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

[hardincap]

man i would pay real good $ to see the look on the faces of parrott, stevens, et al as they read this opinion damning the nws...

[Guest cherzeca]

man i would pay real good $ to see the look on the faces of parrott, stevens, et al as they read this opinion damning the nws...

 

especially Parrott whose emails figured prominently in Judge Willett's analysis

[hardincap]

yup. that was delicious to read

[allnatural]

I just finished the dissenting opinion on APA claim and feel a lot more comfortable about our odds in SCOTUS if this gets there. The dissent was extremely lazy (only 5 pages, mostly saying they agree with the sister circuits) and unpersuasive as it didn't address any of the majority's carefully thought out points as to why the NWS violates HERA. If SCOTUS judges had to choose between these two opinions written today, shareholders should do fine.

[hardincap]

The head of fhfa agrees nws is illegal. This is not going to scotus. It will be settled. Mnuchin and Calabria got the political cover they needed

[Guest cherzeca]

The head of fhfa agrees nws is illegal. This is not going to scotus. It will be settled. Mnuchin and Calabria got the political cover they needed

 

it will be interesting to see how this decision is referred to by calabria and mnuchin, as well as the senators, at SBC....assuming they dont just ignore it at the SBC

[hardincap]

Yes, Tuesday can’t come soon enough. I’m guessing they skirt the topic though and keep it focused on the contents of the report. But little doubt in my mind Mnuchin and Calabria let out a sigh of relief today, as their jobs got significantly easier

[james22]

Funny, still no news coverage.

[hardincap]

the two most important players here are head of fhfa and head of treasury

 

the former strongly condemned the nws in writing, and the latter has spoken derisively of the conservatorship in general and has seen a close friend (lampert) and a business partner (paulson) get screwed by it.

 

these guys are the least likely pair to continue the fight over nws in court

[DRValue]

This decision may make an appearance at the hearing on Tuesday. I'd expect treasury and fhfa to lean heavily on it when they get the inevitable accusations of shareholder windfalls and crony capitalism.

 

The timing of the release of the decision irks me a bit. They waited to see what treasury said in the plan to decide what to release (based on cherzeca's analysis,  which I agree with). Isn't justice blind?

[DRValue]

No tweets re en banc from gasbag... I wonder what side of the fence he's on?

[Luke 532]

The head of fhfa agrees nws is illegal. This is not going to scotus. It will be settled. Mnuchin and Calabria got the political cover they needed

 

+1

[TwoCitiesCapital]

Doesn't this do A LOT more for the commons than the preferred at this point?

 

The preferred are good for par - we know that now that the NWS will be stopped. But if the NWS was illegal and a settlement would return some of those proceeds back, that means less dilution to the common as those billions come back as capital.

[Gregmal]

Doesn't this do A LOT more for the commons than the preferred at this point?

 

The preferred are good for par - we know that now that the NWS will be stopped. But if the NWS was illegal and a settlement would return some of those proceeds back, that means less dilution to the common as those billions come back as capital.

 

Probably yes. However arent there quite a few scenarios where the preffereds are worth way more? Off the top of my head some of these things have like 8% yields at par, no? So in a scenario where the capital structure is not completely rearranged, or the dividends get turned back on, or paid in arrears, in even preferred get converted to common, there would be scenarios where FMV is significantly in excess of par, or so I would think.

[Midas79]

Doesn't this do A LOT more for the commons than the preferred at this point?

 

The preferred are good for par - we know that now that the NWS will be stopped. But if the NWS was illegal and a settlement would return some of those proceeds back, that means less dilution to the common as those billions come back as capital.

 

I know it's just going to sound like I'm talking my book here, but I am of the opposite opinion. The biggest uncertainty behind the prefs gaining value is whether or not the NWS will end and how quickly. The timeline for that seems to have been accelerated by yesterday's opinion.

 

The commons, on the other hand, have a lot of uncertainty as to how much they will be diluted as part of the recap and release process. The opinion does nothing to alleviate this. In fact, I would go so far as to say that the remand, as opposed to an outright reversal with remedy, is bad for them because it allows Treasury to monetize the seniors, most likely by converting them to commons as they did with AIG.

[DRValue]

Doesn't this do A LOT more for the commons than the preferred at this point?

 

The preferred are good for par - we know that now that the NWS will be stopped. But if the NWS was illegal and a settlement would return some of those proceeds back, that means less dilution to the common as those billions come back as capital.

 

I know it's just going to sound like I'm talking my book here, but I am of the opposite opinion. The biggest uncertainty behind the prefs gaining value is whether or not the NWS will end and how quickly. The timeline for that seems to have been accelerated by yesterday's opinion.

 

The commons, on the other hand, have a lot of uncertainty as to how much they will be diluted as part of the recap and release process. The opinion does nothing to alleviate this. In fact, I would go so far as to say that the remand, as opposed to an outright reversal with remedy, is bad for them because it allows Treasury to monetize the seniors, most likely by converting them to commons as they did with AIG.

 

I don't think they can convert seniors to common without refunding the cash paid by GSEs because if they don't that would mean the govt gets paid twice. Lawsuits mean seniors are paid down. It should be better than that for plaintiffs as dividends shouldn't be allowed but I don't think that'll happen.

[Guest cherzeca]

thread: 

[Ahab]

Any guesses for what the stock does on Monday?  8)

[Luke 532]

Any guesses for what the stock does on Monday?  8)

 

I'm more interested what the stock does two weeks from now.  I bet we get either NWS ended/modified or a settlement by then.

[Luke 532]

“No one knows except it will be a minimum of $17-$18 based on Moelis, but not on Monday”

 

Any guesses for what the stock does on Monday?  8)

 

Emily, for the love of everything good and holy, would you please reference your quotes?  Thanks in advance.

[muscleman]

Any guesses for what the stock does on Monday?  8)

 

I'm more interested what the stock does two weeks from now.  I bet we get either NWS ended/modified or a settlement by then.

 

 

Likely a gap up and then up 30%.

This is the short coming of my current approach. When shocking news comes to the market, it disrupts any TA. I am fully aware of this short coming and accept it. I’ve also seen countless times when it goes the other direction like the Perry ruling.

 

[Midas79]

Any guesses for what the stock does on Monday?  8)

 

This is going to sound strange, but I think it will be rather flat overall. The weekend is enough time to digest the fact that the en banc panel did not grant the plaintiffs the big awards some were expecting. It's the same as the Treasury plan, many who bought in hopes that Treasury would say something really shareholder-friendly were disappointed.

 

I can't put my finger on it, but for some reason I am underwhelmed by the opinion. I think it gives plaintiffs more settlement leverage but that's it. If the case ever gets to trial it means that the administration isn't nearly as committed as we thought to recap and release.

[rros]

Any guesses for what the stock does on Monday?  8)

 

This is going to sound strange, but I think it will be rather flat overall. The weekend is enough time to digest the fact that the en banc panel did not grant the plaintiffs the big awards some were expecting. It's the same as the Treasury plan, many who bought in hopes that Treasury would say something really shareholder-friendly were disappointed.

 

I can't put my finger on it, but for some reason I am underwhelmed by the opinion. I think it gives plaintiffs more settlement leverage but that's it. If the case ever gets to trial it means that the administration isn't nearly as committed as we thought to recap and release.

Midas, don't you think that the wording "prospective relief is the proper remedy" will provoke a buying stampede on Monday morning? Doesn't this mean that whoever held in the past and sold is out of luck but whoever buys on Monday and holds is in possession of the lucky ticket, whenever the rewards come? Sort of a sprint to get in through a really narrow door... buy first, ask questions later.

[no_free_lunch]

https://www.wsj.com/articles/investors-notch-victory-over-fannie-freddie-profits-11567879840

 

 

Funny, still no news coverage.

 

Yes, also an article in bloomberg.

 

Fannie Mae and Freddie Mac investors won a big victory in their long battle to reap benefits from their stakes in the mortgage giants with a court ruling letting them pursue claims that the U.S. sweep of the companies’ earnings is illegal.

..

“Congress created FHFA amid a dire financial calamity, but expedience does not license omnipotence,” a majority of judges on a 16-member panel said in Friday’s ruling.

 

The message is getting out there.

 

I think shares are up strong on Monday.  I have no idea where they end up but if they are flat or down I am buying more.

 

https://www.bloomberg.com/news/articles/2019-09-06/fannie-freddie-investors-get-key-win-in-bid-to-end-profit-sweep

[orthopa]

Any guesses for what the stock does on Monday?  8)

 

This is going to sound strange, but I think it will be rather flat overall. The weekend is enough time to digest the fact that the en banc panel did not grant the plaintiffs the big awards some were expecting. It's the same as the Treasury plan, many who bought in hopes that Treasury would say something really shareholder-friendly were disappointed.

 

I can't put my finger on it, but for some reason I am underwhelmed by the opinion. I think it gives plaintiffs more settlement leverage but that's it. If the case ever gets to trial it means that the administration isn't nearly as committed as we thought to recap and release.

Midas, don't you think that the wording "prospective relief is the proper remedy" will provoke a buying stampede on Monday morning? Doesn't this mean that whoever held in the past and sold is out of luck but whoever buys on Monday and holds is in possession of the lucky ticket, whenever the rewards come? Sort of a sprint to get in through a really narrow door... buy first, ask questions later.

 

My thinking is kind of along the same lines of Midas. Shit, I would love a huge up day monday but to me, it looks like the "prospective relief" was going to happen anyway. The Treasury plan said so didnt it? My read on the Treasury plan was the NWS modification or end was coming soon, next 3 months so maybe this does push things up but in the end even if the Q3 payment is swept its what a ~3B difference? Then again I saw the NWS stopping as a significant driver of a partial move to par so maybe the stock will pop.

 

I think the removal for cause ruling certainly could move things up or put a giddy up on things. If Calabria is at risk of being out by early 2021 all or a significant amount of the recap needs to be done.

 

I see many people beating their chests and ecstatic that its on paper that the NWS was illegal and that justice has finally been served by the courts but unless Calabria/Mnuchin act sooner then they were was it really?