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

[sleepydragon]

I chickened out this morning and sold 3/4 of my fnmas. 

[Mephistopheles]

Lutnick pumping these sardines this AM and not a peep on the thread? Definite fatigue for sure.

 

idk, it would be insane for them to do NOTHING at this point.

 

But, we’ve all been bag holding for 17 years so I can see why it’s boy who cried wolf (the wolf being a good thing)

 

Honestly: Ackman, the master of short term derivatives, should write a $10 mn check for the Trump ballroom, just in time for Pershing’s returns to look fantastic for the annual letter.

 

But ackman knows what he’s doing and obviously this is the only reason he’s so MAGA. So I trust him to do us a good favor here…

Edited December 3, 2025 by Mephistopheles

[COBFInfinity]

22 hours ago, Mephistopheles said:

Lutnick pumping these sardines this AM and not a peep on the thread? Definite fatigue for sure.

 

idk, it would be insane for them to do NOTHING at this point.

 

But, we’ve all been bag holding for 17 years so I can see why it’s boy who cried wolf (the wolf being a good thing)

 

Honestly: Ackman, the master of short term derivatives, should write a $10 mn check for the Trump ballroom, just in time for Pershing’s returns to look fantastic for the annual letter.

 

But ackman knows what he’s doing and obviously this is the only reason he’s so MAGA. So I trust him to do us a good favor here…

What is there to discuss?  It was just another teaser, but not a single material change to the conservatorships has actually occurred, yet.

[TwoCitiesCapital]

On 12/3/2025 at 2:00 PM, Mephistopheles said:

Lutnick pumping these sardines this AM and not a peep on the thread? Definite fatigue for sure.

 

idk, it would be insane for them to do NOTHING at this point.

 

But, we’ve all been bag holding for 17 years so I can see why it’s boy who cried wolf (the wolf being a good thing)

 

Honestly: Ackman, the master of short term derivatives, should write a $10 mn check for the Trump ballroom, just in time for Pershing’s returns to look fantastic for the annual letter.

 

But ackman knows what he’s doing and obviously this is the only reason he’s so MAGA. So I trust him to do us a good favor here…

 

Not much to discuss when not much of anything material has happened. 

 

Aren't we all still waiting for that October IPO that was so certain?  Maybe 2026 will be the year? Or maybe this will be exactly like Trump's first term.

 

Maybe a better strategy's of trying to ride Trump's coattails would be to just buy the stocks of any companies his sons join the board of - they keep seeming to catch government contracts and explode in share price somehow... 

 

Probably just best to let Eric and Don Jr 'spot the opportunities' than hoping to find Trump's good graces on our own. 

 

 

 

Edited December 4, 2025 by TwoCitiesCapital

[TwoCitiesCapital]

Michael Burry disclosed sizable ownership in both commons. 

 

TL;DR is that he expects junior preferred to convert at a discount of ~15-20% to common shares being priced at ~1-1.25x boon for both companies. In those scenarios, he expects common to outperform preferreds but acknowledges preferreds are lower risk AND could do better than commons if his assumptions re: haircuts and book multiple are off. 

 

He likes the securities because OTC means institutions have largely steered clear and he thinks Berkshire Hathaway might participate in the IPO in a big way. 

 

He goes through entire history of the companies in the post - but doesn't really make much of a case for why he expects the admin to be more capable this time around. Whole argument seems to boil down to 1) the capital built over the last few years And 2) comments from Pulte and Trump while acknowledging he doesn't believe Pulte is trustworthy. 

Edited December 8, 2025 by TwoCitiesCapital

[Sweet]

20 minutes ago, TwoCitiesCapital said:

TL;DR is that he expects junior preferred to convert at a discount of ~15-20% to common shares being priced at ~1-1.25x boon for both companies. In those scenarios, he expects common to outperform preferreds but acknowledges preferreds are lower risk AND could do better than commons if his assumptions re: haircuts and book multiple are off. 

Is this finger in the air stuff?  Did he mention what this was based on?

[TwoCitiesCapital]

9 minutes ago, Sweet said:

Is this finger in the air stuff?  Did he mention what this was based on?

 

He ran through many different scenarios in table form, but didn't provide a lot of information on how he landed on his own conclusions. 

 

Basically - they traded at 2-2.5x book value pre-GFC and basically never below. He expects a haircut to those values on IPO due to the size and the remaining large government ownership presence. So he thinks ~1.25x is the right amount while acknowledging that 2-3 years post IPO it may trade closer to 2x with assumed growth rates. 

 

For preferred, he thinks the current discount of 40% of par is too low but that they're unlikely to get par either due to the lack of substantial progress in the courts. So he pins -15% at the optimistic scenario that some discount is had, but they trade better than the current price to entice participation and avoid lengthy lawsuits, all in the name of getting a deal done quickly instead of having IPO further delayed by lawsuits and disgruntled preferred holders. 

[Mephistopheles]

Perhaps we should put a hard cut off date. If Trump doesn’t deliver by x date we dump him. Kind of like a relationship. 
 

id think it has to be before the midterms some time.

[TwoCitiesCapital]

1 hour ago, Mephistopheles said:

Perhaps we should put a hard cut off date. If Trump doesn’t deliver by x date we dump him. Kind of like a relationship. 
 

id think it has to be before the midterms some time.

 

It wasn't after his first term?

[Mephistopheles]

On 12/4/2025 at 5:57 PM, TwoCitiesCapital said:

 

Not much to discuss when not much of anything material has happened. 

 

Aren't we all still waiting for that October IPO that was so certain?  Maybe 2026 will be the year? Or maybe this will be exactly like Trump's first term.

 

Maybe a better strategy's of trying to ride Trump's coattails would be to just buy the stocks of any companies his sons join the board of - they keep seeming to catch government contracts and explode in share price somehow... 

 

Probably just best to let Eric and Don Jr 'spot the opportunities' than hoping to find Trump's good graces on our own. 

 

 

 

 

Lol, now Bessent saying "sometime next year", but that's because Bartiromo asked if it's sometime next year. 

 

Maybe you guys are right. Just an enormous amount of gaslighting. 

[DRValue]

1 hour ago, Mephistopheles said:

 

Lol, now Bessent saying "sometime next year", but that's because Bartiromo asked if it's sometime next year. 

 

Maybe you guys are right. Just an enormous amount of gaslighting. 

 

He said "Sometime", that was it. it could literally be anytime or never happen at all. I'm so sick of this.

[Mephistopheles]

Lol at Ackman pump Dec 30/31, just in time to pad his reported results for the year. Just like last year!

 

I think if this deal doesn't get done before midterms, the shares are going to come crashing down again...

Edited December 31, 2025 by Mephistopheles

[Sweet]

Why would anyone still be holding a full position in this?

[TwoCitiesCapital]

5 hours ago, Sweet said:

Why would anyone still be holding a full position in this?

 

TDS.

[Sweet]

12 hours ago, TwoCitiesCapital said:

 

TDS.

Trump Devotion Syndrome in this case?

[TwoCitiesCapital]

2 hours ago, Sweet said:

Trump Devotion Syndrome in this case?

 

Still a form of derangement.

 

Just the derangement where they ignore anything he's ever done to self soothe with the stories they tell themselves about how good he's gonna be to them

[TwoCitiesCapital]

Trump announces $200B bond purchase in bid to lower mortgage rates - POLITICO https://share.google/dXjsICN894Od1eyua

 

Trump pushing Pulte to buy $200B of mortgages using Fannie/Freddie as the piggy bank. Does this strike any of you as the actions of a man who is willing to relinquish control,return these to public hands, and enrich others not named Trump?  

Edited January 9 by TwoCitiesCapital

[COBFInfinity]

10 hours ago, TwoCitiesCapital said:

Trump announces $200B bond purchase in bid to lower mortgage rates - POLITICO https://share.google/dXjsICN894Od1eyua

 

Trump pushing Pulte to buy $200B of mortgages using Fannie/Freddie as the piggy bank. Does this strike any of you as the actions of a man who is willing to relinquish control,return these to public hands, and enrich others not named Trump?  

 

I wish I knew the answer to this question. But as for the MBS buying, the GSEs already had the legal authority to do this and didn't need Trump to announce anything in order to do it. But Trump looooooooves big announcements. So perhaps a secondary offering will give Trump more opportunities for big announcements? That might matter more to him than anything else, actually.

[COBFInfinity]

4 hours ago, COBFInfinity said:

 

I wish I knew the answer to this question. But as for the MBS buying, the GSEs already had the legal authority to do this and didn't need Trump to announce anything in order to do it. But Trump looooooooves big announcements. So perhaps a secondary offering will give Trump more opportunities for big announcements? That might matter more to him than anything else, actually.

 

Quoting myself here, but just saw that Trump is planning to make more housing announcements at Davos conference later this month. As I said, the guy loves to make announcements, especially on a big stage. There are plenty of housing-related things they can announce and stretch it over months, if they feel like it. I, of course, withhold any predictions.

[TwoCitiesCapital]

On 1/8/2026 at 10:17 PM, TwoCitiesCapital said:

Trump announces $200B bond purchase in bid to lower mortgage rates - POLITICO https://share.google/dXjsICN894Od1eyua

 

Trump pushing Pulte to buy $200B of mortgages using Fannie/Freddie as the piggy bank. Does this strike any of you as the actions of a man who is willing to relinquish control,return these to public hands, and enrich others not named Trump?  

 

Market coming around to the idea that Trump doesn't actually want to take his hands out of the piggy bank. 

 

FNMA -10% today, -16% YTD, and -40% from it's "imminent IPO" high in September. If only it has been obvious at the time....

[sholland]

I am skeptical that 2026 will be a good year for $FNMA or $FMCC shareholders (common or preferred) for the following reasons:

 

IPO is not to raise money for shareholders, but rather to monetize the government’s stake.

https://www.foxbusiness.com/economy/wall-street-banks-race-win-trump-admins-favor-massive-fannie-mae-freddie-mac-ipo-deal.amp

 

FHFA director Bill Pulte expects IPO to happen and F2 to remain in Conservatorship.

https://x.com/newslambert/status/1986995246681538617?s=61&t=JDX-Ceei0dDpGB_SEntfPQ

 

At least one bank proposed IPOing shares senior to the government’s senior preferred shares.

https://www.wsj.com/finance/banking/fannie-freddie-ipo-big-banks-6d8884aa?mod=Searchresults&pos=1&page=1

 

Administration officials “show no interest” in relaxing the current capital structure.  (Lynchpin of Ackman’s and Burry’s theses)

https://themortgagepoint.com/2025/06/11/mba-ceo-projects-unlikely-future-for-fannie-freddie/

 

[TwoCitiesCapital]

23 minutes ago, sholland said:

I am skeptical that 2026 will be a good year for $FNMA or $FMCC shareholders (common or preferred) for the following reasons:

 

IPO is not to raise money for shareholders, but rather to monetize the government’s stake.

https://www.foxbusiness.com/economy/wall-street-banks-race-win-trump-admins-favor-massive-fannie-mae-freddie-mac-ipo-deal.amp

 

FHFA director Bill Pulte expects IPO to happen and F2 to remain in Conservatorship.

https://x.com/newslambert/status/1986995246681538617?s=61&t=JDX-Ceei0dDpGB_SEntfPQ

 

At least one bank proposed IPOing shares senior to the government’s senior preferred shares.

https://www.wsj.com/finance/banking/fannie-freddie-ipo-big-banks-6d8884aa?mod=Searchresults&pos=1&page=1

 

Administration officials “show no interest” in relaxing the current capital structure.  (Lynchpin of Ackman’s and Burry’s theses)

https://themortgagepoint.com/2025/06/11/mba-ceo-projects-unlikely-future-for-fannie-freddie/

 

 

The thesis is much simpler - when someone shows you who they are, believe them. 

 

Trump showed us 2016 - 2020. 

[COBFInfinity]

10 hours ago, TwoCitiesCapital said:

 

Market coming around to the idea that Trump doesn't actually want to take his hands out of the piggy bank. 

 

FNMA -10% today, -16% YTD, and -40% from it's "imminent IPO" high in September. If only it has been obvious at the time....

 

Well, the assumption shareholders have made is that Trump will want to utilize proceeds from stock sales for some policy objective, although I have never seen even a hint from his team as to what that might be. So it is certainly possible that Trump's idea is, "Hey, we can use the GSEs to bring mortgage rates down now, and then we can sell some stock later on, so I get to go to the piggy bank in multiple ways."

 

But this MBS buying is seriously muddying the waters. Trump is known to misstate reality, so when he said he is directing the companies to buy MBS, what does that really mean? Does it mean that the CEOs already wanted to buy MBS but weren't doing so based on prior FHFA guidance, but Pulte, as regulator, said they could start now? Or does it mean that Pulte, as Chairman of both boards, "convinced" the CEOs to start buying MBS even if they didn't want to? I have no idea, but the latter scenario is exactly why there will be no stock sale until Pulte removes himself and his friends from the BOD (among many other things that need to happen.)

 

The odds of this conservatorship stretching another 3 years, or even 30 years, are definitely not zero.

 

[TwoCitiesCapital]

16 minutes ago, COBFInfinity said:

Well, the assumption shareholders have made is that Trump will want to utilize proceeds from stock sales for some policy objective, 

 

And they have yet to explain how he accomplishes that with 80% of something vs 100% of something. 

 

Right now - he controls 100% of their cash flows. Why would a control freak/micromanager give that up so he can only own 80% and not have control of any cash flows? 

 

16 minutes ago, COBFInfinity said:

But this MBS buying is seriously muddying the waters. Trump is known to misstate reality, so when he said he is directing the companies to buy MBS, what does that really mean? 

 

It means Trump is using money that isn't his to try to effect outcomes he wants. And once again, why give up that power/control? 

 

16 minutes ago, COBFInfinity said:

 

The odds of this conservatorship stretching another 3 years, or even 30 years, are definitely not zero.

 

 

+1

 

Everyone who drank the kool-aid a second time have no one to blame but themselves. Fool me once....

Edited January 16 by TwoCitiesCapital

[Mephistopheles]

Right now - he controls 100% of their cash flows. Why would a control freak/micromanager give that up so he can only own 80% and not have control of any cash flows? 
 

100% of the cash flows for 3 years only, vs 80% of the DCF for eternity. The latter is the better bet. 
 

Also - the cash flows are all staying within the firms. The govt is only getting an accounting gain…
 

Is there anyone that benefits from NOT releasing them? One can argue that Congress benefits for future uses as a piggybank. And future executive branches.
 

But all the incentives for all parties are to release … big payout for Trump, all the bankers, Ackman.

 

The incentives make this a screaming buy, but I agree that it’s all been gaslighting thus far.

 

 

Edited January 16 by Mephistopheles