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


twacowfca

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I think the idea is they dont have to announce anything tomorrow, but they can stop the sweep before div is due at the end of March (after Calabria hearing and after admin releases its reform plan).

 

Or they could announce it tomorrow. who knows

 

if a capital restoration plan is to be released by admin "soon", I don't know why they would sweep a dividend now...just makes the amount of capital to be restored incrementally higher...but you never know with the govt

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I think the idea is they dont have to announce anything tomorrow, but they can stop the sweep before div is due at the end of March (after Calabria hearing and after admin releases its reform plan).

 

Or they could announce it tomorrow. who knows

 

if a capital restoration plan is to be released by admin "soon", I don't know why they would sweep a dividend now...just makes the amount of capital to be restored incrementally higher...but you never know with the govt

 

Announcing tomorrow would draw too much fire against Calabria hearing, right?

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That is my suspicion. Might be wiser to wait for admin plan thats being released "shortly" and Calabria hearing out of the way (it also makes sense to release the plan AFTER Calabria's hearing as well).

 

 

I think the idea is they dont have to announce anything tomorrow, but they can stop the sweep before div is due at the end of March (after Calabria hearing and after admin releases its reform plan).

 

Or they could announce it tomorrow. who knows

 

if a capital restoration plan is to be released by admin "soon", I don't know why they would sweep a dividend now...just makes the amount of capital to be restored incrementally higher...but you never know with the govt

 

Announcing tomorrow would draw too much fire against Calabria hearing, right?

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I think the real question is if the NWS will be stopped, not when it will be stopped.

 

If we're correct on the former, then the latter is small potatoes.  And I'm highly bullish on the answer to the former being "yes."

 

In other words, if we're spending more time debating, contemplating, discussing the "when" (as opposed to the "if"), well, that means the thesis is pretty darn strong at this point.

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https://www.banking.senate.gov/imo/media/doc/Calabria%20Testimony%202-14-19.pdf

 

 

"I have even brought with me today my nearly decade old, dog-eared personal copy of HERA. Whatever the policy issue, my first question will always be “what does the statute say?"

 

Also for those interested, link to live stream for tomorrow: 

 

https://www.banking.senate.gov/hearings/02/07/2019/nomination-hearing

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As the members of the Committee are perhaps aware, I have an extensive record of

writings in the area of mortgage finance. I have on a few occasions expressed strong opinions

on the history and future of our mortgage finance system. I have most definitely expressed,

and express here today, a frustration with the current state of our mortgage system and the

need for reform.

 

 

Despite that frustration, I want to very clearly state to this Committee, that if confirmed, my role as Director of FHFA is to carry out the clear intent of Congress, not to impose my own vision.

 

In other words, I'm not going to put them in receivership like you may have heard.

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The way this has been playing out has depended mostly on narratives.

 

If the Administration wishes to kill the rally, as Obama's Tsy would regularly do by issuing carefully crafted PRs or stating certain positions during hearings, tomorrow they will have their chance. It can happen. For whatever reason... Calabria's confirmation outcome, pacifying spirits, compromising attitude, etc. Instead, if the Administration doesn't care where shares are trading or doesn't care what opponents say/think re hedge fund vultures and are firm on their adopted plan Calabria may simply state his views and dodge any kind of question that may curtail his freedom of action and/or downplay the shareholders' issues.

 

Tomorrow, for sure, we will see if they are friends or foes. I hope tomorrow is a definite departure from the Obama days.

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Guest cherzeca

What is stopping FHFA/Tsy from reversing NWS -> leaving current GSEs with minimal capital (what was the relief from the en banc, $13bn?) -> FHFA declare undercapitalized and force receivership?

 

good way to destroy $100B of value for no good purpose.  next?

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What is stopping FHFA/Tsy from reversing NWS -> leaving current GSEs with minimal capital (what was the relief from the en banc, $13bn?) -> FHFA declare undercapitalized and force receivership?

 

good way to destroy $100B of value for no good purpose.  next?

 

philosophical reasons could override a monetary payment that isn't directly payable to those making the decision... 

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I changed my mind and sold the position for a small loss. I think the technicals are very interesting right now but slightly premature to enter, so I fixed my error. I may get a big slap on the face tomorrow.

 

 

Maybe someone should slap you irrespectively? Emily?

 

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I changed my mind and sold the position for a small loss. I think the technicals are very interesting right now but slightly premature to enter, so I fixed my error. I may get a big slap on the face tomorrow.

 

 

Maybe someone should slap you irrespectively? Emily?

 

If that either helps me avoid losses or help me generate profits, then slap me however he wants.  :D

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Guest cherzeca

market may overreact tomorrow.  maybe GSEs do another sweep.  market dives down.  maybe GSEs don't do a sweep (or is silent).  market bumps up.  Calabria says something he cant deliver. upside or downside, tomorrow is just another day unless there is some statement by Calabria that seems definitive about the admin plan that is adverse. and his written statement was about as innocuous as possible, so that would be a surprise.  I just don't think tomorrow is an "event" day either way.  we shall see.

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Guest cherzeca

10K:  same language

 

"Fannie Mae expects to pay a $3.2 billion dividend to Treasury by March 31, 2019. Through the fourth quarter of 2018, the company has paid $175.8 billion in dividends to Treasury."

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At least we know a plan is coming.. from 10-k

 

"Administration Developments

 

Officials in the Trump Administration have indicated that resolving the conservatorships of Fannie Mae and Freddie Mac is a priority and that the Administration intends to release a framework for housing finance reform in early 2019."

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Guest cherzeca

At least we know a plan is coming.. from 10-k

 

"Administration Developments

 

Officials in the Trump Administration have indicated that resolving the conservatorships of Fannie Mae and Freddie Mac is a priority and that the Administration intends to release a framework for housing finance reform in early 2019."

 

thanks allnat

 

inasmuch as otting had to tell fhfa staff what was in the offing (riff off on otting) a few weeks ago, it is not surprising that the GSEs themselves would write 10k ask as per previous language and staff of fhfa would approve it.  just thought that if otting would tell counsel not to argue against const claim, he might have told people to leave out this language.  should keep temperature a little cooler for Calabria confirm

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the sweep continues, sadly.  remote odds tsy 'cancels' a nearly $200bn asset of US govt.  the courts and/or congress are likely necessary for that possibility.  if courts or congress fails, then Tsy would likely want something -- billions more common shares perhaps on top of the warrants -- for the sr pref.  good luck everyone. 

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What is stopping FHFA/Tsy from reversing NWS -> leaving current GSEs with minimal capital (what was the relief from the en banc, $13bn?) -> FHFA declare undercapitalized and force receivership?

 

not much.  the Moelis warrant values are likely wildly inflated to generate publicity.  we'd have to hang our hats on either a) a court win or b) a creative way to share cash flow proceeds from the process among govt, jr pref, and common that reflects some level of fairness and sacrifice by all sides.

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At least we know a plan is coming.. from 10-k

 

"Administration Developments

 

Officials in the Trump Administration have indicated that resolving the conservatorships of Fannie Mae and Freddie Mac is a priority and that the Administration intends to release a framework for housing finance reform in early 2019."

 

they are likely reading the news just like us.  and things can (and likely have) changed since otting spoke to the FHFA employees. 

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