merkhet
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Posts posted by merkhet
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why would treasury be cool with a plan that does not redound to common when it owns 80% of common?
Remember, they do not own 80% of the common. They have a provision that allows them to choose the timing of their dilution, which can come before or after a capital raise -- so it's a bit more nuanced than just owning 80% of the common. They own 80% of the common of NewCo, not 80% of the common of OldCo. There could be many steps between OldCo & NewCo.
Moreover, it's possible that OldCo common does okay while OldCo preferreds are made whole at par -- i.e. it's possible for Treasury to do well on its NewCo common while OldCo Common holders merely do okay.
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I'm surprised at the comments about the commons considering Ackman's recent kind words for Corker/Warner. I would note though that one possible interpretation is that common won't be "made whole" to their pre-conservatorship levels (i.e. $75 per share) so they "may not fare as well."
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Chris, Merkhet, Rros - perhaps a moot point, but is there not a different angle here? This case argued (at least that’s what the judge writes) that the agency exceeded its authority because it did something that is not permitted under Delaware law and it assumed all responsibilities, etc. when it stepped in as conservator/liquidator. The judge dismisses this with reference to some other case that says that contravention of other legal schemes is not grounds for equitable relief.
Is there not a more basic point that, i.e. could plaintiffs not simply argue that Delaware law was violated, independent of HERA/agency powers? I presume that would lead into a debate of primacy of federal vs. State law but it seems to me that this question can be settled without getting entangled with HERA, which seems all judges try to do their best to avoid (really odd for me as an outsider that they pretzel themselves to defer to congress, when they are meant to be a third leg of government).
Thanks.
IMO, no. You can’t separate the violation of Delaware law from the exercise of HERA powers; the reason the law was violated was because they exercised powers under HERA.
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Memorandum Opinion attached
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Nice to hear, how he openly supports Trump.
I think he supports some of his policies. I do too (lower corporate taxes I have nothing against, though the way to get there is a different question...). I agreed with some George W. Bush policies too. Pretty different from being a supporter of either guys.. Malone won't go on TV and say negative things about almost anyone, not his style. Go to Barry Diller for that:
https://www.cnbc.com/video/2017/07/12/barry-diller-on-trump-hopefully-will-be-over-soon.html
Would be a terrible idea for someone who does a lot of M&A in the content industry to go on TV and talk trash about Trump given the rumors about AT&T and Time Warner.
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Look shareholders lost in court so SCOTUS is last hope. If denied cert why on Earth would they give shareholders anything? Sure we won a tiny claims damage that Lamberth will award .01 cents as damages and be done with it. Berk punted to SCOTUS before discovery was finished... there's no smoking gun in the documents.
I keep feeling the need to point out that shareholders won in part and lost in part, which goes against the statement that SCOTUS represents shareholders' last hope. (Also, Jacob & Hindes, etc. that cherzeca pointed out.) Whether the claim for breach of contract will end up being large or small can be debated, but it's mildly important to keep the facts straight here.
Also, the case that Fairholme appealed to SCOTUS was in the U.S. Court of Appeals for the D.C. Circuit dealing with the Administrative Procedures Act. It is wholly separate from the case that is being tried before Judge Sweeney's court in the U.S. Court of Federal Claims under a Takings Claim, so it doesn't really matter that discovery is ongoing in the U.S. Court of Federal Claims while Berkowitz et. al. petition for cert based on the APA claims.
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Bought my first stock at age 13 in 1996. I wouldn't call what I was doing "investing" though.
Began really investing in 2008/2009.
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Hume's part of the case was based on breach of contract and breach of the implied covenant of good faith and fair dealing, which, and it seems like people periodically forget this, prevailed in the U.S. Court of Appeals for the D.C. Circuit. Why would he appeal the case to the Supreme Court? He won. They're getting ready to try the case back in the U.S. District Court for D.C.
We affirm the judgment of the district court that the institutional plaintiffs’ claims against the FHFA and Treasury alleging arbitrary and capricious conduct and conduct in excess of their statutory authority are barred by 12 U.S.C. § 4617(f). We affirm the district court’s dismissal of their common-law claims because they were not properly appealed. With respect to the class plaintiffs’ claims, we affirm the judgment of the district court on all claims except for the claims alleging breach of contract and breach of the implied covenant of good faith and fair dealing regarding liquidation preferences and the claim for breach of the implied covenant with respect to dividend rights, which claims we remand for further proceedings consistent with this opinion. -
If the guy did indeed lever a BRK quality position, he made a great move. Many people are terrified of leverage, but if used properly it's a necessity to outperformance. Something like BRK is not going anywhere. So theoretically, if I put 100% of my portfolio in BRK and then with a 1-2% interest charge consistently operated at 1.5-2x leverage buying what I believed where value investments, I'll probably do pretty damn well over the long run.
Hm, I would be careful about this. IIRC, Rick Guerin did something similar, and he ended up selling his Berkshire shares to Buffett @ $40 a piece to satisfy a margin call.
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Nothing has changed in my thinking re the warrants' possible "cram-down" of common stock. Trump likes to get a good deal, and he likes to win. In his mind, in order for him to win, someone else needs to lose -- maybe that's the prior administration, maybe that's common stock holders.
I am significantly more comfortable holding the preferred than common.
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to me, the power of the RNC resolution is that it gives mnuchin cover if he wants to push congress in a certain direction. until this resolution, corker/crapo/hensarling etc could stake out a anti-gse position and be confident that they were defining republican orthodoxy of the gse subject. now they find themselves on the other side of the "official" party position. mnuchin can now clothe himself with this resolution and argue for a result that is close to the moelis blueprint and not be a party outlier, and corker/crapo/hensarling etc now bear the burden of pushing a non-orthodox party position. i say close to the moelis blueprint because that rnc resolution could have been appended as an exhibit to the blueprint.
100% agree with all of this.
@hardin
rnc summit was 8/23-26. apparently posted to rnc website 8/31. still trying to get clarity on whether reps from trump admin/treasury were at summit/voted on resolution.
So this has been on the RNC website the last two weeks and just got found yesterday? Or it was adopted on 8/31 and not posted until yesterday? Given how big of a shift this is the time lag is quite surprising.
Recall that the last two weeks, we've been dealing with two big hurricanes (Harvey & Irma). There was no possible way that this was getting into the news cycle.
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I think people are reading into the footnote. Rule 7.1.1 requires that the parties meet and confer on non-dispositive motions prior to submitting them before the court.
While it's possible that they discussed settlement of the broader issues at the meeting, it's far more likely that they merely discussed figuring out the specific issues concerning this motion at the meeting. And it is not necessarily indicative of an expression of interest in settling.
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Grazie!
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"We are fortunate that two of the most financially sophisticated Senators in Washington, Senators Corker and Warner, have taken the lead on housing finance reform and have suggested that they will put forth new legislation shortly to address this last remaining restructuring of the financial crisis. We believe that this initiative combined with support from the Treasury Secretary has dramatically increased the chances of a favorable resolution for the country and for investors in Fannie and Freddie, including the government, which is not reflected in their current share prices."
uhhh what
Didn't Corker/Ackman set up a meeting with each other at some point and start a dialogue?
Yes, IIRC, it was after the Valeant hearing.
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What I find interesting in the AEI article is the idea that Pollock envisions that the companies would pay some sort of a commitment fee to Treasury to maintain their capital "line of credit," let's call it. Except, what would be the point of doing that instead of doing a combination of a capital raise and/or capital retention as envisioned by the Blueprint?
My read is that he's seeing the writing on the wall re the resolution of the NWS, so he's slowly inching his way back while still trying to hobble the entities w/ the commitment fee and a ridiculously punitive amount of capital requirements.
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This might be OT, but Gates Foundation now accepts donations from anyone. This was not true some time ago, but people have been bugging them to take their money 8), so they have relented.
I have donated some. I may donate more. There are caveats: a large chunk of your money gets redonated to causes/organizations Gates Foundation supports. You can see the list on their site. They still encourage you to donate directly to these organizations (but they will take your money and redonate).
It's good that they encourage people to donate directly as that cuts down on how much goes to a second overhead. Curious why you chose to go w/ The Gates Foundation rather than going direct.
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I wonder if corker / warner's true motives are hurting shareholders or just hoping for more competition and other changes which benefit the banks? If it's the latter then there's likely still room for a win-win if shareholders' expectations are reasonable. I know many will say the former, and that's possible, but are their negative comments (hedge funds, etc) only a mechanism to achieve their goals rather than their core feelings?
It depends on whether Corker takes the attacks on him personally or not. That's my main concern as to how doggedly various groups are chasing down Corker. There's a saying that an animal that is backed into a corner is much more dangerous than one that is not.
FWIW, I do understand the need to put pressure on him. I'm mainly concerned about stepping over the unseen line and turning him feral.
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Splitting up single- & multi-family and having multiple smaller companies sounds like a mix of the Berkowitz & Millstein proposals. Will be interesting to see how they deal with existing shareholders.
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Fairholme had a 31 Mar 2017 filing showing a sale of 3mn FNMAS out of a 62mn position, so down to 59 mn - all numbers approximate.
I just checked the annual & mid-annual 2016 reports, and the Series S position was unchanged amongst all three of the funds, and, as far as I know, Fairholme doesn't report the preferred shares on their 13-F filings anymore.
Do you happen to have a link to the filing or remember where you saw it?
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Didn't see this posted yet - Berkowitz sold some prefs in Q1
Where did you see that?
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Treasury's report on changes to financial regulation is out. (https://www.treasury.gov/press-center/press-releases/Documents/A%20Financial%20System.pdf)
Unfortunately, there's not much talk about how it wants to deal w/ the FHFA provision that was in the Financial CHOICE Act, but there are some interesting differences between what the White House wants and what the Financial CHOICE Act proposes.
https://www.wsj.com/graphics/Dueling-Blueprints/
The biggest departures seem to be expanding the Financial Stability Oversight Council rather than curtailing it, and amending parts of the Volcker Rule rather than repealing it.
We'll see what the Senate comes up with. Hopefully, they too agree on the idea that the FHFA director should be removable at will, and the White House's lack of opinion on that was to make things politically easier.
This report covers the depository system. Subsequent reports will cover the other topics listed above. This report does not cover comprehensive housing reform and the future state of the government-sponsored enterprises, Fannie Mae and Freddie Mac.It's not immediately clear whether there will be a future report from Treasury on the GSEs.
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I read this message board. I have running e-mail conversations with a handful of people. I read the proposals that are put out, but realize they are just that... proposals. And I sit and wait. It's important to realize as a young investor that much of investing is sitting and waiting and doing nothing. You do not need to constantly scrutinize an investment and read-up on it daily. Write down your thesis and read the stuff that impacts your thesis (whether positively or negatively), not stuff that doesn't.
Sure, money being returned would be ideal and probably the right/moral thing to do. With that said, I do my best to separate ideal situations from probable situations.
It's a simple as that. The discussions here are members discussing the likelihood or a multitude of outcomes, but none of that conversation/reading is actually going to change the outcome. It's simply us as investors getting comfortable with the risks/rewards to size the position accordingly. We simply have to be patient and wait for that decision to be made. This is what it means to be a passive participant via stock.
If you want to be the one calling the shots and shaping the outcome - you'd need an activist size stake in the co's, a job at the Treasury, or a job in Congress. Pick your poison. Otherwise, patience and constant re-evaluation are the names of the game.
+1 to both
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I'll take that as a yep!
Take what as a yep?
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When I said every news outlet, I did actually mean every.
Although it is supported by the Trump White House, the bill is unlikely to pass the Senate. Democrats have signaled their ongoing support for Dodd-Frank and view the Choice Act as letting banks “off the hook” for the financial crisis.Even Breitbart, hardly MSM, thinks the bill is unlikely to pass the Senate. (And yes, unfortunately, the byline on this one is John Carney, which I'm sure will spawn shouts of "fake news" here.)
The reason every news outlet is basically unanimous that this version of the bill will not survive the House is that the GOP does not have the 60 votes needed to override a filibuster. That's also why the Senate is moving ahead with its own version of the bill that's different than the House version.
It's a free country, though, so I suppose you can continue to believe what you want to believe.
To be clear, I'd love the FHFA modification to remain in the Senate version. I have no idea if it will or not. That's why I stated earlier:
It will fly through the senate, and Trump has already signed the bill as he suspects he'll be busy golfing that day.
It's not expected to pass the Senate in its current form -- though I'll be curious to see what parts of this bill are retained in the Senate version.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
Anyone else notice that Trump is going to start pushing infrastructure soon? https://www.cnbc.com/2017/12/07/trump-will-start-infrastructure-push-in-january-white-house-officials-say.html
I continue to think that monetizing the warrants will be one of the ways that they pay for the infrastructure plan.