merkhet
-
Posts
3,070 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by merkhet
-
-
I would urge a bit of caution. Recall that while Watt took his directions from Treasury during the current administration, there's nothing requiring him to do so in the next administration. If he is somehow forced out, however, then it's a different story.
-
I chatted with a friend of mine, and the idea seems to be that Bass pitches his funds as insurance. Like, if China goes under, maybe have a little in the fund to protect against it. Etc.
-
My best idea for 2017 is to bite my fingers and make no trades for the first 60-90 days of the year ;)
Why just 60-90 days? :)
-
I think people are overlooking the max win scenario for Trump.
(1) Settle the court cases because the underlying documents show bad faith from government
(2) Vaguely mention the documents as why but don't release them
(3) Let the media foam at the mouth about how this is just a giveaway to cronies
(4) "Succumb" to pressure to release the documents
(5) Slam the "anti-business" Democrats and use it as a cudgel for years
No need for a favorable court decision. Much better this way. They "tried" to keep it out of the public eye, but they had to "correct" the narrative.
-
sen cotton endorses mnuchin: https://www.cotton.senate.gov/?p=press_release&id=560
if there is any hope for dems to disrupt mnuchin, they need to split off very conservative senators like cotton. good to see this PR
Bit of trivia: Cotton used to work @ Cooper & Kirk. :)
-
Another thing to buy at Costco -- contact lenses. So much cheaper!
-
@merkhet
"My focus is currently on whether the EC ends up voting for Trump on Monday."
as i understand it, even if the electors dont follow their state's popular vote, congress can object to any non-complying electoral vote and, given R control over both house, fix the non-complying electoral votes that were cast.
so unless i am misreading, and assuming the Rs in congress dont bolt for HRC, there is a zero % chance trump is not elected
This has been a year of many improbable surprises, so I'm making a few slight Bayesian adjustments.
-
I think deadpsace is thinking about Munger's comments from the Daily Journal meeting earlier this year.
-
@cherzeca, I agree with that. I can see a few ways around it, such as spinning the companies off and leaving behind the Senior Preferred shares the way Millstein envisioned -- which might get NewCos out from under HERA/FHFA
@Flynnstone5, unclear, but I don't immediately see a reason why not -- so long as Ps make a filing to de-designate the documents.
-
There's no set time frame for decisions. (Appeals or Mandamus)
So Millet could potentially just stall indefinitely and P's would simply have no recourse and/or same with other court handling mandamus?
This is getting beyond my general knowledge, but I think that's theoretical mostly true. I suppose there are interlocutory appeals or something procedural that can be done once the wait gets egregious. In general, I think you just asssume judges will do their job...eventually.
But I could be wrong on this, so I'll defer to someone who has more knowledge than me on this matter. Like, someone who clerked federally or something. My focus is currently on whether the EC ends up voting for Trump on Monday.
-
There's no set time frame for decisions. (Appeals or Mandamus)
-
Will he join with the Secretary of Agriculture to build pyramids to store our grain?
-
For some reason I was under the impression that Berkowitz, or someone else, floated the idea that public shareholders just wanted the company back and they didn't care about getting back some of the overpayments made by the GSEs. Ex: If GSE's overpaid by $50 Billion the Senior Preferred would still have their original balance of $187 instead of reducing that balance by $50 Bn to $137Bn.
Apologies if my memory is way off for this one.
I think very similar to that -- Berkowitz floated the idea of buying $1 trillion of assets with $52 billion of equity and borrowing the rest -- giving the NewCo a 5.2% cap ratio. $34 billion would come from making the prefs whole and the remaining $18 billion would be contributed by preferred holders -- likely through a rights offering so that those who didn't want to contribute didn't have to do so.
The remaining $4 trillion would have stayed with the GSEs and the legacy structure would remain.
-
I don't understand how there's much of a difference whether you return the excess payments or not on the senior preferred. Let's say they've overpaid by $187 billion over the last 4+ years versus paying the straight up 10% dividend.
Okay, so you deposit $187 billion into the companies' coffers.
Then you have a capital stack that looks like this:
Gov preferred stock - $187 billion
Jr. preferred stock - $34 billion
Pub. common stock - residual
So it doesn't matter if (A) the $187 billion is used to pay off the senior preferred stock or (B) the $187 billion is given back to the GSEs but is not accrued against the senior preferred stock.
Either way, everyone underneath the senior preferred stock (or who remains in the case of the pay off of the senior preferred stock) is "lacking capital."
It's not like the $187 billion of senior preferred stock magically disappears at the same time that the companies get back $187 billion of cash...
-
What if they just did a rights offering to raise capital? Why do you have to assume they can only raise capital by selling very undervalued shares. This is a retarded analysis from a supposed expert. Makes me suspect malfeasance
A rights offering is, by definition, selling undervalued shares... why would anyone subscribe to a rights offering that's above the price you can currently get on the market?
Also, I think there is very little chance that Mnuchin allows for a release if the companies don't have adequate capital immediately upon release. So my guess is that letting the companies just build capital over time is not likely. Definitely not 8-10 years like Ackman proposed. I could see 2/3 years but that still means there is an equity gap that has to be filled.
-
That would be an awful scenario; I still don't get why that makes sense as a settlement.
Which scenario?
If they deduct the dividends already paid in a settlement, as Fairholme's lawyer suggested
It would be an odd remedy. I personally think that's the lowest case recovery.
-
That would be an awful scenario; I still don't get why that makes sense as a settlement.
Which scenario?
-
I'd chafe at being labeled an expert on anything, but I'd say that Fannie S is not just the most liquid stock but the second highest yielding stock if they happen to turn on dividends again. So some of the discount to Series S & T (T being the highest, IIRC) is likely due to liquidity but also likely due to lower potential yields.
My entire position is in Series S.
-
h/t BTShine for texting me on this
Correction: An earlier version of this story incorrectly stated that Rep. Jeb Hensarling wanted to eliminate Fannie and Freddie. Hensarling wants to get rid of their government charters but not eliminate them as companies.Oh, really, Jeb? Ahem...
The House Financial Services Committee approved a Republican housing bill that would liquidate U.S.-owned financiers Fannie Mae and Freddie Mac and limit government mortgage guarantees....
Hensarling’s legislation would eliminate Washington-based Fannie Mae and Freddie Mac of McLean, Virginia, within five years and replace them with a National Mortgage Market Utility to securitize mortgages. Unlike the Senate bill, the House measure wouldn’t include U.S. backing for securitized loans, though it would let the Federal Housing Administration play an expanded guarantee role in an economic crisis.
He's actually my district rep now that I have moved to Dallas (I think, the map is wonky). Guess I no longer have to write that letter that I'd been planning. Welcome to the club, Jeb.
Looks like both Corker and Hensarling have had a come to Jesus moment.
-
Settlement terms determine whether need congressional approval. Remember mnuchin said relatively fast
Just to add to this, Congress really doesn't have much of a say in terms of approval. Think about it this way, HERA mandates that FHFA be in charge. In actuality, Treasury seems to be in charge. The only way to change this is to modify HERA. Corker tried to pass Jump Start and couldn't do it. He had to slip it into an omnibus spending bill that couldn't be voted down.
Really, all Treasury and FHFA would have to do is agree to modify the terms (Jump Start's language, IIRC, merely deals with selling, disposing, etc. of the senior preferred) of the senior preferred to pay out a zero dividend and wait out the 2018 deadline to call it paid. Alternatively, I've seen a Millstein & Co. presentation that says they should just spin out the company from under the senior preferred and leave the senior preferred as the top layer of a hollowed out shell.
Lots of options here. Almost all of which do not require Congressional approval.
Mainly I think Congress could try to screw shareholders by requiring very high capital ratios, but you could easily move aside from that by spinning them out to a new company and/or breaking them up to smaller companies so that no one cares. (i.e. the Berkowitz proposal)
What's really interesting to me is to look at the Berkowitz proposal in conjunction with some of the numbers that are thrown out in the Ackman proposal. If you're able to keep the cap rate at 5% or lower, and you get some favorable changes to the tax code (also a Mnuchin priority), then you can get a pretty decent ROE on top of which you can slap a multiple and get something higher than par.
But this is all speculation until we see what the restructuring looks like...
-
Congrats to you longs. Think you will have to put up new capital in exchange for warrants/equity? Seems like they will have to make you guys write a check in connection with recapitalizing it just for the optics of a GS alumn Treasury Secretary and a bunch of hedge fund buddies.
I wouldn't be surprised to see rights offerings distributed to preferred/common.
its not over till its over folks
Agree. It's not over until I've heard from a fat lady. But the past few weeks have been a welcome change from the last two years. :)
-
berk sold out of commons, actually. bad timing, but i think he was forced to due to redemptions.
v interesting that paulson has prefs as his largest position. i didnt know it was that big.
Are you referring to the position he sold to Icahn? I know he bought back in after that.. but maybe he sold out again ?
If you refer to Fairholme's recent report from mid-year, they have zero exposure to the commons. (http://www.fairholmefundsinc.com/Reports/Funds2016SemiAnnual.pdf)
And yes, @hardincap, it was their largest position. Of course, this was almost three years ago, so things may have changed since then.
-
Which set of filings for Paulson shows his position? He has like 20 different reporting companies and the only 13Fs I found don't show the holdings.
Not that I've checked, but it's not likely they appear in any of his filings as they are not 13-F securities. It is for this reason they also do not show on Fairholme's 13F.
That's what I thought, but someone mentioned how he's the largest owner of Freddie so I figured it's public. Maybe it's from previous filings? I know Fairholme did away with it but then started showing them again in filings...
Paulson is in the preferreds. I was fortunate enough to get a meeting with him back in February 2014. He said that it was the firm's largest position (though I'm unclear whether that's largest within a single fund or across all funds).
And I have no idea where you guys are getting the idea that Paulson or Berkowitz have added (common or preferreds) since the election. Is this out there somewhere or is it conjecture?
-
probably more like paulson and mnuchin. they've worked together before on indymac, and paulson is the biggest holder of freddie
Yup. Paulson was on the board of Indymac. You beat me to it.
What is Bass Investing In?
in General Discussion
Posted
+1
It's incredibly brilliant and brings to mind ScottHall's thoughts on how some PMs are great marketers while others are great investors. (Occasionally, you have some that are both.)
If you can frame your fund as "insurance," then you earn management fees while losing money steadily because no one expects to make money on their insurance contract. And if/when you have a big year, then it has a two-fer effect because (A) you might make some incentive above your high water mark, and (B) like insurance, people tend to flock into the fund to prevent against the next "cat event."