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

[This2ShallPass]

8 hours ago, orthopa said:

Not sure when its reportable but he may have bought some preferred since the election? 

That might be it, because I didn't see him owning preferreds in their latest release.

 

I tried to calculate his ownership, looks like he has 43M of Fannie common and 50M shares of Freddie.

[sleepydragon]

5 hours ago, This2ShallPass said:

That might be it, because I didn't see him owning preferreds in their latest release.

 

I tried to calculate his ownership, looks like he has 43M of Fannie common and 50M shares of Freddie.

Yeah preferred are not reportable. For common, because it’s OTC, it’s only reportable when someone own more than x% (i think x =10, not sure)

 

[This2ShallPass]

2 hours ago, sleepydragon said:

For common, because it’s OTC, it’s only reportable when someone own more than x% (i think x =10, not sure)

I don't think he reported common. But in one of the presentations, he had shown % ownership of Fannie and freddie and from there I calculated how many shares he might have. That's just an estimate by me.

[james22]

Why the Trump 47 Administration Might Want Congress to Authorize a GSE Recap/Release Through Reconciliation Even When It Can Proceed Administratively Without Congress

 

https://ruleoflawguy.substack.com/p/reconciliation-and-the-gses

[Dalal.Holdings]

Oh boy, here we go...

 

 

 

 

[gfp]

10 minutes ago, Dalal.Holdings said:

Oh boy, here we go...

 

 

 

 

 

I'm sure the timing to publish this "tip" on 12/30 was just a coincidence.

[DRValue]

15 hours ago, gfp said:

 

I'm sure the timing to publish this "tip" on 12/30 was just a coincidence.

What does he gain from this? valuation at year end?

[gfp]

2 hours ago, DRValue said:

What does he gain from this? valuation at year end?

 

Yes - year-end marks are important for hedge fund managers in any year and even more so when they are going to be actively marketing their track record to IPO the management company.  But even in a regular year their performance reallocation usually crystalizes on the year end mark.

[sleepydragon]

28 minutes ago, gfp said:

 

Yes - year-end marks are important for hedge fund managers in any year and even more so when they are going to be actively marketing their track record to IPO the management company.  But even in a regular year their performance reallocation usually crystalizes on the year end mark.

though i think he said only 2% of his AUM is invested in this—- unless he has significantly increased it during the last few weeks/months. On the other hand, he is already a 10% holder, so there should be new filings if he bought more..

[sleepydragon]

My personal feeling is Ackman is doing all these to rally more retail shareholders to join his camp, and using this to push the administration for a better deal for common shareholders. On one hand this might work, on the other hand he is doing this because he must have figured he need to do something like this because there’s a real chance his commons will be wiped out.

 

 

[TwoCitiesCapital]

5 minutes ago, sleepydragon said:

My personal feeling is Ackman is doing all these to rally more retail shareholders to join his camp, and using this to push the administration for a better deal for common shareholders. On one hand this might work, on the other hand he is doing this because he must have figured he need to do something like this because there’s a real chance his commons will be wiped out.

 

 

 

Leading lambs to the slaughter hoping that someone will feel bad enough about killing all of the lambs. Interesting strategy

[This2ShallPass]

On 12/31/2024 at 6:16 AM, gfp said:

Yes - year-end marks are important for hedge fund managers in any year and even more so when they are going to be actively marketing their track record to IPO the management company.

I don't think this is the reason, he's trailing s&p by a wide margin this year and few basis points is not going to help. Also, he has beaten s&p in last 5 years by a good margin which should be enough.

 

The tweet was likely aimed at Trump, telling him he could make the biggest deal. That would definitely get his attention..

[fareastwarriors]

Fannie, Freddie Hit a 5-Year High on Plan for ‘Eventual Release’

[orthopa]

58 minutes ago, fareastwarriors said:

Fannie, Freddie Hit a 5-Year High on Plan for ‘Eventual Release’

 

 

Current admin clearly trying to force in "concerns" from MBA, Michael Bright, Blackrock, etc before Bidens term is up.  They let the PSPAs sit for 4 years and now care about release terms LOL. Everyone except the incoming admin wants transparency BC they are all on the outside looking in. They had influence on the GSEs coming out or not with a Biden treasury. Not now. 

 

In the end although clearly a positive on thinking in DC regarding an eventual exit the new agreement means very little. FHFA head serves a pleasure of the president, Treasury Secretary appointed by Trump and a new PSPA agreement can be written to make this all null and void anyway. Remember the last PSPA agreement put out at end of Trump term when Yellen and Thompson were supposed to come up with a "plan" to get the GSEs out of conservatorship by 9/20? Me too. 

 

My opinion on Ackman is he is trying to throw his hat in the ring too for a seat at the table too. He was an early supporter of Trump but for common to be work 30-40 a share the Gov has to give up alot. He probably feels his early public support and 10% holding is worth of a pound of flesh in the end. 

 

At this rate I wouldnt be surprised to see an Executive order from Trump in the first 100 days of an intention to get FnF out.  This has been in the works since last summer....

[This2ShallPass]

2 hours ago, fareastwarriors said:

Fannie, Freddie Hit a 5-Year High on Plan for ‘Eventual Release’

The eventual release language should be really positive for the junior preferred correct? Surprised they didn't move lot higher on the news but common did.

 

Is there a scenario where junior pfd gets paid less than par and common still has value?

[orthopa]

1 hour ago, orthopa said:

 

 

Current admin clearly trying to force in "concerns" from MBA, Michael Bright, Blackrock, etc before Bidens term is up.  They let the PSPAs sit for 4 years and now care about release terms LOL. Everyone except the incoming admin wants transparency BC they are all on the outside looking in. They had influence on the GSEs coming out or not with a Biden treasury. Not now. 

 

In the end although clearly a positive on thinking in DC regarding an eventual exit the new agreement means very little. FHFA head serves a pleasure of the president, Treasury Secretary appointed by Trump and a new PSPA agreement can be written to make this all null and void anyway. Remember the last PSPA agreement put out at end of Trump term when Yellen and Thompson were supposed to come up with a "plan" to get the GSEs out of conservatorship by 9/20? Me too. 

 

My opinion on Ackman is he is trying to throw his hat in the ring too for a seat at the table too. He was an early supporter of Trump but for common to be work 30-40 a share the Gov has to give up alot. He probably feels his early public support and 10% holding is worth of a pound of flesh in the end. 

 

At this rate I wouldnt be surprised to see an Executive order from Trump in the first 100 days of an intention to get FnF out.  This has been in the works since last summer....

 

https://www.marketwatch.com/articles/fannie-mae-stock-freddie-mac-fnma-privatization-db92f622?mod=mw_latestnews

 

 

In reality, Thursday’s agreement will change little, and there are already indications that the Trump administration will disregard or amend it. Mark Calabria, who headed the FHFA under Trump, on X called the request for a report on release “hypocritical” given that the Biden administration abandoned a previous study on Fannie and Freddie’s risks to financial stability. Jonathan McKernan, a former Republican FHFA staff member who now is a director at the Federal Deposit Insurance Corporation, noted that the new agreement can be “easily reversed.”

 

“We view this as political and do not see it as a significant roadblock to recap and release,” wrote TD Cowen analyst Jaret Seiberg in a research note on Friday.

[orthopa]

14 minutes ago, This2ShallPass said:

The eventual release language should be really positive for the junior preferred correct? Surprised they didn't move lot higher on the news but common did.

 

Is there a scenario where junior pfd gets paid less than par and common still has value?

 

 

Anything is possible at this point. Ackman will be lobbying hard for the common, Paulson et al for the preferred. Scenarios I have discussed with others for value for preferred. 

 

1. Re turning on divs, some may not trade to par, others will big div would probably trade higher. 

 

2. % of par for preferred in a conversion scenario. Highest div pars get favorable conversion to common terms

 

3. Some of the series have to have a 2/3 vote on the outcome of any conversion or change in terms of the preferred. Would 2/3rds vote to get less then par?

 

Lots of questions for sure. But for a pure capital perspective how can the preferred not be worth par if a security below is worth even a dollar?

 

[sleepydragon]

Fannie and Freddie Stocks Surge on Hope for End to U.S.  Control. It Won’t Be Easy.

 

https://www.barrons.com/articles/fannie-mae-stock-freddie-mac-fnma-privatization-db92f622?st=Gjrmu3

 

[sleepydragon]

7 minutes ago, orthopa said:

 

 

Anything is possible at this point. Ackman will be lobbying hard for the common, Paulson et al for the preferred. Scenarios I have discussed with others for value for preferred. 

 

1. Re turning on divs, some may not trade to par, others will big div would probably trade higher. 

 

2. % of par for preferred in a conversion scenario. Highest div pars get favorable conversion to common terms

 

3. Some of the series have to have a 2/3 vote on the outcome of any conversion or change in terms of the preferred. Would 2/3rds vote to get less then par?

 

Lots of questions for sure. But for a pure capital perspective how can the preferred not be worth par if a security below is worth even a dollar?

 

the preferred could worth More than par too if they converted into new equity.

i bought some commons, to “hedge” the upside  if common is wiped out, my gains on the perferred will more than cover my entire common position.

 

[This2ShallPass]

1 hour ago, orthopa said:

1. Re turning on divs, some may not trade to par, others will big div would probably trade higher. 

 

2. % of par for preferred in a conversion scenario. Highest div pars get favorable conversion to common terms

 

3. Some of the series have to have a 2/3 vote on the outcome of any conversion or change in terms of the preferred. Would 2/3rds vote to get less then par?

Which of the pfds will have higher value? I thought all of them will trade close with only small differences.