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

[TonyG]

How long has sweeney had that motion to compel?

[muscleman]

How long has sweeney had that motion to compel?

 

She's been doing in camera review of the documents that US treasury refused to turn over. Who know how long that's gonna take.

[doughishere]

i just checked her twitter page and don't see any reference to this article. Did she delete the tweet?

 

According to her Twitter page, Gretchen Morgenson is preparing another article.

 

It was up there. Check GSElinks from last week some time...I forget which day.

[merkhet]

How long has sweeney had that motion to compel?

 

She's been doing in camera review of the documents that US treasury refused to turn over. Who know how long that's gonna take.

 

A little under three months since the June deadline for presidential privilege.

[Luke 532]

Fanniegate: FHFA's Circular Reasoning Defeats Its Earlier Arguments

http://seekingalpha.com/article/4003541-fanniegate-fhfas-circular-reasoning-defeats-earlier-arguments

 

[muscleman]

Fanniegate: FHFA's Circular Reasoning Defeats Its Earlier Arguments

http://seekingalpha.com/article/4003541-fanniegate-fhfas-circular-reasoning-defeats-earlier-arguments

 

Caution. I don't read anything written by Glenn. This guy is a joke. He was largely involved in the 2011 Chinese reverse mergers and got burned. He was writing a lot of pump articles and had the moto of "Follow me to invest to become a millionaire". He got quiet for the next 4 years, and now he started to become active again, on the GSEs?  :o

 

It looks to me that this guy is desperately looking for one big shot to become famous, so he can either launch a fund or do whatever he planned. I was even thinking about exiting all of my GSE shares when I saw this guy's activity, but I think that decision may not be wise because the legal reasonings provided by excellent board members here like chris and merkhet made this a strong case.

 

 

http://seekingalpha.com/author/glen-bradford/articles#regular_articles&ticker=ccme

 

[redhots]

Wow.  My spidey sense is off the charts with him as well.

[Mephistopheles]

He's also apparently invested 150% or so of his net worth in the prefs...

[muscleman]

He's also apparently invested 150% or so of his net worth in the prefs...

 

How did you know that?  :o

But I guess that's normal with this guy. Having been burned by the Chinese reverse mergers, I guess he finally saved enough money to get back into the game again, so he is desperately needing to swing through the fence and make a large profit. Then he can start bragging about his legendary trade.

 

[Spekulatius]

He's also apparently invested 150% or so of his net worth in the prefs...

 

How did you know that?  :o

But I guess that's normal with this guy. Having been burned by the Chinese reverse mergers, I guess he finally saved enough money to get back into the game again, so he is desperately needing to swing through the fence and make a large profit. Then he can start bragging about his legendary trade.

 

Taleb's monkeys at work.

[Mephistopheles]

He's also apparently invested 150% or so of his net worth in the prefs...

 

How did you know that?  :o

But I guess that's normal with this guy. Having been burned by the Chinese reverse mergers, I guess he finally saved enough money to get back into the game again, so he is desperately needing to swing through the fence and make a large profit. Then he can start bragging about his legendary trade.

 

In his Seeking Alpha I believe he's disclosed taking out a loan and owns 60,000 prefs or something

 

 

[Spekulatius]

Besides the issues with the profit sweep and the conversatorship - how good  would these business be without the government backing them up? What would their margins be and how much capital would they need to hold to run their business and insure millions of homes and assume the interest rate risk for millions for 30 year mortgages?

 

How would they fare if the government would compete with them by founding a new GSE backed with a government guarantee?

[Guest cherzeca]

i dont read glen.  another lawyer w/o a law degree.  he's nice enough, but...

 

@spek "how good  would these business be without the government backing them up?"

 

whenever i read something like this, i wonder whether this applies to all TBTF banks as well.  you know?

[SnarkyPuppy]

Is there a risk that certain Preferreds will be made whole through liquidation preference rights and that others lower in the capital structure will be insufficiently funded? 

 

In my brief read of a few of the offerings  (http://www.fanniemae.com/portal/about-us/investor-relations/stock-information.html), the language reads to me that at least in a liquidation scenario, funding occurs in an alphabetical sequence  (i.e. full payment is Series D -> then use remaining to fully pay Series E -> etc). 

[merkhet]

From the Series S Circular:

 

The shares of Preferred Stock of Fannie Mae designated “5.25% Non-Cumulative Preferred Stock, Series D” (the “Series D Preferred Stock”), “5.10% Non-Cumulative Preferred Stock, Series E” (the “Series E Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series F” (the “Series F Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series G” (the “Series G Preferred Stock”), “5.81% Non-Cumulative Preferred Stock, Series H” (the “Series H Preferred Stock”), “5.375% Non-Cumulative Preferred Stock, Series I” (the “Series I Preferred Stock”), “5.125% Non-Cumulative Preferred Stock, Series L” (the “Series L Preferred Stock”), “4.75% Non-Cumulative Preferred Stock, Series M” (the “Series M Preferred Stock”), “5.50% Non-Cumulative Preferred Stock, Series N” (the “Series N Preferred Stock”), “Non-Cumulative Preferred Stock, Series O” (the “Series O Preferred Stock”), “Non-Cumulative Convertible Series 2004-1 Preferred Stock” (the “Series 2004-1 Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series P” (the “Series P Preferred Stock”), “6.75% Non-Cumulative Preferred Stock, Series Q” (the “Series Q Preferred Stock”), and “7.625% Non-Cumulative Preferred Stock, Series R” (the “Series R Preferred Stock”) shall be deemed to rank on a parity with shares of Series S Preferred Stock as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of Fannie Mae. Accordingly, the holders of record of Series D Preferred Stock, the holders of record of Series E Preferred Stock, the holders of record of Series F Preferred Stock, the holders of record of Series G Preferred Stock, the holders of record of Series H Preferred Stock, the holders of record of Series I Preferred Stock, the holders of record of Series L Preferred Stock, the holders of record of Series M Preferred Stock, the holders of record of Series N Preferred Stock, the holders of record of Series 2004-1 Preferred Stock, the holders of record of Series O Preferred Stock, the holders of record of Series P Preferred Stock, the holders of record of Series Q Preferred Stock, the holders of record of Series R Preferred Stock, and the Holders of Series S Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon dissolution, liquidation or winding up of Fannie Mae, as the case may be, in proportion to their respective dividend rates or amounts or liquidation prices, without preference or priority, one over the other.

[SnarkyPuppy]

From the Series S Circular:

 

The shares of Preferred Stock of Fannie Mae designated “5.25% Non-Cumulative Preferred Stock, Series D” (the “Series D Preferred Stock”), “5.10% Non-Cumulative Preferred Stock, Series E” (the “Series E Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series F” (the “Series F Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series G” (the “Series G Preferred Stock”), “5.81% Non-Cumulative Preferred Stock, Series H” (the “Series H Preferred Stock”), “5.375% Non-Cumulative Preferred Stock, Series I” (the “Series I Preferred Stock”), “5.125% Non-Cumulative Preferred Stock, Series L” (the “Series L Preferred Stock”), “4.75% Non-Cumulative Preferred Stock, Series M” (the “Series M Preferred Stock”), “5.50% Non-Cumulative Preferred Stock, Series N” (the “Series N Preferred Stock”), “Non-Cumulative Preferred Stock, Series O” (the “Series O Preferred Stock”), “Non-Cumulative Convertible Series 2004-1 Preferred Stock” (the “Series 2004-1 Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series P” (the “Series P Preferred Stock”), “6.75% Non-Cumulative Preferred Stock, Series Q” (the “Series Q Preferred Stock”), and “7.625% Non-Cumulative Preferred Stock, Series R” (the “Series R Preferred Stock”) shall be deemed to rank on a parity with shares of Series S Preferred Stock as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of Fannie Mae. Accordingly, the holders of record of Series D Preferred Stock, the holders of record of Series E Preferred Stock, the holders of record of Series F Preferred Stock, the holders of record of Series G Preferred Stock, the holders of record of Series H Preferred Stock, the holders of record of Series I Preferred Stock, the holders of record of Series L Preferred Stock, the holders of record of Series M Preferred Stock, the holders of record of Series N Preferred Stock, the holders of record of Series 2004-1 Preferred Stock, the holders of record of Series O Preferred Stock, the holders of record of Series P Preferred Stock, the holders of record of Series Q Preferred Stock, the holders of record of Series R Preferred Stock, and the Holders of Series S Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon dissolution, liquidation or winding up of Fannie Mae, as the case may be, in proportion to their respective dividend rates or amounts or liquidation prices, without preference or priority, one over the other.

 

Thanks for pointing that out merkhet, I was reading the earlier alphabetic offerings. 

[merkhet]

They all have the same/similar language in Section 9. Priority. Basically Series D can't possible have foreshadowed the existence of Series E/F/G, etc. So therefore, in each successive Series, there is language putting that Series on parity with the prior Series.

[TonyG]

If it was a simple affirm of Lamberth, would the court of appeals be taking this long? I ask because I'm reminded of when hamish hume said " the longer they take to make a decision, the better it is for us.."

[Steve_Berk]

i don't remember him saying that. I think he just said the fact that they're taking all these steps means that they're taking this very seriously, which is true and you could tell from oral arguments in Perry.

 

I don't think anyone expects or ever expected a decision like the one we just got in Pagliara, which was frankly just shameful.

 

 

If it was a simple affirm of Lamberth, would the court of appeals be taking this long? I ask because I'm reminded of when hamish hume said " the longer they take to make a decision, the better it is for us.."

[merkhet]

If it was a simple affirm of Lamberth, would the court of appeals be taking this long? I ask because I'm reminded of when hamish hume said " the longer they take to make a decision, the better it is for us.."

 

I don't think we should be reading tea leaves. There are a number of variables that go into why things take a while in the courts -- any one of them could have a dominant effect.

[Luke 532]

i don't remember him saying that. I think he just said the fact that they're taking all these steps means that they're taking this very seriously, which is true and you could tell from oral arguments in Perry.

 

I don't think anyone expects or ever expected a decision like the one we just got in Pagliara, which was frankly just shameful.

 

If it was a simple affirm of Lamberth, would the court of appeals be taking this long? I ask because I'm reminded of when hamish hume said " the longer they take to make a decision, the better it is for us.."

 

Hume: "We think that the more the court studies the case and looks at what really happened, looks at all the legal arguments, and looks at the decision below and at what we say about the decision below, the more likely it is that we're going to win. I take it as a very, very good sign for the plaintiffs that the court is spending this much time on it."

http://www.dsnews.com/news/04-19-2016/counsels-corner-the-battle-over-gse-profits-is-raging

[TonyG]

Ya i almost didn't post the question because I didn't want to really speculate but nonetheless thanks for the answers

[Luke 532]

Ya i almost didn't post the question because I didn't want to really speculate but nonetheless thanks for the answers

 

I think it was a valid hypothesis given that the lead attorney made a point to mention that the more time it takes the more favorable it might be.

[hardincap]

its only been 4 months. i think abnormal in this court is 8-12 months. thats the scenario hume was really talking about

[rros]

Besides the issues with the profit sweep and the conversatorship - how good  would these business be without the government backing them up? What would their margins be and how much capital would they need to hold to run their business and insure millions of homes and assume the interest rate risk for millions for 30 year mortgages?

 

How would they fare if the government would compete with them by founding a new GSE backed with a government guarantee?

 

Like many other businesses this one is subsidized. So the question is can they be in business w/o subsidies? If so, who pays for the additional cost of capital? This may all translate into a viable business model where mortgages are more expensive.

 

What happens when you remove the political factor.