Flynnstone5

Alright. Fair enough on speculating regarding positions that require no disclosure. That said, this boards been reading between the lines or trying to for how long? I don't think it's that crazy of a notion to try and read into Corkers frustration with Watt or Mnuchins responses to questions asked.

Last I read was Paulson had about 3% of one fund so the under $10M makes sense. So Paulson's stake is irrelevant and no one knows if Icahn still holds or he doesn't (I doubt it from 2014). Someone made the point not too long ago that this whole investment is beginning to shake out to Mnuchin knows Berk from Sears.....lol I think the commons are toast, but I'm curious of how many are beginning to think that the prfd's could wind up getting screwed too? I think the dems would be fine and quite happy if every shareholder winds up with nothing if they had their way. On the rep side, I don't see what Corker/Crapo expect to get out of reform as their plan will not work effectively and Mnuchin for his perceived flaws thus far is not going to restructure in a flawed way just to help Wells Fargo and co. The scary part though is I watched the Corker/Watt exchange again and it just feels like Corker thought he had a plan with Mnuchin, but Watt is suddenly going rogue and is going to fuck everything up by retaining capital. Then yesterday, you get the same feeling that Mnuchin/Corker have "an understanding". Wayne recently made the comment about trusting Mnuchin and I'm really starting to question that myself.

There's two ways to blow out commons, and preferreds too for that matter. 1)Big FU. Fold both companies into one and dump existing shareholders. Like you, I don't see this happening because it won't make lawsuits go away but may make recapitalizing a bummer. Voids treasury's shares too. 2) FU. Treasury ignores immediate gains of selling seniors and warrants for longer term hold. No change to FnF structures. NWS ends 1/1/18, 10% dividend doesn't. Capital buffer is comprised of remaining year's earnings plus order to sweep all future earnings (minus dividend) until level is met. That would be $1.5b this year. Companies gain right to pay down seniors. That's why action is so poor lately, there's a growing distrust for Mnuchin. I can see some distrust, but the vol doesn't really match with that theory.

I haven't added a single share to my already significant position in prefs since March of 2016. I'll likely be adding if it drops a little more. Chapter 8 of The Intelligent Investor in action. I actually bought some yesterday despite thinking I need my head examined.

I don't know how anyone can infer anything other than the fact Mnuchin has repeatedly said that he wants complete safety in front of taxpayers should there be a gov guarantee (which there absolutely will). No matter what, I see him setting an extremely high capital buffer so that virtually no one can question the safety of taxpayers in the event of a major down turn. Purely my own intuition/speculation, but Mnuchin strikes me as having no problem what so ever in blowing out common shareholders. In his world, his peers would buy prfd for an investment such as this and I believe he will respect those rights. Watt may simply be acting like today's typical dem, which is to just do the opposite of what the admin wants you to do. I can see Mnuchin wanting to just buy time and if Watt suspends the sweep, then that could spur the Corker/Crapo & co. into taking action they might not get around to prior to Jan 2018. What's up with price action in prfd's lately?

No good news so far. He made clear that he wants the payments to continue per agreement.

who does x? who is they? Treasury/FHFA/Mnuchin/Trump/Congress - I think the "what" is done is key, not the "who". What are your thoughts? You're one of the reasons I originally joined this board so I absolutely respect your opinion.

"X" is common gets wiped out or heavily diluted. Doesn't make sense to pay divs on jr., decrease earnings and bring down market cap, but it does make sense to call and be able to cover a solid 10% of the capital raise through new issuance of jr. They could avoid not calling and say not paying divs either fro extended period, but that doesn't solve any issues with litigation. Don't agree?

If they create a utility model and a do a new offering, who wouldn't?

I'm certainly not claiming anyone is categorically wrong for being in common. I just find with all of the changes that have occurred and the likelihood of a capital buffer perhaps much larger than people had hoped, i.e. at least $100B if you factor in DTA, common just doesn't have the upside we once thought, but it does have substantially more risks than prfd now. I just get the feeling and maybe I'm completely wrong that the buffer size is going to be a shock and if so they're likely to call the jr's so they can issue new with much lower rates. Or maybe they convert, but at least you still get a par value IMO. At the very least, I don't see how a situation where prfd get a bad deal yet common come out ok. The largest players, friends of Trump and litigants are all prfd so I don't see them just rolling over.

Thanks for the feedback everyone. Emily - have to say I think you're absolutely crazy being 100% common. I think you're missing the big picture and unbelievable risk IMO.

As of now, how many are preferred, common or mix of the two given where we are? I'm all prfd, but am curious how if at all people have adjusted positions over the last six months. I just can't see the rationale at all for holding common anymore.

So you think Watt is going it alone without having discussed with Mnuchin? I don't see it that way if that's the case. Mnuchin has said that he agrees with Yellen that FnF didn't cause the crisis, they serve a vital purpose, etc, etc. I don't think he's an enemy, but I think the writings on the wall that the capital buffer is going to be much larger than many expect. Certainly wouldn't touch common at this point. Thoughts appreciated.

Assuming the NWS is paused/stopped in June, what do you all perceive as the major risks going forward for preferred shareholders? I'm intentionally not including my opinion in this post as I don't want to influence thoughts/opinions/comments. Thanks in advance for commenting! I'd say the risks are they propose a plan that doesn't re-instate divs for a long period of time or that maybe they force a shitty conversion deal. I'm more optimistic though that they would rather pay us off so they can re-issue new jr. Look forward to hearing everyone's opinions.

The biggest key point I noticed was Watt clearly drawing a line between GSE reform and that of Housing reform. It sounded to me like Watt was saying that we've already implemented necessary GSE reform so your focus (congress) should be on housing reform and don't confuse the two. In essence, go screw Corker, focus your time on other areas because you're not playing a key role when it comes to GSE's. Let's hope Mnuchin finally makes some crystal clear statements that benefit our positions as shareholders. End this bullshit, all the trying to read between the lines and make inferences from vague statements.

Yes - was thinking the same as additional possibility, which could even turn out to be a better deal. That said, I'd be more than happy to get par and run at this point!

Pulled this from the blackrock proposal. They are basically asking for government guarantee to continue with private investors being first at bat to take losses. This could work. What would this mean for existing preferred shareholders? Doesn't this imply that most likely outcome if pursued would be deem sr. prfd paid, pay off jr. prfd and do a new offering with a very high capital raise (fits with utility, saftey, etc.) that probably dilutes the hell out of existing common?

I simply see Corsi as a method of introduction, which is fine. Initially he and Jones claim regarding NWS used to pay for Obamacare was looked upon in the same way, i.e what a joke, quack, etc. Weeks later we had Rosner on Tucker Carlson show, Bartiromo asking the direct question and Mnuchin confirming. Pure speculation, but I see a setup taking place albeit slowly where this story of Obama using FnF funds becomes a real main stream story. I think the prfd are paid in the end game and Paulson/Berkowitz make a fortune. The common is too much of a gamble as I could really see Ackman getting screwed. Maybe common works out, but I'll take the safer bet at this point.

I'd like to know when the hell someone will do a thorough interview and actually ask him directly about his views on the sweep and what his position is on shareholder rights. Maybe bring up the fact of how much money has been paid to treasury and compare with any other company that received bailout funds. WTF?!

I could see him wanting to zero out the balance so that they could make the statement that under original deal, gov has been paid back in full whenever they finally announce a definitive plan for the future.

How much is owed under the original deal if you applied the NWS as an over payment?

I don't think it's that strange. In Mnuchins world a prfd share means there's an obligation and expectation of greater safety vs. a common share. Money used by Obama from FnF should have first gone to prfd divs. My bet is at the end of all this prfd's are made whole and commons are the sacrificial lamb. Can't say that HF's were made rich when you have one of the most outspoken (Pershing) getting crushed. Paulson and Berkowitz supported the admin early on, but Ackman never did. I'd think the most rational thing for the government to do is to exercise its 79% warrant and max the price of the common stocks it can sell. I used to feel that way, but I can see the Corker, Crapo, Warner, Hensarling crew finding a way to screw common shareholders.

I don't think it's that strange. In Mnuchins world a prfd share means there's an obligation and expectation of greater safety vs. a common share. Money used by Obama from FnF should have first gone to prfd divs. My bet is at the end of all this prfd's are made whole and commons are the sacrificial lamb. Can't say that HF's were made rich when you have one of the most outspoken (Pershing) getting crushed. Paulson and Berkowitz supported the admin early on, but Ackman never did.

Corkers a snake and that's exactly what he would like to see. Why couldn't they just transfer to a new entity with a brand new offering and capital structure leaving existing shareholders with zero? It doesn't make any sense from most angles, i.e. hurts Trump allies, gov. makes no $ on warrants, lawsuits continue, etc., but who thought a few months ago we'd be where we are. Anyone know where the doc saga stands with Sweeney at this point? I think the gov was supposed to respond today?

FNMAS is pretty appealing at the current price. I bought more a couple days ago. It just feels odd to me that they are trading this low given the security and even liquidation preference that prfd's are supposed to have. I get the commons getting hammered given complete uncertainty at this point. This is either a second chance on prfd's or the market knows something bad is coming and I'm an idiot for ignoring it.