Packer16 Posted February 19, 2014 Share Posted February 19, 2014 I feel like a lot of people are investing in this based on analysis that is compromised by emotion. (i.e. This is wrong, and I will be vindicated.) If you look at all the incentives involved, they all heavily line up on one side. You are correct and in investing in these types of situations in the past if you have somebody on your side willing to fight and has resources my experience has been good. If these were not present I would not invest in these securities. Packer Link to comment Share on other sites More sharing options...
onyx1 Posted February 19, 2014 Share Posted February 19, 2014 I feel like a lot of people are investing in this based on analysis that is compromised by emotion. (i.e. This is wrong, and I will be vindicated.) If you look at all the incentives involved, they all heavily line up on one side. You are correct and in investing in these types of situations in the past if you have somebody on your side willing to fight and has resources my experience has been good. If these were not present I would not invest in these securities. Packer Agreed. This is a very complicated case and will require years of legal wrangling. Small players, like me, wouldn't stand a chance against the government even with the merits on our side. Fortunately, we have on our side willingness, resources, and some of the highest quality legal teams available. Link to comment Share on other sites More sharing options...
doughishere Posted February 19, 2014 Share Posted February 19, 2014 I feel like a lot of people are investing in this based on analysis that is compromised by emotion. (i.e. This is wrong, and I will be vindicated.) If you look at all the incentives involved, they all heavily line up on one side. Its not a matter of "analysis compromised by emotion." The truth is that the Treasury and FHFA have overstepped their mandate from congress. If the government did what it did as a private investor there would be no question as the value of the common and preferred being higher than where they are today. The facts here are simple. Much has been accomplished since the financial crisis: • Both companies have been stabilized so that investors and nations would continue to lend to them. • Management has been replaced. • Management has returned to the prudent underwriting standards that guided both companies to stability for decades. • Both companies provide affordable financing for tens of millions of Americans and enables them to buy a home to raise their families. • Both companies produce significant cash flow and stable profits. But, of course, in our opinion, much still needs to be done: • The Government’s senior preferred investment must be repaid in full, including a 10% annual return per the terms of the original capital infusion (possible in 2014). • Earnings must be allowed to stay within the companies (not paid out to stakeholders) to build up the capital base. • The companies should start paying the coupons on the pre-crisis preferred shares (reflecting the profitability of both companies). • The warrants to acquire 80% of the stock held by our Government should be sold off to new investors (who can contribute more capital if needed) generating a significant profit that can be used to pay down our national debt. Link to comment Share on other sites More sharing options...
Yours Truly Posted February 21, 2014 Share Posted February 21, 2014 Your move US government... I'm anticipating much more screaming and shouting reported in the media now http://www.bloomberg.com/news/2014-02-21/fannie-mae-to-pay-u-s-7-2-bln-after-quarterly-profit.html Link to comment Share on other sites More sharing options...
doughishere Posted February 21, 2014 Share Posted February 21, 2014 Heres the 10k http://archive.fast-edgar.com//20140221/AA2ZA222H222L2S2222322328L4CZ2225862/ Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 21, 2014 Share Posted February 21, 2014 With Fannie and Freddie Debt Repaid to Taxpayers, Will Uncle Sam Turn Shareholders Into Zombie Investors? http://www.forbes.com/sites/jonentine/2014/02/21/with-fannie-and-freddie-debt-repaid-to-taxpayers-will-uncle-sam-turn-shareholders-into-zombie-investors/ Link to comment Share on other sites More sharing options...
Matson125 Posted February 21, 2014 Share Posted February 21, 2014 Is there a reason why the Freddie mac common is slightly lower than the Fannie Mae common, looking at a chart there always seems to be a slight discount. Is there a better credit profile at Fannie? Link to comment Share on other sites More sharing options...
constructive Posted February 21, 2014 Share Posted February 21, 2014 Is there a reason why the Freddie mac common is slightly lower than the Fannie Mae common, looking at a chart there always seems to be a slight discount. Is there a better credit profile at Fannie? They are different companies. You can't compare share prices and expect it to be meaningful. Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 24, 2014 Share Posted February 24, 2014 Fannie's Fake Victory Lap The mortgage giant's profits don't offset the cost of the financial crisis. http://online.wsj.com/news/articles/SB10001424052702304275304579397452646208162?mod=WSJ_business_MoreArticles Link to comment Share on other sites More sharing options...
bmichaud Posted February 25, 2014 Share Posted February 25, 2014 Nothing new, but Ackman sees 10 to 15X upside in the common in a legal victory: http://blogs.wsj.com/moneybeat/2014/02/23/ackman-sees-big-upside-to-fannie-freddie-bet/ Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 25, 2014 Share Posted February 25, 2014 Fannie Mae Appoints New Chairman Egbert Perry to Replace Philip A. Laskawy, Who Will Retire on March 31 http://online.wsj.com/news/articles/SB10001424052702303880604579405152787239682?mod=WSJ_hp_LEFTWhatsNewsCollection Link to comment Share on other sites More sharing options...
nkp007 Posted February 26, 2014 Share Posted February 26, 2014 Court grants Fairholme discovery motion. http://blogs.wsj.com/moneybeat/2014/02/26/court-grants-fairholmes-discovery-motion-in-fannie-freddie-suit/ Hypothetical discovery: Bruce: Can I see any documents you have related to the 2012 sweep? Government: REDACTED Bruce: Can I see your profitability forecasts for F+F? Government: REDACTED Bruce: Is there anything you're actually willing to show me? Government: REDACTED you! And REDACTED that mother-REDACTED Ackman guy too. Link to comment Share on other sites More sharing options...
doughishere Posted February 27, 2014 Share Posted February 27, 2014 This is huge, nkp Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 27, 2014 Share Posted February 27, 2014 Freddie Mac profit moves U.S. housing bailout further into black http://in.reuters.com/article/2014/02/27/usa-housing-freddiemac-idINL1N0LW10X20140227 Link to comment Share on other sites More sharing options...
nkp007 Posted February 27, 2014 Share Posted February 27, 2014 This is huge, nkp That's what REDACTED said! Link to comment Share on other sites More sharing options...
dowfin1 Posted February 27, 2014 Share Posted February 27, 2014 Attached is a copy of the discovery order. We'll see document demands, frivolous objections, multiple motions to compel/sanctions, and ultimately depositions of DeMarco, Geithner, Lockhart, and Paulson even before any hearing on the dismissal motion. Promises to be a great sideshow. discovery_order_2-26-2014.pdf Link to comment Share on other sites More sharing options...
Yours Truly Posted February 27, 2014 Share Posted February 27, 2014 It's nice to have Ackman/Berkowitz on the "right" side of the trade, hopefully it turns out to be GGP v2.0 Link to comment Share on other sites More sharing options...
tiddman Posted February 28, 2014 Share Posted February 28, 2014 can someone boil down for me why this would be a good investment? And not be thrown on the too hard pile. At first sight it looks pretty complex For me the very simple explanation is that, when the government bails out a company, it is reasonable for them to be repaid the funds required for the bailout plus some reasonable return. But it is not reasonable for them to simply take all future profits forever. There is plenty of precedent for bailouts even before this crisis, both in the US and in other countries. In the US the goal has been to bail the company out but then get it back on its feet, extract a pound of flesh, change management, and then return it to non-government investors. With the Fannie/Freddie bailout the US government changed the script and went from charging a 10% rate on the funds to simply taking all of the profits forever. This is clearly violates the spirit of capitalism that drives our economy. It is even more interesting when you consider that for a long time, banks were actually required to hold preferred stock in Fannie/Freddie on their balance sheets if they wished to do business with Fannie and Freddie. So the government required banks to hold these securities but then stepped in and made them worthless. There will be much debate and wailing and gnashing of teeth over what to do with the companies, but I don't think it's tenable to leave them in this quasi-shareholder-owned state and funnel all profits to the government forever. Whether or not the ultimate resolution provides value to shareholders or not is certainly speculative but if those profits don't go to the government, they have to go somewhere... Link to comment Share on other sites More sharing options...
nkp007 Posted March 3, 2014 Share Posted March 3, 2014 Investor Fires Salvo Against Fannie, Freddie http://online.wsj.com/news/articles/SB10001424052702304585004579415490523879118?mod=rss_economy&mg=reno64-wsj Mr. Berkowitz said last week's letters followed a series of unsuccessful attempts to meet with the chief executives of both companies. "It's easy to see we're not welcome," he said, adding he was still waiting for a response. "If the directors have a pulse and five dollars in a bank account, I think they should be concerned because not responding to me would be bordering on gross negligence," he said. Link to comment Share on other sites More sharing options...
doughishere Posted March 3, 2014 Share Posted March 3, 2014 Pour it on them boys! http://online.wsj.com/public/resources/documents/fanfredletter2030214.pdf Link to comment Share on other sites More sharing options...
doughishere Posted March 3, 2014 Share Posted March 3, 2014 berkowitz is not afraid of taking on.....everyone. He has got to be supremely confident of this to be now taking on the board. Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 3, 2014 Share Posted March 3, 2014 Fannie's Profits May Be Fleeting http://online.wsj.com/news/articles/SB10001424052702304071004579411510434148896 Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 6, 2014 Share Posted March 6, 2014 Here’s one thing the funds buying stakes in Fannie MaeFNMA +3.40% and Freddie MacFMCC +3.70% have right: the two companies aren’t ever likely to run out of customers for their mortgage guarantees. Part of the reason demand for securities backed by Fannie and Freddie isn’t going anywhere is that U.S. financial regulators all but require the largest banks to hold billions of dollars of them. Under the liquidity coverage ratio rules proposed last year, banks with over $50 billion of assets are required to hold a portfolio of “high-quality liquid assets.” They are permitted to fill up to 40% of their liquidity portfolio with securities issued or guaranteed by the very safest foreign sovereigns, the World Bank and its regional clones, and the U.S. mortgage finance giants. The Federal Reserve estimates that banks will need to hold $2 trillion of liquidity assets to meet the requirement. Since Fannie and Freddie paper offers higher yields than most other approved securities, banks are likely to max out their 40% allowance with it. That implies an appetite for around $800 billion. Throw in a 15% haircut to the paper’s value imposed by regulators, and that grows to almost $950 billion. Gives a whole new meaning to the phrase “Government Sponsored Entities.” http://blogs.wsj.com/moneybeat/2014/03/05/wall-street-captivated-by-fannie-and-freddie/?mod=WSJBlog&mod=overheard Link to comment Share on other sites More sharing options...
alertmeipp Posted March 6, 2014 Share Posted March 6, 2014 I sold my remaining pfds (tiny position anyways) - I think the risk outweigh max 2x potential here Link to comment Share on other sites More sharing options...
bmichaud Posted March 6, 2014 Share Posted March 6, 2014 I bet 'ole Bruce disagrees :) Link to comment Share on other sites More sharing options...
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