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

[Fat Pitch]

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?

 

With all the $$$ on the line do you think they care about what the liberal media has to say? They are going for the win and they are telegraphing it, though I could be wrong.

[Luke 532]

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?

 

Trump and his team will be ripped apart by the liberal media no matter what they do.  Those that voted for him certainly don't care, and there were enough that didn't care to get him elected.  I doubt those voters care what the media will say about him for the next four years.  Trump will do what he thinks is the best thing to do.

[Steve_Berk]

I think that there's been way too much other stuff to focus on for the media to make a lot of hay about this issue. Notably, very few news articles came out about this topic when Mnuchin commented on getting rid of the conservatorship. My guess is that the topic is too technical and complicated for any media to delve into this very deeply. You might get some of the expected refrains about how wall streeters are getting rich off the deal or something like that, but I'm thinking that it's not going to be a massive public outcry.

 

 

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?

 

Trump and his team will be ripped apart by the liberal media no matter what they do.  Those that voted for him certainly don't care, and there were enough that didn't care to get him elected.  I doubt those voters care what the media will say about him for the next four years.  Trump will do what he thinks is the best thing to do.

[rros]

but I'm thinking that it's not going to be a massive public outcry.

In the (new) era of Ayn Rand wall streeters getting rich off any opportunity will become role models. And there will be (some) media behind them.

 

It is just too early to forget 8 years of progressive media and the Elizabeth Warrens of the world. The animals, animal spirits, will be running the show. Soon.

[Guest cherzeca]

it will really come down to something as simple as someone in trump administration (crusty ole wilbur ross would be perfect) saying, hey, we have a pro-growth agenda, and in a pro-growth agenda, businesses and investors can do well.

[HalfMeasure]

This is where the legal and political angle intertwine - positive news from the courts and damning evidence from discovery would help manage the political angle. While we might think of these as two separate roads to victory, in reality you can't decouple them. As well, the strength of the legal cases dictates the negotiating power of the shareholders. E.g., the stronger the legal case looks, the more concessions the Treasury will have to take on any settlement/restructuring agreement. Right now I think many people are assuming the Treasury gets full payback on the liquidation preference + 10% dividends on the Sr Prefs as well as the warrants, but to me that sounds a lot like having their cake and eating it too (which only makes sense to me if there was no wrongdoing).

[merkhet]

I think people are overlooking the max win scenario for Trump.

 

(1) Settle the court cases because the underlying documents show bad faith from government

(2) Vaguely mention the documents as why but don't release them

(3) Let the media foam at the mouth about how this is just a giveaway to cronies

(4) "Succumb" to pressure to release the documents

(5) Slam the "anti-business" Democrats and use it as a cudgel for years

 

No need for a favorable court decision. Much better this way. They "tried" to keep it out of the public eye, but they had to "correct" the narrative.

[Guest cherzeca]

I think people are overlooking the max win scenario for Trump.

 

(1) Settle the court cases because the underlying documents show bad faith from government

(2) Vaguely mention the documents as why but don't release them

(3) Let the media foam at the mouth about how this is just a giveaway to cronies

(4) "Succumb" to pressure to release the documents

(5) Slam the "anti-business" Democrats and use it as a cudgel for years

 

No need for a favorable court decision. Much better this way. They "tried" to keep it out of the public eye, but they had to "correct" the narrative.

 

i've been thinking along these lines but i'm not sure how far this dog will hunt.

 

mnuchin will need cover from the attacks that he is favoring his hedge fund buddies (and trump assuming he is an LP of paulson).  the simple fix is for mnuchin to release (or at least threaten to release) all privileged docs and say this was a terrible mess and he is just trying to do right, fix the mistakes of the last administration (which will be a recurrent theme for the trump administration).

 

in this way, a denial of mandamus is not even necessary, though i expect it to come.

 

this is a powerful defense available to mnuchin, i just hope he is thinking along these lines

[HalfMeasure]

I think people are overlooking the max win scenario for Trump.

 

(1) Settle the court cases because the underlying documents show bad faith from government

(2) Vaguely mention the documents as why but don't release them

(3) Let the media foam at the mouth about how this is just a giveaway to cronies

(4) "Succumb" to pressure to release the documents

(5) Slam the "anti-business" Democrats and use it as a cudgel for years

 

No need for a favorable court decision. Much better this way. They "tried" to keep it out of the public eye, but they had to "correct" the narrative.

 

i've been thinking along these lines but i'm not sure how far this dog will hunt.

 

mnuchin will need cover from the attacks that he is favoring his hedge fund buddies (and trump assuming he is an LP of paulson).  the simple fix is for mnuchin to release (or at least threaten to release) all privileged docs and say this was a terrible mess and he is just trying to do right, fix the mistakes of the last administration (which will be a recurrent theme for the trump administration).

 

in this way, a denial of mandamus is not even necessary, though i expect it to come.

 

this is a powerful defense available to mnuchin, i just hope he is thinking along these lines

 

This is where I think the courts could be very helpful for the narrative - a favorable ruling in the Perry appeal or continued positive developments in the Court of Claims could help the narrative. The more obvious the Gov'ts wrongdoings, the more inevitable a shareholder win looks, and the less one-sided or favor-like any negotiation from Mnuchin will look. There doesn't have to be a win in the courts outright, but the stronger the cases look optically to the media/layman the better.

[investorG]

fyi F+F mentioned on rachel maddow show last night.  in the segment with k conway that is 12 minutes long entitled price / ethics.  around the 4minute mark.

 

maddow tries to tie trump's association with paulson's hf to mnuchin's comments.  conway said a) he might not still have a stake in the fund  b) repubs generally favor privatization so it's less of a surprise and c) even if he still has the investment, it's peanuts for trump and thus he's not making picks or policy based on it

[onyx1]

I think people are overlooking the max win scenario for Trump.

 

(1) Settle the court cases because the underlying documents show bad faith from government

(2) Vaguely mention the documents as why but don't release them

(3) Let the media foam at the mouth about how this is just a giveaway to cronies

(4) "Succumb" to pressure to release the documents

(5) Slam the "anti-business" Democrats and use it as a cudgel for years

 

No need for a favorable court decision. Much better this way. They "tried" to keep it out of the public eye, but they had to "correct" the narrative.

 

 

This is good strategic thinking Merket.  With or without an assist from the courts, the new administration is well aware of the looming "you're helping your hedge fund buddies" hysteria. I expect them to be well prepared with a persuasive response against abusive executive overreach.

[onyx1]

fyi F+F mentioned on rachel maddow show last night.  in the segment with k conway that is 12 minutes long entitled price / ethics.  around the 4minute mark.

 

maddow tries to tie trump's association with paulson's hf to mnuchin's comments.  conway said a) he might not still have a stake in the fund  b) repubs generally favor privatization so it's less of a surprise and c) even if he still has the investment, it's peanuts for trump and thus he's not making picks or policy based on it

 

Looks like the talking points have been dutifully distributed to the sympathetic media drones.

[no_free_lunch]

This would be the perfect investment if there was some way to hedge it.  I don't have access to short FNMA directly but I wonder if there is anything else?  The scenario I was thinking of is where the republicans force fannie into runoff.  They have talked about this before.  Even if they revoke the sweep, depending on how things are implemented I am not sure if there would be enough profits to repay the preferreds.  Is there perhaps some other businesses that would do very well in this scenario, something that you could buy calls on?  Any other thoughts on a hedge?

 

I am about 3% FNMA preferreds but could seriously bump that up if hedging was available.

[Flynnstone5]

I think people are overlooking the max win scenario for Trump.

 

(1) Settle the court cases because the underlying documents show bad faith from government

(2) Vaguely mention the documents as why but don't release them

(3) Let the media foam at the mouth about how this is just a giveaway to cronies

(4) "Succumb" to pressure to release the documents

(5) Slam the "anti-business" Democrats and use it as a cudgel for years

 

No need for a favorable court decision. Much better this way. They "tried" to keep it out of the public eye, but they had to "correct" the narrative.

 

i've been thinking along these lines but i'm not sure how far this dog will hunt.

 

mnuchin will need cover from the attacks that he is favoring his hedge fund buddies (and trump assuming he is an LP of paulson).  the simple fix is for mnuchin to release (or at least threaten to release) all privileged docs and say this was a terrible mess and he is just trying to do right, fix the mistakes of the last administration (which will be a recurrent theme for the trump administration).

 

in this way, a denial of mandamus is not even necessary, though i expect it to come.

 

this is a powerful defense available to mnuchin, i just hope he is thinking along these lines

 

Completely agree with merkhet's line of thinking here. Trump has been masterful at baiting his opponents and this would be a beautiful setup to let the media go crazy only to drop the hammer.

 

@cherzeca - I've been thinking about the confirmation hearings as well. I wonder if he needs to bring up docs so early as opposed to saving them for the media surprise. Wouldn't it make more sense to refer to the NWS as completely unjust, make the point that the gov has been paid back and has taken billions extra, bring up comparisons of Citi, GM, AIG, and then address the Brown letter questions by saying he believes in the rights of all shareholders regardless of the class of share held.

[SnarkyPuppy]

This would be the perfect investment if there was some way to hedge it.  I don't have access to short FNMA directly but I wonder if there is anything else?  The scenario I was thinking of is where the republicans force fannie into runoff.  They have talked about this before.  Even if they revoke the sweep, depending on how things are implemented I am not sure if there would be enough profits to repay the preferreds.  Is there perhaps some other businesses that would do very well in this scenario, something that you could buy calls on?  Any other thoughts on a hedge?

 

I am about 3% FNMA preferreds but could seriously bump that up if hedging was available.

 

Not that I know of.  It's really a shame- in an ideal world you'd make an Ericopoly trade here by buying long dated options concentrated in FNMA and shorting related exposure

[Flynnstone5]

fyi F+F mentioned on rachel maddow show last night.  in the segment with k conway that is 12 minutes long entitled price / ethics.  around the 4minute mark.

 

maddow tries to tie trump's association with paulson's hf to mnuchin's comments.  conway said a) he might not still have a stake in the fund  b) repubs generally favor privatization so it's less of a surprise and c) even if he still has the investment, it's peanuts for trump and thus he's not making picks or policy based on it

 

Thanks for pointing out. Here is the link:

 

http://www.msnbc.com/rachel-maddow/watch/ethics-questions-loom-over-trump-hhs-pick-rep-tom-price-839983683992

[muscleman]

http://www.wsj.com/articles/trump-to-name-icahn-as-adviser-on-regulatory-overhaul-1482354552

 

Didn't Icahn say he would not want to be Trump's adviser but will be around to take his phone calls? Now he is named Trump's adviser?

[Luke 532]

Housing Groups Turn to Trump to Recapitalize GSEs

http://www.nationalmortgagenews.com/news/compliance-regulation/housing-groups-turn-to-trump-to-recapitalize-gses-1093561-1.html

[hardincap]

http://www.wsj.com/articles/trump-to-name-icahn-as-adviser-on-regulatory-overhaul-1482354552

 

Didn't Icahn say he would not want to be Trump's adviser but will be around to take his phone calls? Now he is named Trump's adviser?

 

much ado about nothing, imo. icahn always had trump's ear. this title doesnt really change anything

 

 

 

[Guest cherzeca]

trump should tell mnuchin that if he gets heat on the trump ownership of paulson hedge fund angle, he will donate entire investment to charity.  easy for me to say...

 

[Mephistopheles]

Just a small anecdote. A family member worked with Mnuchin at Goldman. He says that Mnuchin is a diehard capitalist. Hopefully that's a good thing for us...

[Guest cherzeca]

Just a small anecdote. A family member worked with Mnuchin at Goldman. He says that Mnuchin is a diehard capitalist. Hopefully that's a good thing for us...

 

much of his business experience at goldman and thereafter involves mortgage finance.  plus he is a big risk-taker, as evidenced by his indymac coup.  he doesn't look at his partner in the indymac deal, paulson, or berkowitz, ackman and perry as anything other than good guys doing the right thing, imo.

[HalfMeasure]

Just a small anecdote. A family member worked with Mnuchin at Goldman. He says that Mnuchin is a diehard capitalist. Hopefully that's a good thing for us...

 

much of his business experience at goldman and thereafter involves mortgage finance.  plus he is a big risk-taker, as evidenced by his indymac coup.  he doesn't look at his partner in the indymac deal, paulson, or berkowitz, ackman and perry as anything other than good guys doing the right thing, imo.

 

Plus, he's probably well prepared for a negative narrative in the press after IndyMac - likely thickened his skin while lining his pockets.

[orthopa]

Anyone have "that" or a link to the list of fannie/freddie issues and where they trade at percentage of par? I thought I have posted it at some point but cant seem to find it now that topic is over 500 pages.

 

Thanks in advance.

[Luke 532]

Unconfirmed, but this (attached) is floating out there... GS saying FNMAS could trade at $32 with a payable 8.25% coupon.  Again, unconfirmed.