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Desert_Rat

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    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    I strongly encourage GSE investors to read the whole blackrock piece.  I am just a novice here but I view the contents as being very positive for existing preferred shareholders.  Based on this and the price slump I have upped my investment.

     

    "Ultimately, private capital in the mortgage market requires a transparent process that provides certainty and respect for the rights of investors, both in the current framework and in any transition to a future system."

     

    ?  I interpret the language in the Blackrock proposal as discussing MBS investors, not GSE equity investors.

     

    Of course, as soon as ones interest is affected its ok to extol the rights of shareholders/stakeholders. No coincidence then Blackrock has the position they do in the white paper.  That being said I think its probably best Mnuchin tries to respect rights for all shareholders/stakeholders. The common for example may get very unfavorable terms but not totally excluded. This would have the effect to quell ongoing lawsuits IMO. Big risk to reform would be a lawsuit requiring compensation years down the road.

     

    Again for my fellow conspiracy theorists Paulson dismisses the lawsuits and leans on a favorable solution from Mnuchin for shareholders. For lack of better reason or knowledge I still think its better to align myself with an Economic Adviser to the president and worry less about the situation as a result.  As mentioned above all of these white papers maybe completely meaningless with Mnunchin knowing exactly what will happen already just going through the motions.

     

    Repeated and accentuated.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    That's not negative, that's fact. Negative would be something like "Since courts have rejected each lawsuit brought by these bottom feeders we believe they have no rights going forward and will treat them as such; Poorly"

     

    I honestly don't care about any of this stuff because 90% of what we read is not going to happen. My primary concern is if housing reform is going to pass before all our assumed advantages expire. If it does we're golden. If it doesn't we will remain an elusive 10 5 bagger.

     

     

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    "BlackRock wants to make sure they are interchangeable with Fannie and Freddie’s current bonds. That would prevent legacy debt from getting isolated in its own, dying market"

     

    Now that's something I've never considered.

     

    https://www.bloomberg.com/politics/articles/2017-05-05/blackrock-says-don-t-recap-and-release-fannie-and-freddie?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

     

    I watched the arguments regarding FnF causing the financial crisis. 4:30 and later.

    I am surprised it is the Democrats who are insisting that FnF did not cause the crisis and it is the Republicans who said FnF caused the crisis.

     

    That was interesting. I listened to the whole thing and started to worry about what was in this H.R. 14, but Ellison was right at 4:27: Not one damn thing in it refers to FnF https://www.congress.gov/bill/115th-congress/house-bill/10/text. So what was that whole back and forth about?

     

    Our govt in action. Hours wasted bitching about something they obviously know little about, and in the end rejecting the amendment they were asked to legislate but really did not.

     

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

     

    I watched the arguments regarding FnF causing the financial crisis. 4:30 and later.

    I am surprised it is the Democrats who are insisting that FnF did not cause the crisis and it is the Republicans who said FnF caused the crisis.

     

    But it's always been that way. The GOP, for law, can't stand us for reasons like the community reinvestment act while the lawless, heathen Dem's see us as a utility to help finance the poor. So on one side we have a group that would do away with us but regret the theft, and on the other a group that would prefer the NWS remain in perpetuity.

     

     

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    No. I don't think he flip-flopped. He is being consistent. He is accepting the fact that because companies rely 100% on Treasury's money all rewards should go to taxpayers and none to shareholders. However, he is -and has been- simultaneously saying that this situation is no longer useful/needed/healthy or safe. And he has been more than clear saying taxpayers are at risk with the current set up.

     

    From this line of thought he infers:

     

    a) companies need their own capital for their existence and stop relying on Treasury.

    b) once that is accomplished rewards can be shared among all shareholders (being Treasury one of them, potentially).

     

    I am adding b) as his next line of thought.

     

    Briefly, he says:

     

    'The current set up is legit. But has lead to a risky situation and must be changed.'

     

    He is not judging the NWS directly. Only accepting the court outcomes even though his statements reflect its unhealthiness.

     

    Maybe he is trying to push things to the limit to force an outcome? The closer we get to a draw, the more politicians will become believers.

     

    Please share the quote. I haven't read anything even close to it.

     

    I think Mnuchin wants one thing, and one thing only. He wants to remove the treasury from picture and have FnF's debt guaranteed by private interests. That's it. He will take any and all suggestions about how to better handle FnF fate but that's not his priority.

    Please share the quote. I haven't read anything even close to it.

     

    Nobody knows what's going on. So far, we have all been tools.

     

    He has absolutely stated he wants to remove treasury from picture but not once said shareholders should be left out of picture. I'll concede that I should have used "in my opinion" but you were straight out pulling your opinion from your butt. He's said nothing even close to your statement, and if he had, these preferreds would be trading far lower today.

     

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    No. I don't think he flip-flopped. He is being consistent. He is accepting the fact that because companies rely 100% on Treasury's money all rewards should go to taxpayers and none to shareholders. However, he is -and has been- simultaneously saying that this situation is no longer useful/needed/healthy or safe. And he has been more than clear saying taxpayers are at risk with the current set up.

     

    From this line of thought he infers:

     

    a) companies need their own capital for their existence and stop relying on Treasury.

    b) once that is accomplished rewards can be shared among all shareholders (being Treasury one of them, potentially).

     

    I am adding b) as his next line of thought.

     

    Briefly, he says:

     

    'The current set up is legit. But has lead to a risky situation and must be changed.'

     

    He is not judging the NWS directly. Only accepting the court outcomes even though his statements reflect its unhealthiness.

     

    Maybe he is trying to push things to the limit to force an outcome? The closer we get to a draw, the more politicians will become believers.

     

    Please share the quote. I haven't read anything even close to it.

     

    I think Mnuchin wants one thing, and one thing only. He wants to remove the treasury from picture and have FnF's debt guaranteed by private interests. That's it. He will take any and all suggestions about how to better handle FnF fate but that's not his priority.

     

    Of course he has also Freudian slipped statements regarding our freedom, as that seems most prudent because the govt profits greatly, but he can be swayed, if not already. But that doesn't matter given how the democrats control both houses and the pres. They DO want FnF and control over housing finance and will likely get it.

     

    I think our wait ends with draw. No politician wants a continuation of bailouts. Until then we're in hiatus.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    I'd be happy with the ICBA proposal: http://www.icba.org/news-events/press-releases/2017/04/25/icba-white-paper-lays-out-principles-for-housing-finance-reform

     

    The attached image is a highlight of the proposal.

     

    nice proposal, thank you icba. 

     

    confused on the warrants into sr preferred comment in your pasted attachment -- was it a typo?

     

    Yes, I believe it was.  The warrants are for common stock.

     

    I think:  "The Treasury should exercise its warrants for AND senior preferred shares of GSE stock and convert those shares to stock in the new structure"

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    I'd be happy with the ICBA proposal: http://www.icba.org/news-events/press-releases/2017/04/25/icba-white-paper-lays-out-principles-for-housing-finance-reform

     

    The attached image is a highlight of the proposal.

     

    I like its idea on equity resolution but not its convolution of an operation that has been highly successful as is. Isn't "catastrophic mortgage insurance fund" pretty much what AIG offered? and it would be another layer on top of g-fees that will increase the cost of financing, while adding only pretty optics because if shit hits fan govt is covering losses anyway.

     

    It's not necessary. Govt has one of two choices: Stick with what's worked or increase the cost of home financing. Personally, I favor the latter but America won't.

     

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Didn't Mnuchin state in that briefing exactly what he did on TV on day 1? And ruled out two ways to zero - status quo and nationalization. One way to zero still would be spin offs without anything to existing shareholders if courts permit? Otherwise it would be a question of how much which shares get diluted?

    @rros not sure what your advice meant, I'm thinking of half position now and half after "reform". What did you mean by accumulate before the cold water splash?

    For those of us who have been on this trade for years we have learned that when things seem to be going well -reflected on a high priced stock- the time comes when some really bad news is thrown unto us: Lamberth ruling, Appeals ruling or Treasury/FHFA/WH press releases debunking rumors. We have gone through 3 big cold water splashes and numerous smaller ones. But this was intended as half a joke.

     

    Your one way to zero is not to be disregarded. Administration/FHFA could force receivership to wipe out equity before moving into a new scheme where new equity is raised. However, there are a few issues with this. Wiping out legacy after what we have gone through could send the wrong message to new investors. Or it could also reinforce the notion of no bailouts to anyone pointing at moral hazard. Another thing to consider is that many voices in the current administration (Calabria, Mulvaney) have stated the government has been paid back. If all this drags into 2018 there is a chance Trump may simply eliminate the Sr. preferred shares (hopefully Corker fails to extend Jumpstart). In which case, a receivership may grant full value to the Jr. shares. Or what Snarky has already stated.

     

    Remember, Calabria is big on receivership and he both understands and believes in the process. I would not be surprised he will try to see this working in an actual scenario. But I also believe the chance to see value re liquidation preference of the Jrs. is very high. Provided the Srs. get the boot before.

     

    Two things:

     

    1) The courts have let us down, alone. The bias and political support are looking up. This is the better thing, imo, because the courts have never  been keen on cleaning up this mess. The politicians had a point, in that they were protecting our way of life. That they were 100% wrong that this country wouldn't right itself naturally is not their fault, and the courts will forever respect that.

     

    2) I am so sick and tired about the 'protect taxpayers' statements. No matter how much capital, no matter how keenly planned, if the shit hits the fan, like it did just 8 years ago, TBTF (like FnF) will be covered by the same treasury that has been propping up asset prices since we were seized by them. It's such a stupid, retarded, moronic, demand of progress.

     

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    question regarding the court case timing:

     

    perry and Sweeney seem 2018+

     

    the Cincinnati and st louis appeals courts, along with hindes in Delaware seem like 2h 2017 possible rulings.

     

    what about Collins in texas -- both the fhfa constitutionality part and also the standard nws illegality request --- could either one of those or both come at any point?

    The way it seems to go is that rulings have already been reached in all cases. But they are only being released as share prices become too frothy. Once prices reach unsustainable levels of speculation someone calls the courts and they drop the ax. So there you have the schedule: pay attention to share prices. And yes, I am assuming all courts are against us.

     

    That may be the most pragmatic+pessimistic (is there a word there?) thing I've ever read!

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    basically, why not do this for fnma and fmcc first since they are the housing finance market, and them say others can compete on same basis?  gses have all of the expertise in house and are managing Ts in gtee obligations, so why not start there first?

     

    I think that is what he is saying. Take a look:

    Preserve where possible the existing infrastructure — for example, a rechartered Fannie Mae and Freddie Mac could be the first two Guarantors.

     

    Rechartered successors to Fannie Mae and Freddie Mac would likely be the first two Guarantors. Preserving the existing human capital and operational processes at both GSEs and reasonably supporting their emergence as viable Guarantors. Transitioning to the new system over a multiyear period, with implementation occurring gradually to avoid market disruption and to build required capital.

     

    Guarantors would be monoline, regulated utilities owned by private shareholders. (The monoline was also Millstein's idea).

    Competition can come later and only if the regulator charters out to other institutions . And we know banks will kill for such charter.

     

    I do not think Berkowitz wanted a gov. guarantee though. Maybe Ackman.

     

    Stevens plan may gather consensus from many parties. As well as shareholders provided we are part of the transition.

     

    Potentially more money for govt as well.

     

    I recall from way back that FnF's CDO algo's could be sold to replacement vehicles. Since FnF do their job so well I'll assume they're pretty valuable.

    FNMA and FMCC preferreds. In search of the elusive 10 bagger.

    in General Discussion

    Posted

    Gotta be before '19.

     

    With DJT's admin unable to accomplish anything except bombing folks, even I'd think about voting the house back to Dem's @ midterms. That would be a vote for no congressional approval on warmongering. If the house is lost that means anything that hadn't been accomplished by then gets stonewalled until 2020 when our present edge may be lost.

     

    There may be hope though: http://www.cnbc.com/2017/04/20/conservative-republicans-reportedly-pleased-with-changes-to-health-care-proposal.html

     

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