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


twacowfca

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Bloomberg has become a anti-Trump political news organization with more opinion than facts in its reporting with out stating which is which.  This is sad for a formerly fact based news organization.

 

Packer

 

+1

 

The days of fact based journalism are close to dead. Barron's seems to be still decent.

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Allocation/ Tax related question: if Moelis plan comes to fruition, or preferreds get converted to commons, will it be a taxable event? Trying to figure out whether this long term investment is best in the tax deferred account or the taxable one? Thanks in advance!

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Is anyone confused with the lack of Fox coverage?  Prior to the recent release, there were two significant media events which occurred on Fox-

 

1.  Rosner invited on Tucker Carlson + Carlson tweeting about the GSEs

2.  Maria interviewing Mnuchin -> hashtagging #fanniegate on twitter -> Mnuchin stating that the GSEs profits were used by the government inappropriately

 

But total silence on this?  It's very weird to me.  I'm concerned that they are being silent for a reason.

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Guest cherzeca

Nothing in moelis requires you to sell or exchange so no taxable event. If there is a conversion or exchange offered it will likely be structured to be tax free

 

Spit 3 times

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For those wondering where Sessions is - that's why I asked if anyone was worried about the Donald's volatility. AG is on the way out the door, Trump laying groundwork with his base in this respect on recent tweets - as too afraid of/annoyed with/whatever the Russia probe and wants to shut down Mueller. So bottom line, I think both the Donald and the AG have other things on their mind.

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For those wondering where Sessions is - that's why I asked if anyone was worried about the Donald's volatility. AG is on the way out the door, Trump laying groundwork with his base in this respect on recent tweets - as too afraid of/annoyed with/whatever the Russia probe and wants to shut down Mueller. So bottom line, I think both the Donald and the AG have other things on their mind.

This could be a "castling" chess move. Trump negotiating w/democrats to fire AG in exchange for democrats to lower the noise on Russia probe. Then, he fires Mueller with no crisis. Sessions = casualty of war. Don't see any impact on us.

 

For us it is:

1. Better outlook on lawsuits with the latest release of docs.

2. Second half 17' Mnuchin's promise to look into GSEs.

3. Corker enjoying a lot less leverage after his nay vote.

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From Peter Chapman... A recording of the oral arguments presented to the Sixth Circuit today is now available at https://goo.gl/ZxmZxr at no charge.

Another Judge that doesn't know left from right. Houston, we have an Iowa problem. Again!

 

As awesome as Thompson was the Judge appears not to understand the issues well enough.

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Guest cherzeca

I agree Thompson did a very good job and all one judge cared about was that he should not point his finger

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From Peter Chapman... A recording of the oral arguments presented to the Sixth Circuit today is now available at https://goo.gl/ZxmZxr at no charge.

 

Does motive not matter? Why didn't the guy point them to the newly released documents - he had a prime opportunity to rebut the guy going on about the death spiral - or do I have my dates wrong?

 

 

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I agree Thompson did a very good job and all one judge cared about was that he should not point his finger

She also cared about one more thing: fuck the shareholders.

 

As long as this sentiment pervades, that following the law benefits shareholders, we are doomed in all courts.

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From Peter Chapman... A recording of the oral arguments presented to the Sixth Circuit today is now available at https://goo.gl/ZxmZxr at no charge.

 

Thanks for posting this.

 

Since Ginsburg made the "salt the earth" comment and still affirmed Lamberth's dismissal, I am not going to try and guess what the judges will do based on what they say.

 

  • Thompson was just a ball of energy, which didn't seem to go over too well but I'll give him points for enthusiasm. I'll admit that Stern and Cayne also did a good job presenting their case.
  • One judge (sorry, I can't tell which voice belongs to which judge) points out to Stern that the central argument turns on whether actions by the FHFA that don't actually benefit FHFA or the companies are subject to judicial review.
  • At 15:40 Stern equates the interests of the agency with the interests of taxpayers. While Thompson did address this point during his rebuttal, I'm surprised he didn't hammer Stern for conflating those.
  • Cayne mentions a whole laundry list of powers that HERA grants to FHFA, including broad powers of discretion that he claims are the basis for it being able to lawfully enter into the 3rd amendment. My counterpoint: given that the NWS runs counter to all previous definitions of conservator, why would the FHFA bother with conservatorship at all? Couldn't they have just released the companies from conservatorship and then agreed to the NWS anyway?
  • Cayne himself brought up that the language in HERA that requires FHFA to act in the best interests of the companies and FHFA itself is taken from FIRREA. But if the "best interests" clause must be the same as in FIRREA, why not also the accepted definition of conservator, which in the case of FIRREA has been well-defined?
  • Thompson recognizes that he needs to show that the NWS hurt the companies (easy) and was at best neutral to FHFA (the crux). I would hope this fits the definition of ultra vires.
  • Stern brings up the numbers showing that in 2015 and 2016 the GSEs paid less in dividends than they would have under the 2nd amendment. Does this kind of retroactive justification matter at all here? Or are the judges supposed to only consider what was known at the time of the imposition of the NWS?

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From Peter Chapman... A recording of the oral arguments presented to the Sixth Circuit today is now available at https://goo.gl/ZxmZxr at no charge.

 

Thanks for posting this.

 

Since Ginsburg made the "salt the earth" comment and still affirmed Lamberth's dismissal, I am not going to try and guess what the judges will do based on what they say.

 

  • Thompson was just a ball of energy, which didn't seem to go over too well but I'll give him points for enthusiasm. I'll admit that Stern and Cayne also did a good job presenting their case.
  • One judge (sorry, I can't tell which voice belongs to which judge) points out to Stern that the central argument turns on whether actions by the FHFA that don't actually benefit FHFA or the companies are subject to judicial review.
  • At 15:40 Stern equates the interests of the agency with the interests of taxpayers. While Thompson did address this point during his rebuttal, I'm surprised he didn't hammer Stern for conflating those.
  • Cayne mentions a whole laundry list of powers that HERA grants to FHFA, including broad powers of discretion that he claims are the basis for it being able to lawfully enter into the 3rd amendment. My counterpoint: given that the NWS runs counter to all previous definitions of conservator, why would the FHFA bother with conservatorship at all? Couldn't they have just released the companies from conservatorship and then agreed to the NWS anyway?
  • Cayne himself brought up that the language in HERA that requires FHFA to act in the best interests of the companies and FHFA itself is taken from FIRREA. But if the "best interests" clause must be the same as in FIRREA, why not also the accepted definition of conservator, which in the case of FIRREA has been well-defined?
  • Thompson recognizes that he needs to show that the NWS hurt the companies (easy) and was at best neutral to FHFA (the crux). I would hope this fits the definition of ultra vires.
  • Stern brings up the numbers showing that in 2015 and 2016 the GSEs paid less in dividends than they would have under the 2nd amendment. Does this kind of retroactive justification matter at all here? Or are the judges supposed to only consider what was known at the time of the imposition of the NWS?

Fair. But that one judge also dismissed J. Brown's ruling arguing she saw a "regular" conservatorship while in reality this one is *special*. Maybe it comes with french fries? There is really no objectivity on these judges.

 

Oh, yes. Thank you for the link.

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good reminder why the legal route looks grim. i think longs seriously need to consider the increasing likelihood that all lawsuits fail

 

under the assumption that mnuchin supports a fair FNMA+FMCC utility with greater private capital involvement -- which may be wrong -- then the main purpose of the lawsuits would be for the plaintiff shareholders to buy time and cover for him to craft his plan in 2018 while still having a small sliver of legal leverage.  while the stock prices can go lower, imo they don't price in a lot of legal confidence.

 

 

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@hardincap

 

Hindes/Jacobs and bhatti/Rop are not perry look alike like Robinson. Just saying

 

I recommend setting expectations for those to get tossed also.  maybe the supreme court would be a small hope, if they took it on.

 

anyone have new ideas on what to expect from watt during the earnings releases?  my odds are below.

 

a) strong adjustment to the sweep (1pct chance)

 

b) minor adjustment to the sweep but with plenty of negative verbiage (this is not recap/release,etc)  (55pct chance)

 

c) no adjustment (44pct chance)

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I find it interesting that Fairholme did not send an e-mail to their investors citing the New York times article as they have done in the past.  I suspect that there may be more information and Fairholme didn't want to send weekly e-mails to their investors when they could combine the information into one.

 

 

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