typicalvalue

+1 was just going to post this. Michael is smart guy and like most of his thoughts on JPS.

it's not a slam dunk and many will exit but the reasons would be a) the low price b) potential court victories and their impact on stock price even if still in conservatorship and c) Tsy might want to move the ball forward at some point for progress / collect their billions for pet projects. I have no intentions to exit my position. While Yellen/Biden were briefed on the LA, what's to say they don't decide to make another agreement? Here is what I see as to deciding to remain in this investment: (1) Assess the odds of positive court outcomes and account for the length of time for the court to announce a decision. This thread has just the person to do that: cherzeca. If the odds and estimated time to decision meet your value criterion, then stay. (2) Assess the odds that the government will reach a plan and release them and estimate the value based on that plan, including the time elapsed from now to the implementation of the plan. If the value is greater than the current price and the estimated time elapsed meets an obvious criterion for estimating present value of future payments, then stay. (3) Ockham's Razor: Past is prologue and people don't change. The court case will take "forever" and the odds are at best 50-50 that the decision will be positive for current shareholders. Further the Democrats are Democrats and will not be favorable to present private shareholders. Sell, sell, sell and then sell again. Correct process. No comment on conclusion I will do a deep dive in Collins and publish it in a couple of weeks but my assessment that Ps win APA claim is much higher than 50%. This would lead to either a trial or more likely summary judgment motion in lieu of trial. If SJ motion that would be in fall. If trial then later. Decision early 2022? Depends on court calendar. The constitutional claim would be quicker and my view of odds are about 50%. Not because I don’t think Ps case isn’t strong but because scotus was trying to squirm around it in orals. So timeframe is important both in terms of your patience capacity and IRR hurdles but also because the longer this takes the more likely that the effing Ds do something crappy again. Thanks looking out to dig in that piece when its out. Now you are probably the most valuable in this board.

Given that our win maybe depends on SCOTUS, would be nice if @cherzeca could provide us some light on what expects from that and if outcome puts us in a more position of power.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation. My best gin waiting in the fridge in case we have a happy ending LOL

Many of the above make sense. Tomorrow we'll know. Considerating admin reform is dead and just capital buffers are increased, what are your takes on SCOTUS decision?

If that's true would be just allowing more retained earnings and maybe ending the NWS if we are lucky. So we have to wait till scotus to decide our fate and admin reform is dead.

The main conclusion is that everyone reasoning is valid until mnuchin acts/20th of jan. Market is the smartest one and has priced as if Mnuchin dosent acts. Wait and see

Mnuchin returning early from its trip. Show time begins.

*salutes* These seems to undoubtedly be the right move at these prices. Just to review as its easy to let the market guide you not serve you on slow news days. A quick review of recent history reported regarding Mnuchin. https://www.wsj.com/articles/fannie-freddie-overseer-seeks-to-end-federal-control-before-trump-leaves-11605873600?mod=article_inline "The Treasury secretary must agree to any move to alter the terms of either the companies’ bailout agreement or the government’s stakes. One person familiar with the effort said Mr. Mnuchin is supportive of locking in a path to private ownership but mindful of steps that could disrupt the housing-finance market." "Mr. Calabria has met twice recently with Mr. Mnuchin to discuss an expedited exit of the companies from government control, most recently the week of Nov. 9, according to people familiar with the meetings, which also involved Larry Kudlow, the director of the White House’s National Economic Council. Mr. Mnuchin was noncommittal about the push, the people said." https://www.bloomberg.com/news/articles/2020-12-10/mnuchin-says-he-s-likely-to-back-changes-to-fannie-and-freddie Speaking to reporters on Wednesday, Mnuchin said he supports amending the companies’ bailout agreements “to set them on the right direction.” Revamping the accords, established after the government took control of Fannie and Freddie at the height of the 2008 financial crisis, is crucial to releasing them from U.S. control. Federal Housing Finance Agency Director Mark Calabria, Fannie and Freddie’s regulator, has recently pushed for a sweeping amendment that would set them on an irreversible path to leave conservatorship, according to people familiar with the matter. “We’re going to create a blueprint,” said Mnuchin, adding that he had spoken to both Republicans and Democrats in the past few weeks. At a minimum we have weak hands leaving with the recent rumors of Mnuchin leaving and I believe the market pricing in a "lite" 4th PSPA that does not eliminate the Sr Preferred but only raises the retained earnings cap. This certainly would hamstring Calabria and certainly does not set them on a path anymore then they are now. Those who have followed along know the unlikelihood of locking in a path to private ownership as Mnuchin says with the Sr. Preferred still in place. So we wait. Only 9 business days left for the crystallization event to occur. Mnuchin comes back the 11th. Let's see if we are in endgame, or we have to rely on the fairness of justice. The pretty good thing is that the downside of not doing anything is pretty priced in, so the only thing left is waiting.

I assume you saw Gasparino float this on Twitter last night. I don't think anyone here knows for sure what would happen to PSPA amendment, but the odds that it occurs clearly plummet if Mnuchin is no longer Secretary, whatever the reason. Mnuchin was kind enough to put us at ease overnight (https://www.timesofisrael.com/netanyahu-calls-rampage-in-dc-disgraceful-doesnt-mention-trump/): "Mnuchin indicated that he would not be resigning from his position in light of the attack on the Capitol, as Deputy National Security Adviser Matt Pottinger did Wednesday. “I look forward to getting back to Washington, DC, with our continued work on the transition,” he said. Yes saw that and was pretty scared. Having heard that comment back to 13 days left to act.

One question that is now on my head that maybe some of you could provide some light to me. What if steve mnuchin resigns? Other treasury officials can execute or its game over for admin reform. Thanks and gl to all.

Mr. Market agrees with all of you guys, maybe im hopeless but still time.

Calabria interviewed on Friday the 22nd of Jan. Sure will be talking about a failed attempt to recap the GSE's (for those that are doubting a PSPA amendment *kidding*) https://www.crefc.org/cre/content/events/January-Conference/2021/January_Conference_2021.aspx?WebsiteKey=105b6c32-4dc8-4e9f-8ba4-8b92bdce1c9e&CCOMain=2&_zs=axRfO1&_zl=O1K56&DC_Symposium=3#DC_Symposium Also, Mnuchin on travel until the 10th of this month, so I don't see it happening this week

Mark Calabra interviewed in 1/2 weeks by Tim Rood On the hill. Good hint that things will happen before that interview

Great slide deck summarizing the investment.

23 days to be disappointed. Just leaving it here. Another week in front of us.

https://www.fhfa.gov/mobile/Pages/public-affairs-detail.aspx?PageName=FHFA-Issues-Notice-of-Proposed-Rulemaking-on-Enterprise-Resolution-Plans.aspx

Lastest from BI

Could be pure speculation, or who knows.. Today seems a good spot.

A lot of timelines have been thrown around - the last date for conclusion discussed here was 12/9. I don’t know how you can get 100% confidence that something will happen between now and mid January. My own assessment of the probability would be less than 50% for sure. I also think that all those leaks ( sitting on his desk waiting to be signed ) are probably worthless. At this point anyone has its arguments belive on one side or another (no one is right or wrong until 20th of january). Taking account GSEs reform history one should think this wont be done, but I think this will get done given all past months nuggets.

That's a good exercise to do. For me the question that's given me more headaches is what is baked in today's prices. Pfds clearly trade at distressed levels, cannot understand given PSPA trumpets are more loud than ever. Market cannot be that retarded. What do you think Mr. Market is telling us?

The plan is sitting on Mnuchin's desk right now ready to be signed. More: Wall Street bankers tell @FoxBusiness that the framework is on the desk of @stevenmnuchin1 and it has input from @MarkCalabria. No immediate comment from @USTreasury or @FHFA. Unclear if and when it will be released cc @FannieMae @FreddieMac $FNMA $FMCC will discuss at 345 At this point Q is what will include? Seems market is pricing a soft PSPA or whatever we can call this.

See Bloomberg Intelligence's take attached... thanks Luke! Always helping :)

Having read more patiently Ackerman's article this a deliberated piece of misinformation. It just uses Mnuchin past interview sentences that are more dubious on lame duck action and skips like "changes that he would likely make" regarding PSPA. So it's just an opinion that adds no new info to the table, and has no direct source regarding the headline. How easy is to manipulate markets when you have voice...

pfds getting smashed at the moment. If Ackerman is right this is game over.