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


twacowfca

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@investorG, no reason to think we won't see the c+w bill soon-ish (before midterms). if the sources who leaked that prefs may get "par or close to it" are to be believed, this should be a very positive catalyst

 

hardincap, nice to hear from you.

 

unfortunately we're likely headed down for now after phillips doused any hope of admin reform and his comments on shareholders.  the corker news may or may not be true, and it's old info.  and any house bill, if one is introduced, certainly won't be friendly.

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certainly won't be friendly to whom? common holders perhaps but i think c+w tipped their hand w/ tacit admission that prefs need to be respected. the republican convention memo, c+w leak and impracticalities of trampling over pref holders leads me to believe the bill will be positive for prefs, but this is admittedly speculation

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FF might soon post a loss to be covered by taxpayers. Next quarter, economy may not look that rosy and by the summer interest rates may be headed lower with markets taking a hit. Lower rates may translate into additional -hedging- losses for FF. A scenario like this, what would it do? Accelerate a bill? Push administrative reform to a rapid recapitalization Watt-style? Today, markets being hit hard seems unthinkable. But just in case I started to raise cash. Not selling my Jrs. though.

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High liquidity prefs going down hard at the moment. FNMAT trading at near parity with FNMAJ, a good time to switch from the latter to the former!

 

The unusual volume is in FNMAM. Two blocks of 765,352 shares were sold at prices (12.09, 12.13) well below the bid (12.87 at the time).

 

Is there some news I missed or is it just another day at the office?

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Guest cherzeca

leaked infrastructure plan says nothing about monetizing fnma warrants

 

leaked draft talks about use of proceeds, all proceeds being sourced from appropriations.  if congress doesnt appropriate enough money, then potus may go to fed balance sheet assets.  no need to tell congress you might have a alternative source of money before you ask for the appropriation, right?

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certainly won't be friendly to whom? common holders perhaps but i think c+w tipped their hand w/ tacit admission that prefs need to be respected. the republican convention memo, c+w leak and impracticalities of trampling over pref holders leads me to believe the bill will be positive for prefs, but this is admittedly speculation

 

the house bill, if introduced, will likely look a lot different than the Senate one.  it likely wont include any payouts to existing shareholders.  imo the RNC memo means nothing, 0 people in power have mentioned it.

 

that said, i believe the securities represent strong value at current levels.  earlier on, I expected more from mnuchin.  but it's hard for one person to rip up a 180bn+ sr pref holding of the US Tsy that courts have said to date is legit. 

 

in the end, i expect either a) the courts to say HERA isnt consititutional or (more likely) the NWS was out of bounds OR b) Congress to count the sr pref as paid back in an attempt to set the stage for the next iteration of housing reform where capital needs to be raised and new investors will likely want to make sure old investors werent 100pct violated.

 

time will tell.  we're in a rocky situation at the moment, yet again...good luck everyone!

 

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Guest cherzeca

certainly won't be friendly to whom? common holders perhaps but i think c+w tipped their hand w/ tacit admission that prefs need to be respected. the republican convention memo, c+w leak and impracticalities of trampling over pref holders leads me to believe the bill will be positive for prefs, but this is admittedly speculation

 

the house bill, if introduced, will likely look a lot different than the Senate one.  it likely wont include any payouts to existing shareholders.  imo the RNC memo means nothing, 0 people in power have mentioned it.

 

that said, i believe the securities represent strong value at current levels.  earlier on, I expected more from mnuchin.  but it's hard for one person to rip up a 180bn+ sr pref holding of the US Tsy that courts have said to date is legit. 

 

in the end, i expect either a) the courts to say HERA isnt consititutional or (more likely) the NWS was out of bounds OR b) Congress to count the sr pref as paid back in an attempt to set the stage for the next iteration of housing reform where capital needs to be raised and new investors will likely want to make sure old investors werent 100pct violated.

 

time will tell.  we're in a rocky situation at the moment, yet again...good luck everyone!

 

agreed.  mnuchin probably realized slow playing was in his long term interest.

 

i do like the constitutional claims in bhatti, argued a few weeks ago...but i said that about the APA claims in perry.  love that watt said his peace...which gives democrats succor.  this is a long game, and the IRR may become treasury yield-like!

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leaked infrastructure plan says nothing about monetizing fnma warrants

 

leaked draft talks about use of proceeds, all proceeds being sourced from appropriations.  if congress doesnt appropriate enough money, then potus may go to fed balance sheet assets.  no need to tell congress you might have a alternative source of money before you ask for the appropriation, right?

 

This is a positive - much better that its appropriations vs. expropriations.

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3bn capital buffer: check

no re-jumpstart: check

mnuchin says does not want to get rid of FnF: check

FHFA on the record in support of a utility: check

 

wondering who's the sucker, me or the other investor who's selling jr pref @24pct of par?

 

I agree here. Add to the list that Phillips said that the conservatorships will end during this presidential term. Even if Phillips wouldn't say that the administration will act if Congress doesn't by August, he didn't say that they never would.

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3bn capital buffer: check

no re-jumpstart: check

mnuchin says does not want to get rid of FnF: check

FHFA on the record in support of a utility: check

 

wondering who's the sucker, me or the other investor who's selling jr pref @24pct of par?

How about adding we have seen the highs for the market this year?
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If there is a recession looming or softness in the economy (say within 1-2 years), does that effect decisions of Congress, Treasury or FHFA to go one way or the other?

Clearly, this will be a Trump issue. Or any President in office. Therefore, a bad economy or a bad market makes the political issue an economic issue. Must win the next election! This is when everything goes and admin action takes place. You have to reach for the cookie jar and put those 100 bill to work. Fast.

 

And I am not thinking 1 to 2 years but this summer.

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Guest cherzeca

4-minute corker interview on front page of cnbc.com. no direct mention of GSEs.  any thoughts on the last 30 seconds though?

Thanks. The tough part is having to revive fannie and freddie.

 

Sorry didn’t see. Did corker say that?  What would he know about it?

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4-minute corker interview on front page of cnbc.com. no direct mention of GSEs.  any thoughts on the last 30 seconds though?

Thanks. The tough part is having to revive fannie and freddie.

 

Sorry didn’t see. Did corker say that?  What would he know about it?

 

https://www.cnbc.com/2018/01/24/corker-companies-may-be-making-coordinated-effort-to-hype-tax-law.html

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4-minute corker interview on front page of cnbc.com. no direct mention of GSEs.  any thoughts on the last 30 seconds though?

Thanks. The tough part is having to revive fannie and freddie.

 

I just listened to the segment. What does the bolded part mean?

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4-minute corker interview on front page of cnbc.com. no direct mention of GSEs.  any thoughts on the last 30 seconds though?

Thanks. The tough part is having to revive fannie and freddie.

 

Sorry didn’t see. Did corker say that?  What would he know about it?

Sorry all. That was me, not Corker.

 

He was asked: Is infrastructure possible?

Corker: "I think infrastructure is tough because of the pay for, ok? How do you pay for? I know he's (Trump) floated things as the gas tax, I don't want to mention some of the other things he's thrown out.../Wallstreet has a weary mouth/..., but I know he is looking for a way to pay for so *that* is going to be the tough part."

 

There was a part /-----/ I could not understand. He spoke so quickly.

 

My inference was that if warrants are in someone's mind at the WH and FF's are recapitalized and released so that exercised warrants pay for infrastructure, *that* will be the tough part... for some. As in hard to swallow.

 

Was just joking. Impossible to say what Corker left out in those last seconds. He was vague about what he heard or knew about the "other things he's thrown out"...

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