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

[Guest cherzeca]

sorry snarky, idk.

 

I think Joe Light has the quotes right in a twitter thread.

 

 

thanks cox

 

/status/958372400701165569

[hardincap]

@cherzeca, yuge for corker to specifically call out shareholders and admit they need to be treated fairly. tide has indeed turned

[BeerBBQ]

Is there any way of watching a replay of this?  Right now?

 

there is a rewind button in lower left of the video stream

[Eye4Valu]

Wow, I would say that is a fair statement from Corker, and one I wasn't expecting.

[rros]

Definitely a conciliatory tone from Corker. And no more Jumpstarts from him ever.

 

He looked at all the panel when he emphasized "we have shareholders in these entities today...".

[Guest cherzeca]

Definitely a conciliatory tone from Corker. And no more Jumpstarts from him ever.

 

He looked at all the panel when he emphasized "we have shareholders in these entities today...".

 

Covered his GSE shorts went long

[orthopa]

Ive asked before and will ask again. Any reason to not go all in on preferred at least? This sounds narrow minded but only downside I really see left is that % return on agreed compensation/reinstatement etc of preferred is undesirable, ie 40% of par after waiting a couple more years and no div.

[SnarkyPuppy]

Ive asked before and will ask again. Any reason to not go all in on preferred at least? This sounds narrow minded but only downside I really see left is that % return on agreed compensation/reinstatement etc of preferred is undesirable, ie 40% of par after waiting a couple more years and no div.

 

A mutually owned private entity would be largely consistent with everything that's been publicly said and c an wipe out preferreds.  Seems unlikely but the most material in probability.

[Midas79]

Ive asked before and will ask again. Any reason to not go all in on preferred at least? This sounds narrow minded but only downside I really see left is that % return on agreed compensation/reinstatement etc of preferred is undesirable, ie 40% of par after waiting a couple more years and no div.

 

A mutually owned private entity would be largely consistent with everything that's been publicly said and c an wipe out preferreds.  Seems unlikely but the most material in probability.

 

What does this mean, and who would the new owners be? Would there be grounds for any new lawsuits about liquidation preference if it takes receivership to move to this new model?

 

It would be hard to reconcile a move to an entity that wipes out even the junior prefs with Corker's specifically mentioning existing shareholders and immediately afterwards expressing a desire for a solution that is fair to all interests, which presumably would include the shareholders he just mentioned.

 

I see why existing shareholders are a thorn in the side of a reform effort: the capital that the original buyers contributed has long been swept away and thus they (well, we) wouldn't actually contribute anything towards a recap.

 

And I understand your point of view, Snarky. You consistently play devil's advocate and I appreciate that; it is always good to keep the downside in mind.

[orthopa]

Just watching the hearing now. I think there is no doubt Corkers is heavily considering if not has already written receivership into his bill. He essentially bounces it off Mnuchin as an administrative option if congress doesnt act.

 

In that light previous reports that his bill would make preferred almost whole meshes with his shareholder comments today.

 

Cant say unless blindsided by a big change I would have any issue with a Corker bill at this point after reading the tea leaves.

[rros]

Ive asked before and will ask again. Any reason to not go all in on preferred at least? This sounds narrow minded but only downside I really see left is that % return on agreed compensation/reinstatement etc of preferred is undesirable, ie 40% of par after waiting a couple more years and no div.

I am and have been both naive and optimistic. With this bias in place, my thought is that Corker/Mnuchin's exchange has been rehearsed with Corker letting Mnuchin's door open to administrative reform. Remember, in the past he not only refused to see this option but actively fought it with Jumpstart.

 

1. The mutually owned entity is a no-shareholders solution. Corker's statement today about an inclusive resolution denies it. Unless admin can do this on their own which I do not think so (rechartering is needed).

 

2. 1 to 10 years of c-ship. In my view, Corker's admission about a high likelihood of Congress failing to act points strictly at this year's effort. Warming up to the idea of administrative action right after such failure has become obvious.

 

I really cannot see this extending into 2019 unless it is real that Treasury wants Fannie and Freddie's income. In which case, we are toast.

 

Chris, yes, Corker is all in now lol.

[Midas79]

Courtesy of whipstick on the iHub board:

 

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=138127285

 

http://bankrupt.com/CRL_FMCC_013018_182330.pdf

 

I just started reading but it appears to be a draft of the Corker/Warner bill.

[rros]

In that light previous reports that his bill would make preferred almost whole meshes with his shareholder comments today.

Yes, his comments today were shareholder friendly.

[investorG]

Ive asked before and will ask again. Any reason to not go all in on preferred at least? This sounds narrow minded but only downside I really see left is that % return on agreed compensation/reinstatement etc of preferred is undesirable, ie 40% of par after waiting a couple more years and no div.

 

yes, lots of potential reasons.  that's why we're @ 25pct of par.  this is not an under-researched investment, especially relative to its market cap.

[FreeOption]

 

Section 802: Continued Conservatorship

a) timing - the conservatorship of each enterprise shall continue until a receiver is appointed...

b) No privatization.

 

 

 

 

Courtesy of whipstick on the iHub board:

 

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=138127285

 

http://bankrupt.com/CRL_FMCC_013018_182330.pdf

 

I just started reading but it appears to be a draft of the Corker/Warner bill.

[investorG]

I suspect the views' of corker and the message board consensus on the meaning of 'fair' aren't similar.

 

since the bankers are desperate (crapo led off the whole FSOC meeting talking about GSE reform!), there is some chance the shareholders are bribed to try to pass a bill.

 

but in that scenario, the bribe wouldn't likely be inserted until later in the process.

 

i do agree that it's nice for a Senator to recognize shareholders, thank you Senator Corker for that hopefully fresh start on finding a balanced solution for all parties.

 

[Midas79]

 

Section 802: Continued Conservatorship

a) timing - the conservatorship of each enterprise shall continue until a receiver is appointed...

b) No privatization.

 

And its own mini-Jumpstart in section 802(b)(1).

 

The Secretary of the Treasury shall not sell or otherwise dispose of any senior preferred shares, any interest in the warrants, any common shares acquired upon the exercise of the warrants, or any other equity interest that were acquired pursuant to the Senior Preferred Stock Purchase Agreement.

 

Section 802(b)(2) ties Watt's hands:

 

Except for as provided by this title, and except for any distribution on the senior preferred shares acquired pursuant to the Senior Preferred Stock Purchase Agreement, the Agency shall not, in the capacity of the Agency as conservator or otherwise, take any step toward privatizing an enterprise or otherwise removing an enterprise, or any material business or other asset of an enterprise, from the conservatorship of the Agency.

 

So receivership plus seniors in place equals zero for all commons and junior prefs. This is what Corker calls fair?

[rros]

 

Section 802: Continued Conservatorship

a) timing - the conservatorship of each enterprise shall continue until a receiver is appointed...

b) No privatization.

 

And its own mini-Jumpstart in section 802(b)(1).

 

The Secretary of the Treasury shall not sell or otherwise dispose of any senior preferred shares, any interest in the warrants, any common shares acquired upon the exercise of the warrants, or any other equity interest that were acquired pursuant to the Senior Preferred Stock Purchase Agreement.

 

Section 802(b)(2) ties Watt's hands:

 

Except for as provided by this title, and except for any distribution on the senior preferred shares acquired pursuant to the Senior Preferred Stock Purchase Agreement, the Agency shall not, in the capacity of the Agency as conservator or otherwise, take any step toward privatizing an enterprise or otherwise removing an enterprise, or any material business or other asset of an enterprise, from the conservatorship of the Agency.

 

So receivership plus seniors in place equals zero for all commons and junior prefs. This is what Corker calls fair?

Yes, this bill is nothing but friendly. With this one, we are looking at zero. InvestorG's concern could be real. And I agree Corker's view of what is fair may be different than ours. So far, the only thing we can rely upon is the rumored fact that not one democrat will vote for receivership.

 

Midas, that was really funny. It has a built-in jumpstart! I was fooled by Corker.

[investorG]

 

Section 802: Continued Conservatorship

a) timing - the conservatorship of each enterprise shall continue until a receiver is appointed...

b) No privatization.

 

And its own mini-Jumpstart in section 802(b)(1).

 

The Secretary of the Treasury shall not sell or otherwise dispose of any senior preferred shares, any interest in the warrants, any common shares acquired upon the exercise of the warrants, or any other equity interest that were acquired pursuant to the Senior Preferred Stock Purchase Agreement.

 

Section 802(b)(2) ties Watt's hands:

 

Except for as provided by this title, and except for any distribution on the senior preferred shares acquired pursuant to the Senior Preferred Stock Purchase Agreement, the Agency shall not, in the capacity of the Agency as conservator or otherwise, take any step toward privatizing an enterprise or otherwise removing an enterprise, or any material business or other asset of an enterprise, from the conservatorship of the Agency.

 

So receivership plus seniors in place equals zero for all commons and junior prefs. This is what Corker calls fair?

 

hopefully its a negotiating starting point.  and then in the end, the sr pref is canceled.

 

my view, fwiw, on today is that mnuchin is undecided on whether a compromise can be found with corker in the next 6 months that appeases all parties. 

 

if so, we'll find out soon enough what happens to us.  if not, then maybe the watt utility plan is a potential fallback, either in 2019 congress (if dems take over) or administratively (as a last resort).

 

 

[Midas79]

I suspect the views' of corker and the message board consensus on the meaning of 'fair' aren't similar.

 

since the bankers are desperate (crapo led off the whole FSOC meeting talking about GSE reform!), there is some chance the shareholders are bribed to try to pass a bill.

 

but in that scenario, the bribe wouldn't likely be inserted until later in the process.

 

i do agree that it's nice for a Senator to recognize shareholders, thank you Senator Corker for that hopefully fresh start on finding a balanced solution for all parties.

 

Yes, that is what it would take. The existence of the lawsuits is proving to be rather important, I think.

 

There are many forms the bribe could take:

• Shares in the post-receivership FnF (if they even exist)
  
• Payouts to all shareholders, common and junior pref
  
• Payouts to only junior pref holders
  
• Payouts to only series of junior prefs owned by plaintiffs
  
• Payouts to only shares owned by plaintiffs
  

 

I guess the second to last is the only scenario where it matters what series you own.

[investorG]

I suspect the views' of corker and the message board consensus on the meaning of 'fair' aren't similar.

 

since the bankers are desperate (crapo led off the whole FSOC meeting talking about GSE reform!), there is some chance the shareholders are bribed to try to pass a bill.

 

but in that scenario, the bribe wouldn't likely be inserted until later in the process.

 

i do agree that it's nice for a Senator to recognize shareholders, thank you Senator Corker for that hopefully fresh start on finding a balanced solution for all parties.

 

Yes, that is what it would take. The existence of the lawsuits is proving to be rather important, I think.

 

There are many forms the bribe could take:

• Shares in the post-receivership FnF (if they even exist)
  
• Payouts to all shareholders, common and junior pref
  
• Payouts to only junior pref holders
  
• Payouts to only series of junior prefs owned by plaintiffs
  
• Payouts to only shares owned by plaintiffs
  

 

I guess the second to last is the only scenario where it matters what series you own.

 

most likely, if we get there, canceling the sr pref, sending them through receivership, and the cash flows after expenses waterfall to shareholders over many years.  but this throws out a lot of $ for the govt, barring a legal turnaround, and so it might be hard to get through.

 

NPV well below par even if they are made 'whole' eventually. but still, in my eyes, a fair deal if NPV is 60-75pct of par.  and i'd guess berk, Paulson, and perry would be ok with that too after all this energy and time.  ackman, imo, should be happy for any win at this point in his career.

[investorG]

I suspect the views' of corker and the message board consensus on the meaning of 'fair' aren't similar.

 

since the bankers are desperate (crapo led off the whole FSOC meeting talking about GSE reform!), there is some chance the shareholders are bribed to try to pass a bill.

 

but in that scenario, the bribe wouldn't likely be inserted until later in the process.

 

i do agree that it's nice for a Senator to recognize shareholders, thank you Senator Corker for that hopefully fresh start on finding a balanced solution for all parties.

 

Yes, that is what it would take. The existence of the lawsuits is proving to be rather important, I think.

 

There are many forms the bribe could take:

• Shares in the post-receivership FnF (if they even exist)
  
• Payouts to all shareholders, common and junior pref
  
• Payouts to only junior pref holders
  
• Payouts to only series of junior prefs owned by plaintiffs
  
• Payouts to only shares owned by plaintiffs
  

 

I guess the second to last is the only scenario where it matters what series you own.

 

#1 could also be a decent possibility.  unclear on the others.

[Midas79]

hopefully its a negotiating starting point.  and then in the end, the sr pref is canceled.

 

my view, fwiw, on today is that mnuchin is undecided on whether a compromise can be found with corker in the next 6 months that appeases all parties. 

 

if so, we'll find out soon enough what happens to us.  if not, then maybe the watt utility plan is a potential fallback, either in 2019 congress (if dems take over) or administratively (as a last resort).

 

I don't think an administrative move to a utility format is even possible if the companies are eventually released. It might take some broad interpretation of FHFA's powers under HERA......oh wait they have already done that.

 

This bill would render the senior prefs mostly worthless; right now there's only around $6B in liquidation preference to go around and that will go negative on March 31. So on one hand we have arguments that Mnuchin would never give up the seniors because that is like lighting $200B on fire, but if they aren't worth anything anyway then he could do something before the bill gets passed.

[orthopa]

I think its important to not only hear but read corker say this. Bold my emphasis.

 

"I actually believe that we have an opportunity to do something, its a very complex topic that matters, we have an administration that is willing to work with us, and I think for the first time we have an opportunity because of just all of the things that have occurred that, we have a lot of interest out there lets face it. We have people who have shareholders, we have shareholders in these entities today, and um, and I understand some of the rubs that have existed there (NWS). I think we have an opportunity to really though deal with all of the interests in a matter that is fair (some form of shareholder compensation), but also move our nation ahead in a manner that we dont have these two behemoths that are basically 100% right now backed by the federal government.

 

Corkers understands shareholders complaints, and see this as an opportunity to move forward in a way fair to shareholders and to remove 100% of the responsibility from the US gov.

 

Im buying more preferred.  ;D

 

 

[orthopa]

 

Section 802: Continued Conservatorship

a) timing - the conservatorship of each enterprise shall continue until a receiver is appointed...

b) No privatization.

 

And its own mini-Jumpstart in section 802(b)(1).

 

The Secretary of the Treasury shall not sell or otherwise dispose of any senior preferred shares, any interest in the warrants, any common shares acquired upon the exercise of the warrants, or any other equity interest that were acquired pursuant to the Senior Preferred Stock Purchase Agreement.

 

Section 802(b)(2) ties Watt's hands:

 

Except for as provided by this title, and except for any distribution on the senior preferred shares acquired pursuant to the Senior Preferred Stock Purchase Agreement, the Agency shall not, in the capacity of the Agency as conservator or otherwise, take any step toward privatizing an enterprise or otherwise removing an enterprise, or any material business or other asset of an enterprise, from the conservatorship of the Agency.

 

So receivership plus seniors in place equals zero for all commons and junior prefs. This is what Corker calls fair?

 

hopefully its a negotiating starting point.  and then in the end, the sr pref is canceled.

 

my view, fwiw, on today is that mnuchin is undecided on whether a compromise can be found with corker in the next 6 months that appeases all parties. 

 

if so, we'll find out soon enough what happens to us.  if not, then maybe the watt utility plan is a potential fallback, either in 2019 congress (if dems take over) or administratively (as a last resort).

 

Correct, Sr Preferred Stock Purchase Agreements Section 808 still open to discussion. Does this section reference just the Sr Preferred themselves ie cancelled or the entire SPSA from the start? Is this where shareholders get their pound of flesh?