FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[merkhet]

I think you are taking the "not seeing" part too literally. It is more that a person might give a heavier weight to favorable aspects of a thesis and a lighter weight to unfavorable aspects of a thesis -- regardless of what the objective weighting might be. That is one of the key takeaways from Tversky & Kahneman. Alternatively, you can read Dan Kahan's research (http://yaledailynews.com/blog/2013/09/24/political-beliefs-affect-objectivity/) on internal biases towards objectivity.

 

Two men can see through the same window, and one can see the stars while the other sees the mud. It does not mean that either of them has an eyesight problem.

 

But we can take this offline so as not to muck up the Fannie thread. You have my email.

[hardincap]

Interesting filing (courtesy of Peter Chapman):

 

Ms. Robinson advised the JPMDL yesterday that Judge Thapur in Kentucky has indicated he's:

 

(A) ready to rule on the government's motions to dismiss pending in his court if Ms. Robinson's case is not transferred; and

 

(B) happy to oversee the consolidated litigation if the MDL Panel so chooses.

 

A copy of Ms. Robinson's filing is attached.

 

does this necessarily imply that thapur will dismiss the govnt's mtd?

[Guest cherzeca]

@merkhet

 

i agree with your degrees of emphasis point.

 

@hardincap

 

no one really knows what this means.  one can speculate that he would deny (which i believe he should do based upon my analysis) but he may pull a lamberth and grant the mtd.

[hardincap]

wouldnt granting the mtd be inconsistent with b)?

[Guest cherzeca]

@hardincap

 

no.  he may be of a view that all of the cases should be dismissed and he's happy to do it.  drank lamberth kool aid.

[merkhet]

@hardincap

 

no.  he may be of a view that all of the cases should be dismissed and he's happy to do it.  drank lamberth kool aid.

 

Yea. The implication is that there wouldn't be a reason to move to Kentucky if he was going to dismiss the original case given that it just means that he'd take on an increased case load, but the alternative theory is he could just dismiss all of them on 4617(f).

[Guest cherzeca]

@hardincap

 

it is hard to forecast what the multi-district panel will do. but after having read briefing, it seems to me the most interesting thing was in the hindes/jacobs opposition brief, which pointed out that the whole purpose of centralizing cases is to locate all the cases where an existing case is pending and where most sensible/convenient etc. and because lamberth granted mtd, there is no existing case in DC to consolidate with.  it is likely that the multi-district panel will decide this motion before appeals court decides, so there should still be no case pending where fhfa wants to consolidate, and i think if panel wants to consolidate cases, the ky venue does make sense given dc is barren...although hindes/jacobs point out that their case should stay where it is because of the importance of the de/va corp law questions 

[doughishere]

The soufflé is in the oven there's nothing that can be done any more...make your bets live with the consequences.

 

 

 

 

At the risk of sounding passé..of mice and men

[Luke 532]

@hardincap

 

no.  he may be of a view that all of the cases should be dismissed and he's happy to do it.  drank lamberth kool aid.

 

Yea. The implication is that there wouldn't be a reason to move to Kentucky if he was going to dismiss the original case given that it just means that he'd take on an increased case load, but the alternative theory is he could just dismiss all of them on 4617(f).

 

It's interesting that Judge Thapar mentions in his filing that he agrees with the plaintiff that "justice delayed is justice denied."  Image attached.

[merkhet]

@hardincap

 

no.  he may be of a view that all of the cases should be dismissed and he's happy to do it.  drank lamberth kool aid.

 

Yea. The implication is that there wouldn't be a reason to move to Kentucky if he was going to dismiss the original case given that it just means that he'd take on an increased case load, but the alternative theory is he could just dismiss all of them on 4617(f).

 

It's interesting that Judge Thapar mentions in his filing that he agrees with the plaintiff that "justice delayed is justice denied."  Image attached.

 

Sure, but he could view justice through the eyes of the government.

 

Always remember, no man is the villain of his own life story. There are always people on the other side who believe just as fervently that they are on the side of righteousness.

[Steve_Berk]

yeah, that could be the equivalent of judicial trash talk, too. I've seen it more than once.

 

@hardincap

 

no.  he may be of a view that all of the cases should be dismissed and he's happy to do it.  drank lamberth kool aid.

 

Yea. The implication is that there wouldn't be a reason to move to Kentucky if he was going to dismiss the original case given that it just means that he'd take on an increased case load, but the alternative theory is he could just dismiss all of them on 4617(f).

 

It's interesting that Judge Thapar mentions in his filing that he agrees with the plaintiff that "justice delayed is justice denied."  Image attached.

 

Sure, but he could view justice through the eyes of the government.

 

Always remember, no man is the villain of his own life story. There are always people on the other side who believe just as fervently that they are on the side of righteousness.

[hardincap]

this is what spooks me about investing in fnma. if the fate of the nws rests largely on the personal whims of the judges rather than an objective analysis of the law (if that is even possible), where is the margin of safety? berk claims the mos rests on the fact that fnma is irreplaceable, but for shareholders to do well, the nws has to end somehow (and this doesnt necessarily follow from fnma being irreplaceable?). the only two ways the nws ends is a) judges rule for the Ps or b) govnt releases fnma on its own accord

[Mephistopheles]

this is what spooks me about investing in fnma. if the fate of the nws rests largely on the personal whims of the judges rather than an objective analysis of the law (if that is even possible), where is the margin of safety? berk claims the mos rests on the fact that fnma is irreplaceable, but for shareholders to do well, the nws has to end somehow. the only two ways the nws ends is a) judges rule for the Ps or b) govnt releases fnma on its own discretion

 

The mos is that there are multiple judges and multiple aspects of the law that are being challenged. i.e. we can lose the APA and fiduciary duty claims but can still win on the Fifth Amendment Takings claim, or on the Delaware corporate law claim, etc.

[Guest cherzeca]

this is what spooks me about investing in fnma. if the fate of the nws rests largely on the personal whims of the judges rather than an objective analysis of the law (if that is even possible), where is the margin of safety? berk claims the mos rests on the fact that fnma is irreplaceable, but for shareholders to do well, the nws has to end somehow. the only two ways the nws ends is a) judges rule for the Ps or b) govnt releases fnma on its own discretion

 

The mos is that there are multiple judges and multiple aspects of the law that are being challenged. i.e. we can lose the APA and fiduciary duty claims but can still win on the Fifth Amendment Takings claim, or on the Delaware corporate law claim, etc.

 

i would agree that there is more to an investment in fnma than the perry appeal outcome.  it is very important to realize that even if perry appeal simply remands back for further fact finding, the appeals court logically must deny fhfa's (and judge lamberth's) reading of the anti-injunction provision, which opens up hindes/jacobs to defeat the motion to dismiss filed agianst it (assuming judge, whoever that would be, follows perry appeals court).

 

but i also think you have to look at fnma as not having a margin of safety.  there is a difference between an investment with a margin of safety and a speculation, and i would put fnma in the latter category.  if your portfolio is mostly in indexes and value investments, then i think there is room for a flyer, and i think fnma is a very interesting flyer.   

 

yes i believe fnma will prevail on legal merits.  yes i think it is impractical to replace the GSEs. but mos? i think not.

[Guest cherzeca]

excellent analysis by the real tim howard:  https://howardonmortgagefinance.com/2016/05/02/getting-from-here-to-there/

[Luke 532]

excellent analysis by the real tim howard:  https://howardonmortgagefinance.com/2016/05/02/getting-from-here-to-there/

 

great quote...

I would not rule out reversal, but believe it more likely that the Perry Capital case will be remanded to Lamberth’s court, with instructions to develop a complete administrative record. Remand would allow the net worth sweep to remain in place for a while longer, but it still would not be a good development for the government. It would mean that in both the District Court and Judge Sweeney’s Federal Court of Claims, judges will have opined that facts matter. And if facts matter, what Treasury and FHFA did with Fannie and Freddie in 2012 with the sweep, and currently are doing with the companies in their management of them in conservatorship, at some point will be judged to be illegal. The only question is when.

[doughishere]

Carneys latest.

 

http://blogs.ws.com/moneybeat/2016/05/02/freddie-mac-may-need-more-taxpayer-money/

 

But this shouldn’t be looked at as a new “bailout.” It’s just the way the company is set up these days.

 

"A rose by any other name would smell as sweet." Shakespeare was a smart man.

[Luke 532]

Mel Watt and Eva Clayton were elected to the House from North Carolina at the same time.  Here's her piece on releasing the GSE's...

http://www.huffingtonpost.com/eva-m-clayton/weve-fixed-fannie-and-fre_b_9821132.html

[doughishere]

I thought Rosner had a good tweet the other day....i know its not that simple but i thought it was a good point.

 

As largest shareholder in 2 public #GSEs, is @USTreasury in possession of material non-public info? Where is exemption?

[hardincap]

excellent analysis by the real tim howard:  https://howardonmortgagefinance.com/2016/05/02/getting-from-here-to-there/

 

great quote...

I would not rule out reversal, but believe it more likely that the Perry Capital case will be remanded to Lamberth’s court, with instructions to develop a complete administrative record. Remand would allow the net worth sweep to remain in place for a while longer, but it still would not be a good development for the government. It would mean that in both the District Court and Judge Sweeney’s Federal Court of Claims, judges will have opined that facts matter. And if facts matter, what Treasury and FHFA did with Fannie and Freddie in 2012 with the sweep, and currently are doing with the companies in their management of them in conservatorship, at some point will be judged to be illegal. The only question is when.

 

im not sure how much weight to put in this comment. he is an expert in fannie mae's financials but the legal cases are an entirely different matter--he admits as much and caveats his comments accordingly. his inside knowledge of the internal politics of the gses, as well as his conviction that fannie mae is irreplaceable, however, are very helpful

[Luke 532]

There seems to be notable articles coming out on a near daily basis that question the government's actions.  I like where this is headed.

[merkhet]

There seems to be notable articles coming out on a near daily basis that question the government's actions.  I like where this is headed.

 

The George Will article helps a lot.

[doughishere]

http://www.delawareonline.com/story/opinion/columnists/2016/05/03/misadventures-fannie-and-freddie/83876844/

 

The misadventures of Fannie and Freddie

George F. Will 1:54 p.m. EDT May 3, 2016

 

and the gem..

 

After the Revolutionary War, many state debts were bought by speculators at steep discounts from the original purchasers, who feared that the states would not pay face value. The buyers, however, wagered correctly that the federal government would assume the debts and pay at par in order to establish the nation’s creditworthiness. Alexander Hamilton successfully argued for assumption. Thomas Jefferson and his allies reluctantly acquiesced in exchange for a more southern location for the nation’s new capital. Which is why Washington is where it is. Fannie’s and Freddie’s misadventures illustrate why Washington is what it is.

 

Murica'.

[Guest cherzeca]

3 months since last filing (Ps reply to govt's response) on motion to compel.  in the interim, judge sweeney received and ruled on motion to lift seal on certain perry exhibits, so we know she can be timely.  one would think she will rule on motion to compel soon.

[merkhet]

3 months since last filing (Ps reply to govt's response) on motion to compel.  in the interim, judge sweeney received and ruled on motion to lift seal on certain perry exhibits, so we know she can be timely.  one would think she will rule on motion to compel soon.

 

Yea, I'm not sure what the hold up is at this point...