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


twacowfca

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here's a typical scene in a hedge fund office (keep in mind most of the current trading is hf and high net worth given the mutual funds cannot buy pink sheets stocks):

 

nov 30:  analyst goes into PM office and says buy FNMA, or more likely the 'safer' preferred, which they do after putting in very little research effort as they are fearful of missing a big time gainer.

 

dec 20:  PM reads the NYT hit piece, gets nervous, has little research to fall back on, and decides to sell or more likely short common against their less liquid preferred position as the analyst tells the PM they can possibly win on both sides.

 

personally, i see more value (as of today at least) in the common and have adjusted the mix in my account.  there are some technical targets at 3.50 - 3.60 which may or may not come into play.

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Guest cherzeca

wonder how mulvaney will shimmy around this address he gave recently to local john birch society:  http://www.motherjones.com/politics/2016/12/trump-mulvaney-john-birch-society

 

frankly with R control of both houses and the nuclear option introduced by reid, i dont see how any of these appointees get derailed.  i do see a lot of wasted time in congress with each member getting their 5 minute shots in though...

 

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Guest cherzeca

sen cotton endorses mnuchin:  https://www.cotton.senate.gov/?p=press_release&id=560

 

if there is any hope for dems to disrupt mnuchin, they need to split off very conservative senators like cotton.  good to see this PR

 

Bit of trivia: Cotton used to work @ Cooper & Kirk. :)

 

ha! not sure that trivia is trivial.  one might think that GSEs came up in their discusion

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Guest cherzeca

gotta admit high volume down days like today make me nervous about a possible news leak

 

usually on a possible opinion release day, fnma common goes up in anticipation of an opinion, then down when no opinion released.  today it went down in anticipation of opinion, and then further down.  seems like false rumor if a rumor

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Guest cherzeca

i believe an opinion was released on a non tues/fri a number of weeks ago, so its not a hard and fast rule

 

i see mandamus decision as key right now. if rejected and docs released, even millet may side w/ Ps

 

i saw that opinion, was released on a non-T/F but was in the nature of an emergency appeal.  but yes could happen.  seems the GSE market is very jittery.  not doing anything about it except being pissed

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the short volume has been elevated the last couple of days, i expect today is similar.

 

either someone knows something about the courts, or perhaps more likely, there is a mini-freakout going on regarding the confirmation process.  this is somewhat natural at this point in the game because our side is silent and the opposition has the floor.  more important, look for any republican defections and/or new bombshells for any valid concern.  the appointment of mulvaney is quite helpful on this front because we have a backup advocate if one of the two fails.

 

in addition there was a gap and double top technical targets around 3.60 and 3.50 respectively, which have been now hit.  common shares are cheap vs preferred on the 2:1 ratio which has generally held to date.

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brown asks mnuchin for clarification on gses:

 

Interesting, just looked at the actual document linked in the twitter post…it looks strange. The second page doesn't look like it matches the first page in scan quality and the second page questions restart the numbering from 1. I also couldn't find a link to the document from Brown's website, maybe I'm just looking in the wrong place.

 

just some comments on the strangeness of the document. I hope we get some clarifications from the courts soon.

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Guest cherzeca

brown asks mnuchin for clarification on gses:

 

Interesting, just looked at the actual document linked in the twitter post…it looks strange. The second page doesn't look like it matches the first page in scan quality and the second page questions restart the numbering from 1. I also couldn't find a link to the document from Brown's website, maybe I'm just looking in the wrong place.

 

just some comments on the strangeness of the document. I hope we get some clarifications from the courts soon.

 

good enough for govt work.

 

i find it interesting that senate banking wont confirm mnuchin.  which committee has jurisdiction?  at least it wont be a corker/crapo show.

 

i think all questions were fair (enough).  isn't sherrod a friend to GSEs?

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brown asks mnuchin for clarification on gses:

 

Interesting, just looked at the actual document linked in the twitter post…it looks strange. The second page doesn't look like it matches the first page in scan quality and the second page questions restart the numbering from 1. I also couldn't find a link to the document from Brown's website, maybe I'm just looking in the wrong place.

 

just some comments on the strangeness of the document. I hope we get some clarifications from the courts soon.

 

The link goes through to Brown's .gov site directly. You can type it in yourself: brown.senate.gov/download/mnuchin-letter-

I think it's legit.

 

Cherzeca, yeah, he's a major ally. Maybe he's thinking better to get it out in the open from a friend before he gets ambushed with it by an enemy in the confirmation hearing? Or it could be that dem loyalty is outweighing his interest in fnf.

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Guest cherzeca

Assuming he just doesn't respond?

 

constitutional duty of senate to advise and consent. all questions from senate should be responded to, however craftily.

 

anyone know what committee will pass on mnuchin before moving it to entire senate?

 

EDIT:  looks to me that it is the senate committee on finance, which has 2 more Rs than Ds, but one R is crapo

 

http://www.finance.senate.gov/about/membership

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Guest cherzeca

fhfa landing team includes 3 out of 4 people that seem to be not friends of GSEs: 

 

i wonder if ahern, pinto or pollock will have any policy input post inauguration? does a landing team only work from election to inauguration?

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understanding that i am only a few months of posting on this board, there are a handful of 'new' posters on various social media and message board sites in recent days / weeks that seem highly confident of how things will play out, throwing out some low-odds predictions -- which often leads to heated discussions on the preferred vs common debate.  many of the comments are even flat-out wrong.

 

i'd point out two things, fwiw:

 

1)  no one knows for sure, there are too many variables! and if they did, they wouldn't be posting on social media.  the more confident someone is in their posts, the more wary i would be

 

2)  if good news happens, it's highly likely that both the common and preferred do quite well from here

 

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Guest cherzeca

fhfa landing team includes 3 out of 4 people that seem to be not friends of GSEs: 

 

i wonder if ahern, pinto or pollock will have any policy input post inauguration? does a landing team only work from election to inauguration?

 

fwiw - checklist under landing teams

 

http://presidentialtransition.org/timeline/agency-review/2016-11-post.php

 

best i can tell, landing teams are liasons that help a handoff between current fhfa and new fhfa...the status of which will be uncertain on day 1 of trump given PHH ruling

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understanding that i am only a few months of posting on this board, there are a handful of 'new' posters on various social media and message board sites in recent days / weeks that seem highly confident of how things will play out, throwing out some low-odds predictions -- which often leads to heated discussions on the preferred vs common debate.  many of the comments are even flat-out wrong.

 

i'd point out two things, fwiw:

 

1)  no one knows for sure, there are too many variables! and if they did, they wouldn't be posting on social media.  the more confident someone is in their posts, the more wary i would be

 

2)  if good news happens, it's highly likely that both the common and preferred do quite well from here

Whatever is said by whoever really doesn't matter. Even if trying to assess "sentiment". The universe of retail is tiny and price fluctuations may be just coincidence.

 

Securing a victory requires surpassing some hurdles. Nominees are rarely rejected. But they get withdrawn due to controversy. Six with the last 3 Presidents (12 in total). If confirmed, senators may extract commitments from nominees narrowing their ability to operate on specific issues. Second hurdle to surpass. Only after this one can have some confidence on certain outcomes. Mnuchin will certainly have to be careful.

 

As we write, there are probably a few out there already trying to secure nomination votes to smooth out the process.

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Mick Mulvaney picked for Budget Director.  Trump is assembling pretty much the most GSE-friendly staff that I could possibly imagine, short of picking Berkowitz and Ackman.

 

Aaaaaaand another... Carl Icahn.  According to CNBC and WSJ, Trump to name Carl Icahn as special advisor on regulatory overhaul; Icahn also playing role in selecting next SEC chief

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Mick Mulvaney picked for Budget Director.  Trump is assembling pretty much the most GSE-friendly staff that I could possibly imagine, short of picking Berkowitz and Ackman.

 

Aaaaaaand another... Carl Icahn.  According to CNBC and WSJ, Trump to name Carl Icahn as special advisor on regulatory overhaul; Icahn also playing role in selecting next SEC chief

 

These guys are going to get ripped apart by the liberal media when they do right for GSE stakeholders.  Do we know if Carl Icahn still holds his stake in the GSEs?

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Guest cherzeca

Mick Mulvaney picked for Budget Director.  Trump is assembling pretty much the most GSE-friendly staff that I could possibly imagine, short of picking Berkowitz and Ackman.

 

Aaaaaaand another... Carl Icahn.  According to CNBC and WSJ, Trump to name Carl Icahn as special advisor on regulatory overhaul; Icahn also playing role in selecting next SEC chief

 

the real tell will be when mnuchin answers the question posed to him by crapo, whether mnuchin will hold fire until congress can address gse reform.

 

if mnuchin says, gee, he has marching instructions from congress already, and he will abide by corker's jumpstart language, then we know we got our guy

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