Desert_Rat
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Posts posted by Desert_Rat
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Canadian oil patch
Gold
Pretty much everything I own except what should be doing shitty, like bank preferreds.
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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?
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.
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Yeah, I don't agree with that. How can you say that MBS market isn't a concern of Treasury when they're the one's backing it? Besides, the question was specific: Are you concerned about a draw (from your treasury). How can he not answer that? Maybe not wanting to get between Watt and Corker.
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To answer fully would invite the type comments this board disapproves of so I'll answer simply: I'm following my gut.
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Brown: "Are you and FHFA/Watt working together to prevent another draw by GSE's?"
Mnuchin: "No. My conversations with him are on the dividend... And conversations that we're willing to work with him and Congress on housing reform."
That's in Corkers corner. By ignoring it, he's saying he doesn't believe a draw would be an issue.
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Would someone familiar with law answer this question?
if the context of 3rd's language is changed by the existence of a capital reserve amount does that affect the contract in any way? Like, would it mandate an amendment or will the language work as is?
For each Dividend Period from January 1, 2013, through and including
December 31, 2017, the "Dividend Amount" for a Dividend Period means the amount, if
any, by which the Net Worth Amount at the end of the immediately preceding fiscal
quarter, less the Applicable Capital Reserve Amount, exceeds zero. For each Dividend
Period from January 1, 2018, the "Dividend Amount" for a Dividend Period means the
amount, if any, by which the Net Worth Amount at the end of the immediately preceding
fiscal quarter exceeds zero.
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If by 'jump start' Vogel means nothing will change except our status as conservatees and a few myopic rules (to make principles look better), than I totally agree.
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SPY Sept options. I've had $200 puts.
Game ends right prior to Comey 7/24 hearing, after which market will soar.
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since we dont know what the outcome will be, and the distribution of outcome probabilities is hard to estimate, i dont think anyone can say objectively whether an investment in common v preferred is way to go, or someone is dumb to do one or the other. yes one is more risk-seeking than another, but you are fooling yourself if you dont think both are risk-seeking
I think this is the operative phrase. Both are very risky, so calling one more risky than the other isn't necessarily saying much.
For me, I am in mostly preferreds to align myself with the big money, i.e. those who have brought and paid for the big lawsuits. Though following Berkowitz on SHLD would have been a disaster...
My position in commons is because I see a relatively small probability of junior prefs winning and commons losing, and that the upside is a good bit higher.
I agree with your last statement. Problem is though, the common can be made whole @ .001
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Well, you never asked 8)
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Always been all preferred. Think common is for trading, preferred is for good.
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I think we're correct, Beaufort. It's also refreshing to read genuine instead of influenced impressions.
IMO, no one watching that hearing could conclude that Watt is a partisan hack whose time is limited. the most obvious thing about it was that the man just wants to do his job, and damn you politicians for not doing yours.
Could he be doing all this to avoid being fired for cause? Why wake up now to risk of capital depletion?
He's been driving this car without airbags all along?
Either way actions speak louder than words - looking to see how much capital will be held? Magic number would be enough to pay par in case of liquidation! Even for that we are in line behind senior preferreds which Mnuchin is in charge of.
He could, sure, but I think Beaufort hit the nail on the head: Things have changed, as have Watt's perception on what he should do. Namely, if tax reform passes and FnF would draw because of it, he should do everything in his power to ensure that draw doesn't happen, and that means building capital asap. I don't think this is unreasonable.
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I think we're correct, Beaufort. It's also refreshing to read genuine instead of influenced impressions.
IMO, no one watching that hearing could conclude that Watt is a partisan hack whose time is limited. the most obvious thing about it was that the man just wants to do his job, and damn you politicians for not doing yours.
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My impression is the opposite; He was disturbed that Corker would bring up a topic they had already hashed out, and, at those times, Corker fully understanding the position Watt would take. In a word: getthefuckoutofherewiththatshit
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With all due respect, I don't think a single one of you saw that hearing last week. Watt is apolitical, in control, doing a good job, and he's going no where. At least as long as the conservatorship exists, that is.
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its pretty clear now that mnuchin underestimated the political challenges of fixing f&f when he said it can be done reasonably quickly (mclean was right about that). signs point to it taking much longer than even he anticipated. watt implementing a cap buffer changed little; nws will remain above the "relatively small" buffer
Plan is Watt will be gone soon. President Trump will soon have the right to fire him. Watt will not matter. One at a time. I also read that the FHFA deputy, Bob Ryan, was VP at Wells Fargo, WFC is out to steal GSE business. They think everyone is dumb.
I doubt that.
Watt seems to be doing a good job, great one if FnF success attributable to him and staff. No cause to remove him.
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Watt was specifically asked that last week. His response was that he wasn't sure but was aware that tax reform could equate to a $15-20b loss. If the man wants to insure no probability of draw I'd say his target is at least that much.
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What he really, really said: 'We can't handle this outsider determined to undermine our cushy (and ineffective) political system'
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Here's a thought. Since optics could be pose a problem and everything this admin does is vilified by anti-American MSM, Mnuchin should demand Watt make future dividend payments. That way Watt can sue treasury, some Obama appointed flunky fed judge can rule for him, and #fakenews can emphasis how greedy Mnuchin was to continue stealing from FnF.
Weeks later Mnuchin rips up PSPA and we all go home happy
I should have gone into politics.
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To add to risk #1 above:
What value will preferreds have if country is burned to ground?
8) MAGA 8)
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The real Tim Howard on yesterday's hearing (emphasis added is mine)...
"I liked the fact that Watt argued and laid the groundwork for suspending Fannie and Freddie’s net worth sweep payments beginning next month. Unlike the March 31 payments, I think the companies now WILL retain the earnings they otherwise would have paid to Treasury on June 30, and will continue to retain them until they build up a capital cushion that Watt feels is sufficient. I do not believe Watt would have been so direct with Senate Banking Committee members about the need to suspend sweep payments to build capital had he not had the backing of Treasury Secretary Mnuchin."
https://howardonmortgagefinance.com/2017/04/25/narrowing-the-differences/#comments
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.
Although we should now be worth more (maybe 50% of face?) my concern remains the same, that housing reform will not occur and we'll remain in limbo.
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FWIW, it appeared that Watt and Corker had the same conversation many times before and Watt was just blowing him off in light of that. He wasn't about to change his mind now and Corker knew it.
As far as Watt being our best pal now, I prefer my GSE supporters to be steadfast with 30 year's and financing lower income folk, as they are our salvation. Watt didn't impress me as particularly interested in either. Or better said, he seems most interested in just doing his job as conservator well.
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Sure, doing his job. That works.
I say that he's without Mnuchin's blessing because he was asked what right he thought he had to proceed without it.
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I don't know, kinda looks like Watt just went rogue.
It didn't appear he had Mnuchin's blessings, and Crapo is probably right that a draw would be inconsequential to housing. I think he's done waiting on Congress to sit around for another couple decades doing nothing and has put his foot down. I also didn't get the impression that this action changed much. I can't see him paying dividends for the remaining year because 1/1/2018 is right around the corner, but I doubt anything is changed until then.
As far as Crapo's comment about 'something's changed', I'd say that's just typical whiny Crapo whose ideas on reform have been tossed out by just about everyone.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
Not a theory. It's possible of course, but I was just responding to your statement about blowing out common shareholders. I don't think they'll get blown out except to the extent of my scenario or similar, which hurts preferreds too. I don't think they have much upside, but I doubt they're blown out.
Mnuchin not exactly having our backs lately stands.