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

twacowfca

By twacowfca
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rros Newbie

rros

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This covert hit piece trying to spread hatred against hedge funds, written in haste in the middle of the night, may just be a little too late. Calabria and Otting nominations/designations are strong indicators that a plan has been carved out. Perhaps not completely, but a clear roadmap. And the addition of Mulvaney as chief of staff only solidifies that sentiment. While we -neither Bloomberg, still do not know what will happen or if there is any light at the end of the tunnel the latest moves by the administration show clear intent.
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Guest cherzeca

Guest cherzeca

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remember that Bloomberg sells a lot of services and advertising to tbtf banks, not so much to hedge funds.  same with wsj/dow jones. whenever a piece is written about GSEs, this shows up in spades

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undervalued Newbie

undervalued

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This covert hit piece trying to spread hatred against hedge funds, written in haste in the middle of the night, may just be a little too late. Calabria and Otting nominations/designations are strong indicators that a plan has been carved out. Perhaps not completely, but a clear roadmap. And the addition of Mulvaney as chief of staff only solidifies that sentiment. While we -neither Bloomberg, still do not know what will happen or if there is any light at the end of the tunnel the latest moves by the administration show clear intent.

 

One the one hand we have Calabria and on the other side $125B profit, is there a way for Gov to get $125B and recievership?

 

“It is difficult to imagine that Mark would take this job to recreate the very system he’s spent an entire career criticizing relentlessly," said Parrott, a former housing official in the Obama administration. “If indeed he winds up comfortable with some version of a privatized Fannie and Freddie, it would likely look dramatically different."
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allnatural Explorer

allnatural

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Not possible according to "experts" chiming in like Rosner- and if there was a way it would mean prefs are worth par so not end of world :)

 

 

This covert hit piece trying to spread hatred against hedge funds, written in haste in the middle of the night, may just be a little too late. Calabria and Otting nominations/designations are strong indicators that a plan has been carved out. Perhaps not completely, but a clear roadmap. And the addition of Mulvaney as chief of staff only solidifies that sentiment. While we -neither Bloomberg, still do not know what will happen or if there is any light at the end of the tunnel the latest moves by the administration show clear intent.

 

One the one hand we have Calabria and on the other side $125B profit, is there a way for Gov to get $125B and recievership?

 

“It is difficult to imagine that Mark would take this job to recreate the very system he’s spent an entire career criticizing relentlessly," said Parrott, a former housing official in the Obama administration. “If indeed he winds up comfortable with some version of a privatized Fannie and Freddie, it would likely look dramatically different."

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Luke 532 Newbie

Luke 532

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@midas. interesting.  does anyone have a rec for an illiquid fnma pref based on discount to par (don't care about divi)?

 

For Fannie I own FNMAH and FNMAS.  For Freddie I own FMCCL.  In order of current dollar value FNMAH and FMCCL are almost even with FNMAS a distant third.

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Guest cherzeca

Guest cherzeca

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I noticed fairx used to own fnma prefs across board.  now only most liquid, fnmas.  got out of illiquid entirely.  if there is an event he is going to just blow out our fnma...crowded trade and knowing his style a bit he won't hesitate

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rros Newbie

rros

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FWIW

 

Just inner thoughts so skip if you'd like.

 

The recent Fed/Trump conflict may play in our favor, to some extent. As confidence in the Fed continues to wane, Treasury may feel the impact. Treasury *is* the #1 bond seller in the planet. Mnuchin may suddenly find the market has an oversupply problem. Lack of demand from central banks who now may be more reluctant to fund Treasury's own ever increasing needs (deficit) may just be what markets do not need: higher interest rates.

 

A volatile 1Q19 may be enough of an incentive for Mnuchin to speed up whatever he has in mind. J. Powell falling in disgrace, who heavily promoted splitting Fannie and Freddie, may become the latest bonus.

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Midas79 Newbie

Midas79

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I noticed fairx used to own fnma prefs across board.  now only most liquid, fnmas.  got out of illiquid entirely.  if there is an event he is going to just blow out our fnma...crowded trade and knowing his style a bit he won't hesitate

 

What does that part mean? A sufficiently negative event will make him sell off at any price, sending FNMAS/FMCKJ (and the rest as a one-off effect) crashing down?

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Guest cherzeca

Guest cherzeca

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I noticed fairx used to own fnma prefs across board.  now only most liquid, fnmas.  got out of illiquid entirely.  if there is an event he is going to just blow out our fnma...crowded trade and knowing his style a bit he won't hesitate

 

What does that part mean? A sufficiently negative event will make him sell off at any price, sending FNMAS/FMCKJ (and the rest as a one-off effect) crashing down?

 

Referring to my experience re MBI where he blew out immediately after litigation settlement

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JRH Newbie

JRH

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Referring to my experience re MBI where he blew out immediately after litigation settlement

 

He actually sold ~3/4 of his MBI position prior to the BAC settlement. You can't really tell from the filings themselves, but if you look at the price of FAAFX around that time, it only jumped about 1/4 what you would've expected from the last reported holdings (MBI was something crazy, like 35% of the fund according to the last filing before the settlement occurred).

 

Bruce has really had just terrible timing selling holdings the last few years (not throwing stones as I'm no expert myself).

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Guest cherzeca

Guest cherzeca

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Referring to my experience re MBI where he blew out immediately after litigation settlement

 

He actually sold ~3/4 of his MBI position prior to the BAC settlement. You can't really tell from the filings themselves, but if you look at the price of FAAFX around that time, it only jumped about 1/4 what you would've expected from the last reported holdings (MBI was something crazy, like 35% of the fund according to the last filing before the settlement occurred).

 

Bruce has really had just terrible timing selling holdings the last few years (not throwing stones as I'm no expert myself).

 

Bruce tends to buy early (calls it premature accumulation lol) which can pressure him to sell early to meet redemptions. But re mbi I remember he blew out what he had that day to invest in.....GSEs.

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18436572 Newbie

18436572

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Will 2019 bring long-awaited GSE reform ?

 

By Hannah Lang December 27 2018, 9:04pm EST

 

WASHINGTON — Though the chance for any reform of mortgage giants Fannie Mae and Freddie Mac this year was slim to begin with, a scandal at the Federal Housing Finance Agency and a general lack of political will served to ensure that nascent efforts never really got off the ground.

 

Some are wondering if that could change in the new year.

 

The Trump administration will have more room to maneuver when Comptroller Joseph Otting takes the reins of the FHFA in early January on an acting basis while the Senate debates the nomination of Mark Calabria as the permanent agency director. The moves give the White House much more leverage in the reform debate, even with Democrats controlling the House.

 

Most people agree that legislative GSE reform is unlikely, but do foresee the administration taking steps on its own next year to limit the reach of Fannie and Freddie.

 

Bloomberg News

 

How they plan to use it is unclear. Otting and Calabria, currently the chief economist for Vice President Mike Pence and formerly a Cato Institute fellow, have no shortage of proposals to consider if the administration wants to reduce the scope of the government-sponsored enterprises, several of which emerged just in 2018.

 

In June, the White House proposed a reform plan that would repeal the federal charter of the GSEs and end conservatorship, as part of a larger Office of Management and Budget proposal to reorganize the government. But the plan was widely criticized as being too vague and it is still unclear if the plan had any support elsewhere in the administration.

 

After the anniversary that marked 10 years of conservatorship in September, House Financial Services Chairman Jeb Hensarling, R-Texas, proposed a surprising — and more politically possible — bipartisan reform plan with Reps. John Delaney, D-Md., and Jim Himes, D-Conn. His proposal built on that of earlier models, which suggested eliminating Fannie and Freddie and instead using Ginnie Mae to provide a government backstop for mortgages.

 

While Hensarling is retiring at the end of this year, his concessions as part of a larger bipartisan overture may have set the stage for a path forward using some form of middle-ground compromise.

 

“There is a lot of bipartisan talk going on both on Capitol Hill as well as within the administration and Treasury and others that they’d like to do something,” said Dan Berger, the CEO and president of the National Association of Federally-Insured Credit Unions. “A common theme around the chatter we’re hearing … is to find a mechanism to make sure that taxpayers aren’t on the hook for another bailout.”

 

In fact, a Calabria-led FHFA in line with the administration’s beliefs and a divided government that will force Congress to consider bipartisan legislation could align to create somewhat of a perfect storm for housing finance reform.

 

“There’s now a confluence that’s been built around the need to really do a deep dive on national housing policy itself, which housing finance is just one important element,” said David Jeffers, the executive vice president of policy and public affairs at the Council of Federal Home Loan Banks.

 

Treasury Secretary Steven Mnuchin said earlier this month that he would like to get the GSEs “out of conservatorship,” but also said that his preference for doing so would be with bipartisan legislative support.

 

The legislative GSE reform Mnuchin wants is extremely improbable, according to most observers, but they do foresee the administration taking steps on its own to limit the reach of Fannie and Freddie, either with Otting in the lead or following Calabria’s confirmation.

 

“Any reform would be administrative with the new FHFA director who’s more conservative and focused ostensibly on reducing the GSEs’ footprint,” said Mark Zandi, the chief economist at Moody’s Analytics.

 

And one of the biggest steps to GSE reform is slated to take place in just a few months, with Fannie and Freddie set to begin using a common securitization platform in June 2019. The FHFA has said combining the two markets into a single market would increase liquidity and encourage market participation, which would ultimately benefit market participants and homeowners.

 

The single security "is moving the system in the right direction for the future system, so a single security is a precursor to any future system,” said Zandi. “In that sense I think it is GSE reform, and that feels like that’s on track.”

 

Though the implementation of the platform is likely to be met with a few glitches, the industry is generally prepared for the GSEs to begin issuing a uniform mortgage-backed security, said Ed Wallace, the executive director of the Community Mortgage Lenders of America.

 

“From an investor standpoint, they’re prepared for it because they want it to be a uniform security, making it easier to" participate in the market, he said.

 

Although the efforts toward a single security have taken place under Director Mel Watt, whose term ends Jan. 6, the move is already in line with the Trump administration’s reform goals, said Zandi.

 

“It feels like the single security would be consistent with any type of reform, even the kinds of administrative reforms that the administration is probably thinking about, so I don’t think there’s any reason why the new FHFA director would stop that,” he said.

 

The FHFA has already started proposing policy changes to support the implementation of a single security, and issued a proposal in September that would require Fannie and Freddie to align their policies on cash flows for mortgage-backed securities in preparation for the future uniform MBS.

 

Otting is due to take over when Watt steps down, while Calabria's nomination is pending in the Senate. Some observers said the Trump administration may want the FHFA to focus on rapidly increasing the share of cash-out mortgage refinancings, multifamily lending or finalizing the agency’s proposed capital framework released earlier this year, which would take effect if the GSEs were to exit conservatorship.

 

Although Calabria has pushed previously for placing the GSEs in receivership and eliminating the 30-year fixed-rate mortgage, observers say it’s unlikely he would actually follow through with these proposals as FHFA director.

 

“We fully expect a broader conversation regarding the future of the GSEs during the Trump administration, which will undoubtedly include a consideration of the conservatorship, but we believe exiting conservatorship is likely a bridge too far in the near-term given political considerations and the associated execution risk at this stage in the cycle,” wrote Isaac Boltansky, the director of policy research for Compass Point Research & Trading, in a note.

 

While the administration is likely facing pressure from shareholders who are “agitating for some solution,” substantial GSE reform will remain just as risky in the coming year, said Zandi.

 

“It’s going to be difficult to get anything done politically, and changes to the GSEs, whether it's reform or not, are politically charged and make it increasingly more difficult to accomplish any significant change,” he said.

 

But that doesn’t mean Congress and the White House won’t try to undertake housing finance reform. In fact, the political shake-up could point to progress.

 

“There’s as strong of a possibility as we’ve had in decades to actually having a debate around what is our national housing policy,” said Jeffers.

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DRValue Explorer

DRValue

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Fannie Maes 10q says dividend to be paid no later than 12/31. Treasury says no later than 12/28. Could be clearing, could be government shutdown, but the treasury dividend record doesn't say it's paid yet...

 

Have dividends fallen on a weekend before? Do they normally not update immediately?

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