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

[orthopa]

https://www.multihousingnews.com/whats-ahead-for-the-gses-under-the-new-administration/

Edited Tuesday at 06:58 PM by orthopa

[sleepydragon]

https://open.substack.com/pub/ruleoflawguy?r=ag2rx&utm_medium=ios
 

 

[sleepydragon]

On 11/18/2024 at 6:42 AM, DRValue said:

 

Craig Phillips was aware of it and agreed with it under Mnuchin in Treasury.

 

IIRC Ackman's thesis is that the commons increase when conservatorship ending is announced, which means less dilution, which means a higher share price, which means less dilution, which means a higher share price...

 

i have more preferred than commons, and added to the preferred recently. This was a lottery ticket before election but now the preferred is really a 50 cents on a dollar.

 

I find it’s hard to believe that commons will be zero. If the govt want to re-ipos the shares, it will be hard to raise capital if they zeroed the commons? Also, all the common shareholders like Ackman can also buy preferred, thus will be able to vote on restructuring. But on the other hand, i am also not sure that the potential payoffs for commons will be a lot higher than preferred, cuz this is completely decided by the kindness of the secretary at time of restructuring.

 

by the way, Buffett has 300bn cash. Can he buy the whole thing? That will be so cool !

 

 

[TwoCitiesCapital]

21 minutes ago, sleepydragon said:

 

i have more preferred than commons, and added to the preferred recently. This was a lottery ticket before election but now the preferred is really a 50 cents on a dollar.

 

I find it’s hard to believe that commons will be zero. If the govt want to re-ipos the shares, it will be hard to raise capital if they zeroed the commons? Also, all the common shareholders like Ackman can also buy preferred, thus will be able to vote on restructuring. But on the other hand, i am also not sure that the potential payoffs for commons will be a lot higher than preferred, cuz this is completely decided by the kindness of the secretary at time of restructuring.

 

by the way, Buffett has 300bn cash. Can he buy the whole thing? That will be so cool !

 

 

 

If you think they're worth $0.50, I'll sell you some for $0.25? 

Edited yesterday at 12:44 AM by TwoCitiesCapital

[This2ShallPass]

I have the common, bought more as a lottery ticket. Now thinking of converting to preferred. Which preferred is better, I want to buy both Fannie and Freddie..

[sleepydragon]

5 hours ago, This2ShallPass said:

I have the common, bought more as a lottery ticket. Now thinking of converting to preferred. Which preferred is better, I want to buy both Fannie and Freddie..

i think FNMAS has the highest dividend rate, so potentially it could worth more under certain conditions of re-org. 

[This2ShallPass]

7 hours ago, sleepydragon said:

i think FNMAS has the highest dividend rate, so potentially it could worth more under certain conditions of re-org. 

Thanks. For Freddie, would that be FMCKJ (8.375% non cum)?

 

Also, do ppl here buy a basket of preferreds or just the highest dividend one? Not sure if the various preferreds have different conditions.

[sleepydragon]

38 minutes ago, This2ShallPass said:

Thanks. For Freddie, would that be FMCKJ (8.375% non cum)?

 

Also, do ppl here buy a basket of preferreds or just the highest dividend one? Not sure if the various preferreds have different conditions.

Yeah, i only have fnmas and fmckj.

i think the main difference is liquidity. Some people buy the less liquid ones which can be cheaper sometimes.

[DRValue]

15 hours ago, This2ShallPass said:

Thanks. For Freddie, would that be FMCKJ (8.375% non cum)?

 

Also, do ppl here buy a basket of preferreds or just the highest dividend one? Not sure if the various preferreds have different conditions.

I have a bunch of different prefs but mainly fnmas, fnmaj, fmckj. The less liquid fnmaj always traded at a pretty steep discount to fnmas due to liquidity and offered a big coupon with more upside