COBFInfinity

Trump signed an executive order to create a sovereign wealth fund. I have no idea if POTUS can do that without Congress, but in any case I can't help but hear Bessent say this and not think the GSEs are at least in consideration here. "We're going to monetize the asset side of the U.S. balance sheet for the American people," Bessent said. "There'll be a combination of liquid assets, assets that we have in this country as we work to bring them out for the American people."

But Ackman's logic rests on the assumption that the market prices the stocks at a 15 P/E with SPS deemed repaid, and as low as a 5 P/E with SPS conversion. Is Treasury going to buy into that argument? Seems like a stretch to me.

"Making everyone happy" is not required. For example, common shareholders have no legitimate argument that the SPS be written off in any way - they just want that to happen so that they get more of the company. My base case assumption is that common ends up with very little unless Bessent implies otherwise at some point, so satisfying the desires of common shareholders doesn't play into my expectations at all. They could easily lose 80-90% of current stock value and the end of the conservatorship can still occur.

As I read the daily news about Trump wanting to annex other countries or ban windmills, with not a hint of him caring about Fannie Mae or Freddie Mac, I do ponder whether this thread will still be going 4 years from now and the elusive 10-bagger still out there somewhere...

Well, we don't actually know Bessent's views and I think he's more important.

Whalen has entrenched views, as do many others. It just shows how critical it is that Treasury Secretary and FHFA Director are either a) entrenched in favor of ending the conservatorship or b) at least pragmatic enough to review all options. For example, Calabria supported ended the conservatorships, but his entrenched belief that the GSEs massive writedowns post-conservatorship were legitimate only served to help keep them in conservatorship due to excessive capital requirements. Having said that, I think wild price swings are to be expected regardless of whatever early posturing the new Admin takes. That, of course, is nothing new for these securities.

As far as I know, no one at Treasury has ever given validity to the 10% moment, so I think it's meaningless. SCOTUS gave it's stamp of approval to the Net Worth Sweep, so Treasury gets all the earnings and there is no cap on rate of return. And since Treasury gets all the earnings ON TOP OF an outright 80% warrant, my cautious view is that Treasury should be assumed to get about 100% of the common stock, prior to an offer to convert JPS to common at around par value. Mr. Market clearly sees it differently, because the common shares are trading above $0.01. But for my taste, the common is untouchable.

The SPS + warrants for 80% of common means the Treasury already controls 100% of the common value. So while preferred stocks have some contractual rights protecting them, you have to come up with some sort of compelling argument why Treasury would be willing to share any material value with existing common shareholders.

I'm well aware of the current risks. What you said is, "Wait until all the restructuring risk is gone and then buy." At that point it's just another stock, with all the uncertainty removed, so there's no longer an expectation of above-market returns.

No, this is different than the question of whether they WILL be released, and on what terms. But if they are eventually released and you wait until after that has occurred to buy, the market prices will be pretty fairly valued before you get there.

Huh? If you wait until release, you will quite obviously be too late to get any material gains.

I opened the link and saw the message and formatting and was like, "Is Whitney Tilson the new Porter Stansberry or something? I'm not even going to bother starting that video." I decided to just scan the page for a few seconds before closing it and...I see it IS a Stansberry production! LOL. OMG, how embarrassing for Tilson.

Wait...18-19% of par? Did I miss something? I thought there was one case with damages and it was like 1-2% of par.

Speaking of the past year, Fairholme Funds has liquidated almost all of its already greatly reduced GSE preferred position (maybe all of it since the May 31, 2024 holdings show just a sliver left over.) One of the great believers has finally thrown in the towel.

I don't know that we can claim Calabria was "well meaning" considering his ongoing motivation to claim that the GSEs lost massive amounts of money in 2008, and he now throws in 2020 for good measure. He may have had an interest in privatizing the companies, but his ideologically driven inaccuracies didn't make it easy.