valuecfa

It could just be to not have to sell as much holdings as the fund meets redemption requests. Not everybody likes such large concentrations in harry names. I think the large positions in the likes of mbia, sears, and prefs have worried even the most loyal of his shareholder base that believe he is taking on too much risk these days

I believe Buffett buys bonds too, and manages Berkshire's duration risk according to his view on where interest rates are likely to go. Duration management is an important tool in fixed income investing. I think the better value on the yield curve is at the 10yr plus maturity He does, but he is also not capitalized with 100% equity like most of us. I'd rather wait for a better spot then try to get some short term MTM gains on the 10 year. But that's just me. GL. You are probably right. Wait for a better opportunity if it comes. I'm only talking about "beginning" to extend duration(approx 5% of portfolio) not making it your core position within you fixed income allocations.

I don't think the high yield market is attractive and prefer duration risk to credit risk. Likely there is no catalyst for nav gap to close on most CEFs

I've read it. Thanks. I do consider Hoisington a better guide on duration management then Buffett, Gross, etc

Depends who at Pimco you are talking to. I'm going to a Pimco presentation in about 2 weeks, and I happen to be friends with this particular manager that's giving it, and he said much of his presentation will focus on the value in 10yr + maturity munis

I believe Buffett buys bonds too, and manages Berkshire's duration risk according to his view on where interest rates are likely to go. Duration management is an important tool in fixed income investing. I think the better value on the yield curve is at the 10yr plus maturity

I expect to see the 10 year well below 3 percent at some point in the next 6 months, despite the taper and taper talk

Then how did people know that he bought those preferreds? If he didn't say it, people won't know, right? Also there are a few preferreds. I am wondering which is the one that he bought, though I think it probably makes sense to just buy the most liquid ones. Thanks a lot! Any way to know his cost basis? Just looking at one series of one fund, and it looks like he bought at ~5-10% cheaper than the current prices on the preferreds

Is it time time to allocate a portion of the portfolio to long duration treasuries?

http://www.sec.gov/Archives/edgar/data/1096344/000119312513326872/d540362dncsrs.htm Then how did people know that he bought those preferreds? If he didn't say it, people won't know, right? Also there are a few preferreds. I am wondering which is the one that he bought, though I think it probably makes sense to just buy the most liquid ones.

Just noticed that... continued: The Fund’s latest investments in the recovery of homeownership are in the preferred stocks of Fannie Mae and Freddie Mac. Your current mortgage may be backed by Fannie or Freddie – about 60% of new mortgages are. Millions of families depend on them to lower the costs and increase the availability of homeownership. In times of stress, Fannie and Freddie stand to ensure the continued functioning of our housing market. Their twelve thousand employees do yeoman’s work helping to preserve a cornerstone of the American dream. The Fund was able to purchase the preferred stocks of Fannie and Freddie near one-fifth of liquidation values – a significant bargain thanks to market predictions of U.S. Government agencies expropriating their assets. w e see them differently. Fannie and Freddie are successful, publicly traded, shareholder-owned companies just like AIG and Bank of America. Shifting political winds can change their futures, but not alter their pasts. The Fund has filed complaints in the court of Federal claims and the U.S. District court in washington. In our suits, we seek nothing more than the enforcement of existing contractual rights, which require the payment of dividends to Fannie and Freddie preferred shareholders. Our arguments are based on fundamental principles. In America, property ownership is a sacrosanct freedom, guaranteed by our Constitution. In America, we follow the rule of law, not the rule of the crowd. In America, profitable companies honor contracts. Preferred stocks of Fannie and Freddie are a growing opportunity in credit arbitrage. Millions of families depend on Fannie and Freddie to lower the costs and increase the availability of homeownership. In times of stress, Fannie and Freddie stand to ensure the continued functioning of our housing market. Their twelve thousand employees do yeoman’s work helping to preserve a cornerstone of the American dream

Fairholme holding report out. Fairx : 0.4% in Fannie and freddie common 6.5% in the prefs. FAAFX: 0.7% in Fannie/freddie common 11.6% in the prefs FOCIX: nada, but it is interesting to see some JCP debt in there along with all that cash. 11.6% in FAAFX is quite the show of confidence

Without getting into each of them in any detail, i think that there are several logical legal paths that can and will be taken (some stronger than others). Aside from the very relevant legal aspects of the investment, i think the implied price of certain of these securities is underestimating the probability of success. At a much higher price the asymmetry in risk/reward is not there. At current prices, i like the payoff relative to the implied probabilities.

Counsel for Perry Capital: http://online.wsj.com/article/SB10001424127887323309404578617451897504308.html

This guy has no shame.

Hiya Which series have you been buying? I saw a reference earlier in the thread about 17c/$1 but I can't tie this back to the quotes or price appreciation I can see over the last 1.5 months? Thank you - C. FNMAP traded at .154c/$1 today.

FNMAK and FNMAP are even much cheaper than the above today. Are they (the preferred issues) all ranked pari passu? yes, excluding treasury's senior prefs Yes. . . . But in the rare event that the dividends on these are restored, those with a higher dividend rate would be worth more. In a reorganization, they should be worth the same. Exactly. I think a restructuring is far more likely. Though, if these were cumulative it would obviously be a no brainer which ones to choose. Sadly they are not.

FNMAK and FNMAP are even much cheaper than the above today. Are they (the preferred issues) all ranked pari passu? yes, excluding treasury's senior prefs

FNMAK and FNMAP are even much cheaper than the above today.

Frankel covering the lawsuits, which i suspect will only pile up much, much more... http://blogs.reuters.com/alison-frankel/2013/07/10/fannie-freddie-shareholders-demand-lost-dividends-from-u-s-in-new-class-action/ with Fairholme link: http://blogs.reuters.com/alison-frankel/files/2013/07/fairholmevus-complaint.pdf

...with my mind on my money and my money on my mind

valuecfa, what do you think about the recently filed litigation by Perry Capital? I think it has merit. With the prefs currently at 17 cents on the dollar, i think the market is mispricing the probability of success. I doubt the courts will end up being the deciding factor in the investment, but if they are, then this could take some time (recall mbia) I'm on the sidelines but becoming more interested every day. I've often wondered over the last two days or so where the free-market conservatives are -- shouldn't they be shouting bloody murder with the de facto nationalization of Fannie & Freddie? It's an interesting story if only from a political angle. If you don't mind me asking, did you buy a particular series or just a basket? I purchased 3 different series. The more illiquid ones with largest discount to par, ignoring the coupons for the most part. I've been purchasing over the past few weeks, but made what may be my final purchase yesterday. Currently about a 6% position.

valuecfa, what do you think about the recently filed litigation by Perry Capital? I think it has merit. With the prefs currently at 17 cents on the dollar, i think the market is mispricing the probability of success. I doubt the courts will end up being the deciding factor in the investment, but if they are, then this could take some time (recall mbia)

Hopefully only fashionably late, i took a bite of the Fannie Prefs today. Risk/rewards seem favorable despite recent legislative action and general market commentary.

You should edit the thread title in search for the elusive 100 bagger! It will be very interesting to see how the chips fall for the preferreds. A rational argument can be made in favor of the prefs.