waynepolsonAtoZ

"so even silence on the dividend amount would be a welcome change." Not pestering you. However, FnF have to follow the SPSPAs including the 3rd Amendment until some time when there is a new 4th Amendment. God only knows. http://ew.com/music/2017/02/13/john-legend-cynthia-erivo-god-only-knows-grammys/

"I believe a conversion is likely." Fair enough. I tend to think it's pointless to argue with people about their beliefs. I've always stuck with the preferreds and with the idea that we'll go back to RV someday. I'm not saying it's the only way to look at it or that their is a high probability it's going to happen, but it tends to keep me away from worrying too much about the end game. Rumsfeld stated: Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.

"Edit: put it this way: I could get about 2.25 shares of common for each $25 preferred share right now. If I really wanted to convert to common around that ratio I'd just do it myself." Ditto! The commons could (arguably) be worth, say, $100 per share assuming absolutely no earnings dilution. With massive earnings dilution they might be worth $8 per share or $20 or what have you. It's really anybody's guess at this point. The preferreds have an RV of $25 per share. Pretty simple.

I'm not sure how useful this is, but here is my little spreadsheet for the preferreds. What I do is screen out the ones that have very low variable preferred dividends (if they were paying dividends), then sort based on adjt dividend to price. I adjust all the market prices as if they all had an RV of $50. As a practical matter, the ones with high dividends tend to trade higher than the ones that have low dividends. Preferred_spreadsheet_5March2017.xls

"Does anyone know where the "Series Z, V, etc" designations come from for the Freddie prefs? Unlike for Fannie, I can't find a reference to these letter series names in any of the circulars or 10-k." They changed the tickers after delisting. Here is the info for Freddie. After http://www.freddiemac.com/investors/preferred_stock.html Before http://www.freddiemac.com/investors/pdffiles/div0908.pdf Fannie http://www.fanniemae.com/portal/media/financial-news/2010/5086.html

What happens when 10% of your portfolio goes up 27 times and the rest of the portfolio stays the same? Answer: it's was 75% of the portfolio. Of course, I should have raised cash at that point. Still, at up 9 times it was still half of my portfolio. Even though I bought all my shares immediately after delisting, the NWS and Lamberth were both extremely painful. In both cases, down over $600,000 in one day. Is that too much information? Still, I can see an executive order along the lines of ordering recap and possibly ending the NWS. I'm hopeful, but not holding my breath. All in all, I can see the possibility at least of going to 40% of RV by the EOM. Good earnings would help.

"As an aside, has anyone done any analysis on what a possible conversion of prfd to common might look like and how likely a scenario this is? I am currently at 10% of NW with 50/50 common/prfd." Keep in mind that conversion would require 2/3 approval by preferred holders for each series, there are about 39 separate series. Also, the big players in the preferred shares should have enough shares themselves to block a favorable vote. Thus, the only conversion will be at redemption value. Even that is undesirable as getting paid dividends at 6% or higher beats any dividend that the common will pay in the future. Not to mention the risk of massive earnings dilution from the warrants and recap of the GSEs.

Vanguard made me call them to trade preferreds for a little while, but they gave me the "Internet" rate.

I think there could be a good earnings report too. I'm not sure that investor expectations fully reflect that as of now. Last year, Freddie filed their 10K on Feb 18, Fannie on the 19th. Not holding my breath, but it would be great to move up to the 40 percent of redemption value level. We're at 27 percent as of the end of January, based on the average % of redemption value of the FnF preferred stocks.

"'As interest rates rise, Fannie Mae’s and Freddie Mac’s portfolios become even more valuable – and we anticipate that Q4 2016 results will reflect this positive impact. "" I think this has to do with deriv costs. Deriv costs are marked-to-market each quarter, although other line items aren't. So, deriv costs are volatile, deriv losses when the Tsy yield curve goes down, deriv gains when the Tsy yield curve goes up. Note that the hedges don't "exactly" hedge the Tsy yield curve, I just use it as a proxy for whatever it is that they do. Note that (apparently) both the increase/decrease in the yield curve matter AND the extent of the "twist" in the curve. Note that at the short end, the increase in the yield curve in 4Q2016 is in the neighborhood of 14 to 40 basis points, three to 10 years is in the range of 56 to 79 bp, and 10 to 30 is in the range of 27 to 78 bp. Take a look at the yield curve changes in 2Q2015 when Freddie's deriv gains were $3.1 billion. 4Q2016 could be better than this based on a comparison to 2Q2015 yield curve changes. Note also 3Q2016 deriv gains/losses were near zero. So, the improvement relative to last quarter will be big. Hypothetically (and note that my analysis is incomplete) it does seem possible that Freddie could have $5 b of total comp income compared to $2.3 b last quarter. The usual disclaimers apply.

"I'm interested in what he's capable of completely on his own as this will likely be what's necessary to avoid another massive obstruction attempt. Thoughts appreciated in advance." Someone has been posting articles about this on Seeking Alpha. http://seekingalpha.com/article/4034039-right-thing-restructuring-spspas I guess the gist is that there are some things that Tsy/FHFA can do in 2017, while some other stuff has to wait until 2018. It seems like the key stuff can be done in 2017 and the rest would just be the icing on the cake. However, I want to be clear that the icing on the cake is sometimes the best thing about eating a piece of cake. So, I'd like a piece of cake with icing please.

It seems like the Trump Administration has to start changing the narrative. 1. Release all the 12,000 documents that they can ASAP. 2. Plaintiff attorneys can quickly find the documents that support the narrative that the NWS had nothing to do with preventing the 10% dividend from causing further draws and that instead show that the NWS was all about capturing FnF's profits for Treasury. 4. Trump Administration can then focus on de-nationalizing and reversing the expropriation from FnF equity investors. This is a good thing, but to make it credible politically one needs to attack the Obama era Treasury/FHFA. 5. What would help is an appeals court decision that supports the plaintiffs narrative by reversing the NWS or at least sending it back to the DC District Court. 6. Then, Treasury/FHFA can focus on recapitalizing FnF. Obviously, if they are going to be recapitalized, high FnF equity prices are a good thing, as it allows less earnings dilution to the gov'ts warrants and thereby benefits Treasury and taxpayers. It would be nice if Tsy just cancels the warrants, but I wouldn't assume that that happens, LOL. 7. In fact, if Treasury/FHFA allows recapitalizing, it makes sense to support high equity prices for FnF. They can do that by restored the preferred dividends and restarting a common dividends. 8. Note that I didn't focus here on cancelling the senior preferred stock and the warrants. It should happen, but I imagine that will be a bit trick-y to explain. I guess one way to explain it is to find documents that show that the SPSPAs and the NWS were purposely done in such a way as to make reversing them and recapitalizing FnF as difficult as possible.

Here is a Q&A about the possible consequences of lying to Congress. http://www.cnbc.com/2016/07/07/what-happens-if-you-lie-to-congress.html Note that I think he'll get away with it. Why he didn't just say "everyone is doing it" is a bit beyond me. The Rs are going to get him through one way or another. And I do like what he said early on about the GSEs, though he seems to have backpedaled a little bit.

@cherzeca Point taken, thanks.

"He said "If this case is remanded..."" If the case is remanded, the District Court would look at the adm record Tsy filed, the substitute for an admin record that FHFA filed, and would look at adding documents from discovery to the records submitted by Tsy/FHFA. The process will be a lot quicker if the appeals court reverses the 4th Amendment, but that's considered a less likely outcome. I could see Judge Brown doing it though, but not sure about the second vote.

Well, if The Donald does what he wants to do re destroying globalization, I think investors will have some remorse for not seeing it coming.

Hopefully, the Ds are going to get some spine soon. http://www.slate.com/articles/news_and_politics/politics/2017/01/constituent_power_is_real_just_ask_chuck_schumer.html#comments Thankfully, Mnuchin is far from the worst of the lot, so he may have chance to squeak by.

Regarding the question of selling common to buy preferreds, when FNMA is a $4 and FNMAS is at $9 (let's say) switching isn't an easy decision to make. Essentially, selling 1000 shares of common gets you less than 500 shares of preferreds. That's a pretty big hit. Still, I like the preferreds better, but that's easy for me to say, I bought FMCKJ when it traded at a 10 cent premium to the common.

"in the perry case, she has to choose between the lesser of two evils: the NWS and the preservation of the GSEs." Judge Brown is a Federalist Society Constitution in Exile type. She'd love to role things back to 1936. Fortunately, nationalization and expropriation via the NWS is on the table for her. Killing the GSEs entirely is not really on her table. She's also interested in economics, very conservative economics (Austrians like Hayek and von Mises), not a criticism. So, I continue to assume she's on board. Judge Ginsburg is a Univ of Chicago economist, a law and economics guy, probably will agree more or less with Brown. My caveat is that Peter Wallison probably was the guy that picked him as a nominee to SCOTUS in October 1986. Wallison was White House counsel from May '86 to March '87), so that's a concern. However, the delay in a decision may be beneficial in the sense that what we want the Circuit Court to do is also what Mnuchin (arguably) wants them to do. Or at least getting the NWS struck down would help accommodate recap and resumption of preferred and common dividends. Going back to the question of whether someone at the DC court of appeals is trying to "en banc" the appeals case, which my lawyer thinks *could* be the case. [He was a clerk at the 3rd district court of appeals and his wife was a clerk at the 4th district court of appeals.] Whether he's right or not, it is almost surely a D that would be trying to do that, which implies that there is an effort to throttle down a Brown/Ginsburg decision that is good for us. En bancing the case would be bad for us because it would restart the clock. There would be another round of oral arguments and another x number of months delay. Still, the decision would surely be 7 to 4 with 7 Ds voting for and 4 Rs voting against. That might spark an administrative action via a 4th Amendment.

"Mnuchin wrote that “any solution will be dependent upon the GSEs being capitalized properly and other such controls that eliminate risk to taxpayers.”" [i pulled this from the top of the gselinks site.] To me, that article seemed to link allowing banks to do proprietary trading with recapitalizing the GSEs. That would be a helpful quid for pro. Neutralize the banks on the GSEs, by linking prop trading with recapitalizing the GSEs. The banks might shut up a bit if it thought it would help them get out from under the Volcker rule.

My lawyer guy responds to the comments about the en banc question: "I can address both comments, however. The first comment is strange. Yes, the case is “heard” en banc and then it is decided en banc. So, the current delay could be attributed to the Court wrestling with whether to hear the case en banc or not. If so heard, there will be at least another oral argument, and then a decision by the full Court. The second comment is off the mark. The DC Circuit’s internal operating procedures make clear that a final opinion is circulated to the full Court before it is published and that a judge may suggest en banc consideration prior to the issuance of the panel decision. This is very rare, but it’s possible and this is the sort of high profile case in which one could imagine it happening. Again, we have no idea what’s happening, but the en banc route is a possibility."

My lawyer brought it up (he was a clerk on the 3rd C. Ct of Appeals some years ago). However, I don't want to ask him further questions about this. Even if there is a delay related to en banc in the Perry case, I'm not worried about it. There are 7 Ds and 4 Rs that are active judges on the DC Circuit Ct. If they came out with a bad decision it would be catnip for The Donald and his crew in terms of overturning it administratively.

Does anyone have comments on this line of thought: "I think it’s possible that someone is trying to take the case en banc and it would be consistent with the extended period of consideration at issue. It is possible, however, that a judge who is not on the panel may be trying to take the case en banc. Panel opinions are circulated to the full court before they are published, so a non-panel judge may have received the opinion (including any dissent) and asked the Court for en banc consideration. Only active judges can vote on whether a case should go en banc, and a majority is needed." "Unfortunately, there’s no way of knowing whether any of this is happening. En banc consideration is rare, but this is the sort of case that would receive it, either on a motion by the losing party (the most common way en bancs are triggered) or by a judge."

Q. "Anyone have information regarding the Freddie Pfds: FREGP, FREJP, FREJN, and FREJO? They aren't listed in the 10-k nor can I find any offering circulars. Are they pari passu with the other preferreds?" A. Yes, I've got some of FREJO. I believe they were originally private placements that now trade in the market. I bought this one a day or so after August 17, 2012. It's always been a little quiet, but follows the other ones pretty closely. The Quantumonline summary for FREJP says it's paripassu with the other preferreds.

"You received money as part of the PwC settlement." Not true. Who are you, the Amazing Kreskin?