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


twacowfca

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Still long as I was never really counting on lawsuits because they can drag on for decades with appeals etc. although I do think we have a case.

 

Think I've said this before, but I'm not convinced we'll win any outstanding lawsuits (outside of maybe the Lamberth remand), purely on the basis that there's what's right and theirs what's legal. We've also been confident before and lost many.

 

Outside of a report on a lawsuit win, i'm disregarding all lawsuits from now on and waiting on Mnuchin.

 

Hurry up if you're reading this.

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I'm curious if anybody has thoughts on why in Sweeney's court the Fairholme attorneys did not oppose recent government requests for delay?  The two most recent filings, unless I'm mistaken, were:

 

-May 17, 2018, motion to stay briefing

-June 19, 2018, motion to revise briefing schedule

 

Both unopposed by Fairholme attorneys.

 

 

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Bartiromo: "There's been a conversation on Twitter and has been for a long time that President Obama needed money for Obamacare and he would take from all the agencies and he took from Fannie and Freddie.  Is that true?"

 

Mnuchin: "It's true.  They used the profits of Fannie and Freddie to pay for other parts of the government while they kept taxpayers at risk."

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Bartiromo: "There's been a conversation on Twitter and has been for a long time that President Obama needed money for Obamacare and he would take from all the agencies and he took from Fannie and Freddie.  Is that true?"

 

Mnuchin: "It's true.  They used the profits of Fannie and Freddie to pay for other parts of the government while they kept taxpayers at risk."

 

The obvious followup question was "Then what does the Trump administration plan on doing with those profits?"

It appears that this administration isn't so different after all.

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Bartiromo: "There's been a conversation on Twitter and has been for a long time that President Obama needed money for Obamacare and he would take from all the agencies and he took from Fannie and Freddie.  Is that true?"

 

Mnuchin: "It's true.  They used the profits of Fannie and Freddie to pay for other parts of the government while they kept taxpayers at risk."

The suspension doesn't appear to involve subsidies. It looks like it's a redistribution program between insurers that has been stopped.
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Bartiromo: "There's been a conversation on Twitter and has been for a long time that President Obama needed money for Obamacare and he would take from all the agencies and he took from Fannie and Freddie.  Is that true?"

 

Mnuchin: "It's true.  They used the profits of Fannie and Freddie to pay for other parts of the government while they kept taxpayers at risk."

The suspension doesn't appear to involve subsidies. It looks like it's a redistribution program between insurers that has been stopped.

 

This is mildly interesting, how would Rosner know? Most likely he's just guessing.

 

 

Rosner...

"There is a valid connection. It just hasn’t been publicly acknowledge yet. It has been privately acknowledged."

 

This was in response to someone else's comment...

"Unfortunately, there is no valid connection between the NWS and Obamacare subsidies.

 

Treasury can stop paying the ACA subsidies and keep sweeping the total net worth."

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Re APA claims: SCOTUS declined to hear the Perry case. This was probably because the DC circuit was the only court to rule at the time and this specific APA case was still pending across various circuits (where hopes are currently looking up in Texas and Iowa). It's common for SCOTUS to allow multiple courts to rule on an issue before deciding to accept a case. If we were to win in Texas or Iowa SCOTUS would most definitely pick up the case. And even if we were to lose there is a chance they hear the case now that all the circuits have ruled.

 

Re constitutional claims: Between the PHH case in the DC circuit, the recent SDNY ruling, and the recent Bhatti ruling, we now have split circuits on the issue of whether an independent agency's structure is constitutional due to it having a single director that is not removable at will. There is a high likelihood SCOTUS should hear this specific issue. Kavanaugh wrote the original appellate court decision in the PHH case where he ruled it was unconstitutional (and pointed to FHFA as having the same flaw). We are also awaiting the Texas court to rule on this matter as well.

 

 

But SCOTUS already said they would not hear our case, no?

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The current admin has majority in both congress and senate. I am sure many members of other party would also vote in favor of recap and release. IF they can't do it now. it can't get better after mid terms. Can it?

 

 

the purported reason they're waiting isn't to get a better set up - it is to maintain power for the ensuing 2 years and then use it.

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What do you mean by " it is to maintain power for the ensuing 2 years and then use it" ??

 

The current admin has majority in both congress and senate. I am sure many members of other party would also vote in favor of recap and release. IF they can't do it now. it can't get better after mid terms. Can it?

 

 

the purported reason they're waiting isn't to get a better set up - it is to maintain power for the ensuing 2 years and then use it.

 

if the enact reform prior to the midterms, they'll ruffle lots of feathers... so waiting post mid-terms allows them runway.

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What do you mean by " it is to maintain power for the ensuing 2 years and then use it" ??

 

The current admin has majority in both congress and senate. I am sure many members of other party would also vote in favor of recap and release. IF they can't do it now. it can't get better after mid terms. Can it?

 

 

the purported reason they're waiting isn't to get a better set up - it is to maintain power for the ensuing 2 years and then use it.

 

if the enact reform prior to the midterms, they'll ruffle lots of feathers... so waiting post mid-terms allows them runway.

 

Or in other words -the investment thesis here is „Hope springs eternal“

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What do you mean by " it is to maintain power for the ensuing 2 years and then use it" ??

 

The current admin has majority in both congress and senate. I am sure many members of other party would also vote in favor of recap and release. IF they can't do it now. it can't get better after mid terms. Can it?

 

 

the purported reason they're waiting isn't to get a better set up - it is to maintain power for the ensuing 2 years and then use it.

 

if the enact reform prior to the midterms, they'll ruffle lots of feathers... so waiting post mid-terms allows them runway.

 

Or in other words -the investment thesis here is „Hope springs eternal“

 

umm - it's a highly politically charged trade and you have to understand how the timing in DC works? It may not make an ounce of difference but emily was asking why they would wait. Well I gave one reason that may be why. It doesn't really have much to do with hope.

 

 

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Market does not believe him anymore after the same talk over 2 years. What would change in next congress? Congress hasn’t done anything for last 10 years. The current admin at least not fight in court cases and release all the documents. At the very least, that is in their control. Not to mention they have control of both houses already.

 

www.c-span.org/video/?c4739821/david-trott-gses

 

My wild guess is that after the unexpected losses of a senator seat in Alamaba and a PA house seat, Trump decided to postpone housing reform until next year, to avoid headline risks that puts the mid term in danger. There are still lots of things Trump wants to do, such as the border wall, so if Republicans can stay in majority for two more years, he has a better chance to get his wishes fulfilled.

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Any idea why the pref shares are down today?

 

No clue. I have noticed that the dividend/price correlation has been weakning over the last few months. FNMAT in particular has gotten very weak compared to the rest of the prefs. Either a large position is being slowly unloaded, or a slice of the market is believing more in the possibility of a redemption or conversion that doesn't take stated dividend rates into account.

 

The FMCC/FNMA gap has opened back up after getting close to closing completely yesterday, but the strength gap between the Freddie and Fannie prefs remains small, the weakness of FNMAT notwithstanding.

 

My model doesn't include FNMAS or FMCKJ due to their liquidity premiums.

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Sunday morning gse conspiracy theory time.

 

The CSP is not in shareholders interest as it does not benefit the companies but instead opens them up to competition.

 

Directors of the gses would not be fulfilling their fiduciary duty to shareholders by implementing the csp.

 

So they have implemented the csp under the cover of conservatorship. Once it's implemented and in use it won't be able to be removed.

 

The gses will be released after the csp goes live in June 2019.

 

 

 

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