Wiggins
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Posts posted by Wiggins
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31 minutes ago, Sweet said:
Trump had 4 years to get it done last time and it didn't happen and I don't think there is any reason to think it will be different. I had traded in and out of a position in this years ago, twice for small profits, once for a small loss. It was a gruelling lesson in not buying into a company based on a court case, as the recent Spirit Airlines merger has shown. It's just too hard to predict court cases, and its especially hard to win them when government are on the other side of the bench from you. I'd like to own the companies at low prices but I'm not holding my breath.
Will have to disagree quite a bit since the Trump administration DID stop the NWS spend, and this was after the Democratic FHFA head sucked up two years of time. This was a critical step. He also wrote an important letter to Rand Paul. These acts are far more than any other president has done. Going forward, he would be in his last term and would have no reason to keep the GSEs in conservatorship. His buddies will be lined up holding JPS. I'm not holding my breath but I am holding lots of GSE JPS.
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Catalysts:
Welcome to Trump trade 2024. The New Hampshire primary is today. I expect Trump to win handily and GSE stock to continue its run. Tomorrow should be another catalyst as it will be the first trading day after Trump won NH, and there will be lots of talk about the inevitability of him winning the Republican primary. Then there will be another catalyst when Nikki Haley drops out of the race. I would be surprised if she does that before the SC primary. After all the primaries and it is inevitable that Trump will be selected, when will there be a pullback or plateau? It has to come at some point.
Tim Pagliara has been making a lot of noise about R&R being worked on by Biden who won't want to hand this over to Trump to get credit. Regardless, there is a lot of discussion that either Biden or Trump will be moving the needle soon. Of course, the GSEs are holding a lot more capital now. Maybe even Maria Bartiromo will interview Trump and ask about it, which could be a good catalyst. I'm holding for now.
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It's not over. There are a few lawsuits still pending. And there's still the issue of what to do with the GSEs.
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On 10/18/2022 at 10:40 AM, maude said:
Thank you. I didn't know that. If the shareholders win any damages, will all GSE shareholders receive a payment from the GSEs or only those who are plaintiffs in the case? And any thoughts on the range of plausible damages that might actually get awarded?
All shareholders of Fannie and Freddie preferred, and Freddie common will get paid unless they specifically opted out of this class action suit. I have read that the plaintiffs are only asking for $1.6 billion in damages which would result in a cash payment for about what they're selling for today. I don't know what the jurors will decide and all I know is what I am reading in the newspapers and on Twitter
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10 jurors were selected today. Likely they will all be sworn in and one is an alternate, so one will be dismissed if all 10 are there at the time of verdict and 9 will make the decision. This is a civil trial, so the jury does not have to agree unanimously. They just have to reach consensus according to the foreman they will select. Any damages paid to shareholders would be from the GSEs themselves.
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There are a lot of sealed motions from defendants in the Lamberth trial. I suspect that they're trying to exclude a lot of damaging emails from Treasury and other government officials, stating they aren't official views. That's just a guess but what else could it be? Hopefully at some point some of this information makes it to the jury and gets released to the public. The ulterior motives we've already seen from officials such as Jim Parrot seem relevant to the plaintiffs' side given the "good faith" portion of the contract breach.
I hope we can get some information about the trial as it unfolds. Someone will have to be there taking notes. Anyone that has seen a jury trial up close knows that juries are unpredictable; we have to hope the odds lean heavily toward the plaintiffs.
I hope some investors are still monitoring these boards and also doing well otherwise. And I wish everyone good luck. I miss the great analysis that used to happen here and I hope we can get some more discussion going about the trial. This seems a good place to discuss trial matters and updates.
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On 4/17/2022 at 7:13 PM, Sweet said:
Is the thesis dead or alive?
Alive.
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Just now, Wiggins said:
Question for Midas or anyone else who has thoughts on this:
Can the GSEs issue new stock for a capital raise that is senior to existing JPS? I think existing JPS certificates say no, but the SPS was made possible by HERA and only pertains to Treasury's capital infusion.
My answer is yes -mainly for the reason that FHFA/Treasury will do whatever the hell they want-, but it could start a whole new round of takings claims. Interested in thoughts on this.
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On 11/4/2021 at 10:30 PM, Midas79 said:
Yup, lots of time and patience. I'm lucky to have a work-from-home desk job that lets me both have the time to develop the model I made (been improving it for 4 years) and monitor prices. My success in this investment is no longer dependent on recap and release, though this wasn't true until recently.
Ironically for a member of this board, I'm not really a value investor. I don't like stock-picking at all. I have owned stock in precisely 4 individual companies in my life, and Fannie and Freddie are two of them. If I make enough money from this stock to retire I will happily index from there and enjoy life.
I also have the advantage (if you can call it one) of not believing in opportunity costs in the way that most people seem to, so I'm not bothered at all by other people making huge returns on things other than FnF. My method is working and I'm quite comfortable with it as opposed to either doing lots of research (classic value investing) or just jumping on the meme coin of the moment (FOMO-driven investing).
Question for Midas or anyone else who has thoughts on this:
Can the GSEs issue new stock for a capital raise that is senior to existing JPS? I think existing JPS certificates say no, but the SPS was made possible by HERA.
My answer is yes -mainly for the reason that FHFA/Treasury will do whatever the hell they want-, but it could start a whole new round of takings claims. Interested in thoughts on this.
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Class certification by Lamberth was underrated. I think this should have been news.
There will be a trial in Lamberth's court next year regarding a breach of the implied covenant of good faith and fair dealing with respect to stock liquidation preference and dividend rights. I am getting the popcorn ready. How can there not be damages when the Treasury lied and then "siphoned" $300 billion out of the GSEs? In a case like AIG there was no money, but with the GSEs they have of course been highly profitable. I think Lamberth just may be the one to unwind the Treasury's Orwellian tales of greedy hedge funds awaiting a windfall or the Government "rescuing" the GSEs. Any shares bought today have the same rights as all others.
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6 hours ago, allnatural said:
Between the court cases (Collins, Takings, Lamberth) + GSEs continuing to retain capital, Biden lowering the capital requirements, expanding the GSE footprints to be more profitable, and wants to transition them to utility model (hinted at with the leak for FHFA pick Calhoun)... 2022 is setting up to be a interesting year
GSEs currently have $67b in capital, at the end of the year that will be closer to $75b. New minimum requirement is $180b and they are earning ~$30b a year (so ~3 years to organic earnings retention). But in Collins case, worst case the Judges don't agree privatization would have been completed in time if Trump could have fired Watt day 1, the GSEs at a minimum should get over $45b in cash back to balance sheet since the NWS suspension would have happened day 1 instead of 2 years later as Trump stopped the NWS immediately so no need for hypotheticals (Yes the liquidation preference would go up, but the government would still need to write a $45b CASH check in exchange back over to the GSEs which is definitely not a desired outcome and hopefully prompts some kind of resolution). This would cut ~3 years down to ~1.5 years to get to $180b of cash capital on the balance sheet. At some point the government should be forced to deal with this issue as not only have the GSEs been completely reformed for the better but now have their desired cash capital on the books.
I'm 100% JPS but thinking about taking a common stake in case there's a ruling or announcement causing preferential accumulation of common vs. JPS. So far I have been piling in to the JPS since they're still so ridiculously depressed (e.g. some are still under 10%), but seriously thinking about a common position.
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10 hours ago, allnatural said:
tripled up sub $2. yolo life
(and took advantage of the tax benefits by realizing losses and swapping into other pfd lines) .. double whammy
Nice work!
I have been thinking we could be setting up for another move up similar to that seen Dec '18 to Jan '19. I think there was heavy tax loss selling in '18 and then investors got back in with a new basis and there was additionally some optimism over releasing the GSEs at that time. Now, especially after the Drumpf letter my thesis is that Dec '21 to Jan '22 will be a repeat.
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On 8/18/2021 at 12:36 PM, muscleman said:
The whole market is doing a top building right now. Liquidity is being drained from small caps each day. Without any catalyst, I expect FNMAS to drift down along the rest of the small cap stocks.
How is everyone doing? Did anyone else buy post Jun 23rd SCOTUS?
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The verbiage of this letter is breathtaking (e.g. "steal the retirement of hardworking Americans"). Any press is good press. This is good press and will get at least some traction in the courts and in the news. Expect court filings soon
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On 11/4/2021 at 10:30 PM, Midas79 said:
Yup, lots of time and patience. I'm lucky to have a work-from-home desk job that lets me both have the time to develop the model I made (been improving it for 4 years) and monitor prices. My success in this investment is no longer dependent on recap and release, though this wasn't true until recently.
Ironically for a member of this board, I'm not really a value investor. I don't like stock-picking at all. I have owned stock in precisely 4 individual companies in my life, and Fannie and Freddie are two of them. If I make enough money from this stock to retire I will happily index from there and enjoy life.
I also have the advantage (if you can call it one) of not believing in opportunity costs in the way that most people seem to, so I'm not bothered at all by other people making huge returns on things other than FnF. My method is working and I'm quite comfortable with it as opposed to either doing lots of research (classic value investing) or just jumping on the meme coin of the moment (FOMO-driven investing).
Thanks for sharing these thoughts. I'm glad the arbitrage and/or trading of the prefs is working for you. Please keep us posted.
Fannie is trying to buy back CAS notes in a tender: https://www.prnewswire.com/news-releases/fannie-mae-announces-tender-offer-for-any-and-all-of-certain-cas-debt-notes-301424020.html
I would like to think now that the infrastructure bill is out of the way that they're trying to clean up the balance sheet in preparation to exit conservatorship, though I'm not counting on it. My plan is to keep holding and hope that Lamberth helps us.
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Midas it is good to see you check in!
Are you actively trading the prefs? That seems like it could work but would take a lot of time and patience. That's great if it works though.
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I started adding significantly to my stake right after the miserable SCOTUS ruling. Glad I did that. I think it's still "oversold" by a lot.
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This guy has been pumping a lot lately, has 23K followers and a big stake according to his feed:
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Agreed, and for what it's worth which is not much, the interest referred to some sort of standard court interest like 6% and did not refer to dividends.
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No one knows for sure, of course, and judges have latitude in what constitutes equitable relief, but I hear some attorneys that are knowledgeable about the case think preferred shareholders are entitled to par value plus interest from the time of the breach, which was the beginning of 2013.
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2 hours ago, COBFInfinity said:
I'm not disputing that it sure seems like GSEs can be treated however the hell any POTUS wants, but securities laws would require any open market purchase program or tender to be announced in advance. Which means the prices wouldn't stay anywhere near 6% of par after such an announcement. All that said, I don't think financial engineering to maximize equity value is part of the plan here.
Thank you for revealing your knowledge on this subject.
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On 10/16/2021 at 11:00 AM, COBFInfinity said:
You were asking if they might be currently doing it. I said no. Now you're saying they could do it in the future. Those are completely different things. Treasury has not given approval.
My original post on it was actually a comment not a question and I wasn't looking for a debate on whether it was actually happening because I don't think it is. But your comment raises an interesting point which is your assertion that the GSEs are constrained from taking certain actions. I view the GSEs as de facto extensions of the Biden administration given the SCOTUS ruling, and view them as very unconstrained given the SCOTUS ruling. I see any action or inaction as more of a willful choice of the administration, rather than lawful constraints. Perhaps I'm wrong about that. But who would stop the administration from doing whatever the hell they want?
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1 hour ago, COBFInfinity said:
They aren't even allowed to pay dividends, so of course they can't buy the securities. And especially without public notice.
Not the same thing. Besides, with Treasury's approval they can basically do anything.
If they finally decide to make a move (the Admin, that is), then it would be a smart move.
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2 hours ago, COBFInfinity said:
Of course they're not buying back preferred shares in the open market because:
A) Conservatorship rules don't allow it
B) Such a program would need to be made public before it begins.
Not sure where your info comes from... HERA? I know they can't get rid of SPS without Treasury approval.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted · Edited by Wiggins
Probably most of us are aware of that mechanism and that it's still bad. But it's not the same because the money is not actually being spent. That's a huge difference IMO because it shifts the financial incentives. The only way to get the money is to ACT.