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

[waynepolsonAtoZ]

"Does anyone know where the "Series Z, V, etc" designations come from for the Freddie prefs? Unlike for Fannie, I can't find a reference to these letter series names in any of the circulars or 10-k."

 

They changed the tickers after delisting. Here is the info for Freddie.

 

After

 

http://www.freddiemac.com/investors/preferred_stock.html

 

Before

 

http://www.freddiemac.com/investors/pdffiles/div0908.pdf

 

 

Fannie

 

http://www.fanniemae.com/portal/media/financial-news/2010/5086.html

 

 

[Seahug]

Haha it seems I am underinvested.

 

By the way, a sincere thanks to the forum for the wisdom during the thick and thin of it.

[Guest cherzeca]

Has anyone successfully bought the preferreds through a Fidelity account? My family and I have some accounts there and just tried purchasing preferreds today, and it didn't work. Called up Fidelity and apparently they have blocked ALL FNMA and FMCC preferreds from puchases from ALL clients, regardless of low or high net worth or type of account.... They told me since they don't pay dividends, they are considered too "high risk" and so they won't allow them. Yet they allow the common, and I settled for those. What a stupid policy.

 

FNMAT is available to buy online through Fidelity - I have bought through an IRA and general account both without a problem.

 

A huge thanks to this community and the legal eagles here for your insights. I studied this case for Corporate Law paper as part of my MBA in early 2016 (5th amendment violation), and have greatly appreciated all the insights ever since. Thanks a lot!

 

hey doc, did you get a good grade on your paper?

[fareastwarriors]

What happens when 10% of your portfolio goes up 27 times and the rest of the portfolio stays the same? Answer: it's was 75% of the portfolio.

 

Of course, I should have raised cash at that point. Still, at up 9 times it was still half of my portfolio.

 

Even though I bought all my shares immediately after delisting, the NWS and Lamberth were both extremely painful. In both cases, down over $600,000 in one day. Is that too much information?

 

Still, I can see an executive order along the lines of ordering recap and possibly ending the NWS. I'm hopeful, but not holding my breath.

 

All in all, I can see the possibility at least of going to 40% of RV by the EOM. Good earnings would help.

I was down $2 million that day lol.

 

Wow...

[no_free_lunch]

 

I tried to buy some FNMAH on the app a few months ago and got a message saying that that symbol wasn't available to buy, limited to closing trades only or some such. After a call to the Fidelity rep I found out why: they don't let anyone (even then-President Obama to quote the rep) buy variable-rate preferreds. So if you're trying to buy FNMAS, FNMAH, FMCKJ, etc. hopefully this explains why you're having trouble.

 

 

Thanks for posting that.  It happened to me on FNMAH not too long ago and I had no idea was going on.  I was able to buy FNMAJ instead.

 

The liquidity of these things is a bit concerning.

[DocSnowball]

Has anyone successfully bought the preferreds through a Fidelity account? My family and I have some accounts there and just tried purchasing preferreds today, and it didn't work. Called up Fidelity and apparently they have blocked ALL FNMA and FMCC preferreds from puchases from ALL clients, regardless of low or high net worth or type of account.... They told me since they don't pay dividends, they are considered too "high risk" and so they won't allow them. Yet they allow the common, and I settled for those. What a stupid policy.

 

FNMAT is available to buy online through Fidelity - I have bought through an IRA and general account both without a problem.

 

A huge thanks to this community and the legal eagles here for your insights. I studied this case for Corporate Law paper as part of my MBA in early 2016 (5th amendment violation), and have greatly appreciated all the insights ever since. Thanks a lot!

 

hey doc, did you get a good grade on your paper?

 

Yessir, A for originality. Thanks again for your insights Cherzeca!

Fingers crossed going into this big catalytic event, whenever and however it unfolds.

 

edit: my analysis back in April was that preferred shares are protected by the Fifth amendment - even if companies are liquidated (which Fifth amendment allows), "just compensation" and liquidation preference would provide a margin of safety perhaps of par value. The commons are outside my little circle of competence.

 

Fairholme not selling any shares even now is a very very good omen in my opinion, as the catalysts are now political.

[Guest cherzeca]

here is the EO re finance from yesterday:  https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-executive-order-core-principles-regulating-united-states

 

make of it what you will

[rros]

here is the EO re finance from yesterday:  https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-executive-order-core-principles-regulating-united-states

 

make of it what you will

This is to tell the Elizabeth Warrens of the world and all other socialists/progressives to F*off.

[no_free_lunch]

I believe the biggest risk to this investment at the moment is impeachment.  Normally this isn't something I would even consider but regardless of which side you are on, if any, it's getting crazy out there.  I am thinking of hedging this risk element by betting on trump impeachment.  7:1 odds if impeachment procedures commence in 2017.  I would probably not fully hedge but enough to cover about 1/3 of the position if I "win".  Obviously there are still other risks to the investment but given you have seen the prefs up 100%+ the market is betting heavy on Trump.

 

I am being very serious and not trying to start a political argument here. 

 

Thoughts from an investing perspective?

[Guest cherzeca]

here is the EO re finance from yesterday:  https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-executive-order-core-principles-regulating-united-states

 

make of it what you will

This is to tell the Elizabeth Warrens of the world and all other socialists/progressives to F*off.

 

my take is that the dems passed statutes like ACA and dodd/frank which gave huge amounts of discretion to regulators. now with trump admin, an EO that tells regulators how to exercise this discretion can have the effect of substantially changing the statutes from within.  now, ACA eventually will require congress to act to remove taxes, but this can be done with 51 R senators under reconciliation.  how much of ACA and dodd/frank that needs to be changed by congressional replacement rather than just a change of regulation we shall see.

 

but i think it is an interesting facet of the administrative state that most political commentators dont appreciate

 

[Guest cherzeca]

I believe the biggest risk to this investment at the moment is impeachment.  Normally this isn't something I would even consider but regardless of which side you are on, if any, it's getting crazy out there.  I am thinking of hedging this risk element by betting on trump impeachment.  7:1 odds if impeachment procedures commence in 2017.  I would probably not fully hedge but enough to cover about 1/3 of the position if I "win".  Obviously there are still other risks to the investment but given you have seen the prefs up 100%+ the market is betting heavy on Trump.

 

I am being very serious and not trying to start a political argument here. 

 

Thoughts from an investing perspective?

 

who is quoting impeachment odds?

[no_free_lunch]

Just google it.

[SnarkyPuppy]

I believe the biggest risk to this investment at the moment is impeachment.  Normally this isn't something I would even consider but regardless of which side you are on, if any, it's getting crazy out there.  I am thinking of hedging this risk element by betting on trump impeachment.  7:1 odds if impeachment procedures commence in 2017.  I would probably not fully hedge but enough to cover about 1/3 of the position if I "win".  Obviously there are still other risks to the investment but given you have seen the prefs up 100%+ the market is betting heavy on Trump.

 

I am being very serious and not trying to start a political argument here. 

 

Thoughts from an investing perspective?

 

Mnuchin would likely remain Treasury Scty in the event of an impeachment, no?

[BTShine]

Odds of impeachment or resignation during full term is 11/10 !!!    Holy cow. 

 

https://sports.ladbrokes.com/en-gb/betting/politics/american/specials/donald-trump-specials/222881036/

 

 

Odds of impeachment proceedings being brought to the House of Representatives in

2017: 7/1

2018: 9/1

2019: 16/1

2020: 20/1

http://www.paddypower.com/bet/politics/other-politics/us-politics?ev_oc_grp_ids=2657726

[hyten1]

in regards to impeachment, one question i have, how would mike pence behave? does he have similar views as the trump on the gse? would he change the players if he becomes president?

 

 

[rros]

The one danger he faces regarding impeachment is Cherzeca's key word: administrative state. The more he does this, the more he will piss the wrong people.

 

http://thefederalist.com/2016/10/25/gop-needs-elect-trump-impeach/

 

But at this stage impeachment talk makes no sense. Republicans are getting away with murder.

 

Far more likely: he pisses off so many people in so many different areas and in so many nations that he gets stopped jfk style. Hopefully not.

[no_free_lunch]

Lots of good points.  Maybe impeachment isn't really a risk then.  The whole fnma process is just on rails at this point?  Seems too good to be true.

 

So with impeachment doesn't it trigger a new general election?  I am totally ignorant of how that all works.

[Guest cherzeca]

"The whole fnma process is just on rails at this point?"

 

i can tell you the whole fnma process is on rails, but what i dont know is what the whole fnma process will be.

[Flynnstone5]

I think any talk of impeachment is nothing more than wishful thinking from the left. Trump like him or not is a smart guy with excellent legal counsel. I say no chance at all that he gets impeached.

[Guest cherzeca]

I think any talk of impeachment is nothing more than wishful thinking from the left. Trump like him or not is a smart guy with excellent legal counsel. I say no chance at all that he gets impeached.

 

i agree.  i would be giving 7 to get 1 all day long, until 12/31/17

[no_free_lunch]

Okay, good to hear.  No bets for me then.

[Sunrider]

I think any talk of impeachment is nothing more than wishful thinking from the left. Trump like him or not is a smart guy with excellent legal counsel. I say no chance at all that he gets impeached.

 

i agree.  i would be giving 7 to get 1 all day long, until 12/31/17

 

Indeed. Shame these brokers don't allow you to bet the other way. If anyone knows of one, please let me know.

Thanks

C.

[BTShine]

You can take the bet in another way at Predictit.  Basically 1/4 that Trump is in office at end of 2017.  Or 4/1 that he's not. 

 

https://www.predictit.org/Browse/Group/83/White-House

[Guest cherzeca]

You can take the bet in another way at Predictit.  Basically 1/4 that Trump is in office at end of 2017.  Or 4/1 that he's not. 

 

https://www.predictit.org/Browse/Group/83/White-House

 

thx BT.  i just laid some change on trump remaining potus through 2017 (4:1) and that there will be another scotus vacancy in 2017 (even).  just not sure if thomas or kennedy, willingly, or some other justice, in a veil of tears...

[Ismael]

How might the Trump tax reforms affect F&F?  What impact will the (in essence) removal of the interest tax deduction have on the housing market?  Will the likely decrease in real estate values put pressure on F&F?  I saw one study that said average home prices would decrease 6 or 7 percent with removal of interest tax deduction.  I would guess a decrease in home prices of this magnitude wouldn’t threaten F&F guarantees much, however, the decreased incentive for home ownership would decrease the size of F&F’s market.  It is hard to say by how much the market size will shrink, but the interest tax deduction is a significant factor in most people's purchase decision.