --- if the GSEs were 20pct of Fairholme's portfolio and then they doubled, he likely doesnt want to carry around a 35-40pct position even if he is max bullish on the outcome. right now the opponents of the GSEs are the loudest because maybe their poker hand looks inferior, which is the opposite of the situation prior. this is likely why th717 shut down his site.

carson, in response to a question by tester today at his hearing, mentioned that he did think the private market could fund a 30year mortgage but that it would take a long time to get there. (tester disagreed). this comment, along with mnuchin's from november, suggest to me that the team might go for a dual track outcome --- with room for all constituencies to win to some degree: the gse's could remain in place, returned to private shareholders, with higher required capital requirements AND there could be new entrants into the market to compete ---- both of which pay the govt for a backstop / reinsurance commitment fee. just a guess...the long term earnings profile for the GSEs would likely look worse than expected in this outcome -- especially if they reduce g-fees back to historical norms. maybe in return the warrants could be altered at a minimum. and preferreds might get their dividends turned back on, maybe after certain capital thresholds are met.

When researching AIG years ago one of the comments I read from an anonymous hedge fund manager was that he/she saw great value in the AIG shares, but didn’t want to buy them because “I was afraid that if I lost money in AIG again that my clients wouldn’t understand and would leave.” true, this investment isn't for everyone, or even most people. but a sell-side analyst could spend 20 hours on this blog and 10 on a report and become famous -- the networks keep bringing the same people on (rood) to discuss the matter, they'd love a new face. and the analyst wouldn't even have to stick their neck out --- simply lay out 3 scenarios, bull (25-50), bear (0), and base (5-10), throw some odds on each outcome, and presto, out comes a 'neutral' rating. their clients could then re-weight the outcome odds to determine whether to buy, short, or stay away. instead, they will write a report on XYZ company that will get thrown out before reading by 95% of their customers on the blast email list.

i am surprised no equity sell-side analyst besides KBW has published on the GSEs. obviously i am biased but even if they were to simple outline the bull and bear cases, without making a firm recommendation, it could be very helpful to their customers, much more so than the regular stocks they eagerly write on where 10-50 analysts cover them and the marginal comments are not relevant. many analysts out there in the hedge funds are likely intrigued by a long investment in the FNMA, but often in such a risky situation they need 'cover' from a sell side analyst in order to present an idea to a portfolio manager / investment committee to avoid looking max foolish if the idea goes sour.

good and simple idea. charity.

mnuchin's hearing is reported to not occur until after jan20 inauguration. i guess it was a good sign that some ethics form news came out today. trump mentioned in his press conference he would be busy the week of jan 23 with new initiatives / signings. all things equal, it would perhaps be helpful for the confirmation hearing if one of those early announcements was something like an intention to stop the NWS forward looking --- this could release some heat as it would suggest to those senators opposed to the GSEs that providing justice and kick starting housing are the administration's views rather than one person's (who happened to have a small portion of his $ in Paulson's fund).

the share prices have not responded in recent weeks to some decently positive signs, each of which is minor but in sum they don't seem inconsequential. my two guesses for this are: a) the preferred shareholders are selling to rebalance their portfolios (fairholme), wind down investments (perry), attempt to weigh on the share prices to reduce media attention in advance of the new admin and/or other reasons. this dynamic, if true, would hold down the common which still seems linked to liquid preferreds in the 2:1 ratio. b) there is deep concern over mnuchin's process, at a minimum the news there might get worse before it gets better. any other thoughts? pending court release uncertainty too much to overcome?

large blocks traded in FNMAS and FMCKJ. not sure what it means but it's the largest daily volume in the 2 most liquid preferreds since the mnuchin announcement aftermath.

to those concerned about duffy: this is not new news. the odds of a pro-GSE leader of the subcommittee were v low. it's a given that the House Rs are resistant to the GSEs. a couple thoughts: --duffy is young, ambitious, loves the media, and is likely from a pro-trump district. in other words, trump would have a lot to offer him in return for any potential half-support. the 'outs' for those previously on record against the GSEs potentially changing their minds are: a) the new company would look far different than the old one in terms of capital / reserves / ROE b) the value of govt warrants, if kept (duffy is a tea partier) and c) if the warrants are altered, there are other potential ways to pay the govt on an ongoing basis, like for a reinsurance commitment fee. --as others have noted, Tsy / FHFA can in theory alter the NWS forward looking on their own. (according to lamberth they might be able to do whatever they want). most traditional Democrats (those not in bed with the elites) support the GSEs, Trump could likely veto anything radical the House R's propose. if the NWS goes away forward looking, it would become harder to shut down the GSEs. perhaps though there is an argument of owning preferred over common. --most importantly, the courts and 11000 documents are still out there as a key variable. if the NWS is reversed and the senior preferred goes away, it's a whole new ball game. and if the documents are allowable then public opinion could shift if they reveal sinister plans by the O administration. in addition there's some small chance HERA is unconstitutional. those who say the courts don't matter now are not thinking clearly imo. all this said, there's real risk to this investment. but if there wasn't, the shares wouldn't have the upside potential that they have and we'd be off doing other things.

not new news but it reinforces the importance of courts

hopefully mnuchin clears the hurdles. importantly, though, it's not just him on the proposed team; some times lost in the shuffle on mnuchin's fox news comments was that wilbur ross is the one who brought up the GSEs (unsolicited) in the first place. also icahn, mulvaney, ken blackwell, ben carson.

finance. on a separate note, the amount of propaganda currently out against the GSEs is stunning. hopefully it's because the special interests are worried.

liquid preferreds now cheap vs commons on the 2:1 ratio, fwiw. likely some unwind of short common hedges put on in 4q 2016, and also potentially some tax-related overhang from high net worth individuals waiting for the lower expected tax rates to sell.

like most others, i have some level of concern about the confirmation process in terms of any potential new news dropping. but fortunately there's now multiple people in the proposed admin that appear more interested in justice and the US economy than the special interests.