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

[Smile]

I miss the old days when it was all court cases and all politicians were bastards. Sweeney did legal work for the intelligence services and is meticulous. She's slow. No one has any idea of the timing of En Banc either, contrary to all kinds of weird statistical analyses that are being posted on message boards. Please just get on with discussing the facts of the court cases, laws, and political power games. Small example: does anyone know more about why Gasparino is now the spokesman for insiders in the administration? And why he posts both positive and negative news? Never seen that before. It's curious. He engaged with John Carney and Joe Light for a while, then went out of step with them.

 

All TA does for me is analyze buying and selling behavior. If you want to connect political/press-related/financial events to it after the fact, and hold a victory lap because you think you had an insight, power to you. But I suspect it simply doesn't help others much because it can only inform them of buying and selling behavior. Go and trade. I'm pretty sure LittleDevil always debated with my nickname on his face.

 

We're all betting on TINA, that the only satisfaction for all stakeholders seems to be a utility model (taking into account the guarantee, optics as well as finance), the fact that the political game can set things into motion, and the fact that we have a contract with the US government that was grossly violated. Maybe we can all trade a bit when we know news is not substantial but does cause price movements. That seems to be about it.

 

I stand ready to be corrected and to be informed of more than I know.

[Eye4Valu]

The inverse head and shoulders pattern has me very bullish here.  ;)

[muscleman]

The inverse head and shoulders pattern has me very bullish here.  ;)

 

Are you ever not bullish on GSEs?  ;)

[hardincap]

its pretty simple: mm has the temperament of a trader and most of us have the temperament of a fundamental analysis investor. temperament loads evidence one way or another and shapes ones worldview. what primarily filters through to mm (chart signals, etc) barely even registers with most of us. (i wasn't as cool as midas when perry appeal came down but my wife didnt notice anything was wrong and we continued on with our vacation as if nothing had happened... though i may have lost my appetite).

 

i internalized before graduating college that debate between two parties with opposite temperaments results in nothing more than people getting frustrated and talking past each other. its not impossible, but it takes humility, patience, and self awareness, qualities we've been lacking in these posts

[muscleman]

its pretty simple: mm has the temperament of a trader and most of us have the temperament of a fundamental analysis investor. temperament loads evidence one way or another and shapes ones worldview. what primarily filters through to mm (chart signals, etc) barely even registers with most of us. (i wasn't as cool as midas when perry appeal came down but my wife didnt notice anything was wrong and we continued on with our vacation as if nothing had happened... though i may have lost my appetite).

 

i internalized before graduating college that debate between two parties with opposite temperaments results in nothing more than people getting frustrated and talking past each other. its not impossible, but it takes humility, patience, and self awareness, qualities we've been lacking in these posts

 

I agree. Well said. I guess this is why I should stop talking about TA.

Still..... Just for fundamental investors, I still think it is important to be open minded, and constantly look for ways to improve the process, and be disciplined. When I was a fundamental investor from 2009 to 2018, I was doing lazy and lousy work, eager to put my cash to work, and once I buy a stock, I would rationalize it as hard as I could to hold on to the position, because, hey, selling at a loss means "lack of conviction", which is not supposed to happen for great investors. Eventually, I took big losses on certain names.

 

I already realized the problem with TA so I stopped talking about it, but I wanted to share with you my own pain and hope it helps with some of you.

I don't see how my comment on "If you don't learn, you get slapped by Mr. market" upset people. I got slapped several times by Mr. market by taking big losses on some names in those 9 years, and vowed to not to let it happen again.

Maybe it was because Midas kept thinking I was referring to him when I was not.

 

Getting back to the GSEs..... I think the probability is high that the treasury plan is a disappointment, which propped Calabria to file in Collins for FHFA constitutionality position to buy himself time. Collins ruling itself is not something I could speak of though.

 

[Sunrider]

its pretty simple: mm has the temperament of a trader and most of us have the temperament of a fundamental analysis investor. temperament loads evidence one way or another and shapes ones worldview. what primarily filters through to mm (chart signals, etc) barely even registers with most of us. (i wasn't as cool as midas when perry appeal came down but my wife didnt notice anything was wrong and we continued on with our vacation as if nothing had happened... though i may have lost my appetite).

 

i internalized before graduating college that debate between two parties with opposite temperaments results in nothing more than people getting frustrated and talking past each other. its not impossible, but it takes humility, patience, and self awareness, qualities we've been lacking in these posts

... haven't said anything here for a while... for my part, I appreciated your contributions, whether I believe TA or not, whether I can use your insights or not, I'd rather have them - it works for you so there must be some value in it, whether I can derive it or, I'd rather have it here. So please keep on with it.

 

I agree. Well said. I guess this is why I should stop talking about TA.

Still..... Just for fundamental investors, I still think it is important to be open minded, and constantly look for ways to improve the process, and be disciplined. When I was a fundamental investor from 2009 to 2018, I was doing lazy and lousy work, eager to put my cash to work, and once I buy a stock, I would rationalize it as hard as I could to hold on to the position, because, hey, selling at a loss means "lack of conviction", which is not supposed to happen for great investors. Eventually, I took big losses on certain names.

 

I already realized the problem with TA so I stopped talking about it, but I wanted to share with you my own pain and hope it helps with some of you.

I don't see how my comment on "If you don't learn, you get slapped by Mr. market" upset people. I got slapped several times by Mr. market by taking big losses on some names in those 9 years, and vowed to not to let it happen again.

Maybe it was because Midas kept thinking I was referring to him when I was not.

 

Getting back to the GSEs..... I think the probability is high that the treasury plan is a disappointment, which propped Calabria to file in Collins for FHFA constitutionality position to buy himself time. Collins ruling itself is not something I could speak of though.

[Guest cherzeca]

agreed hardincap, well put.

 

I think we already can expect what is going to be in the treasury plan, MM, so if it is to be a disappointment there will be some last minute post-phillips rewrite.  it will invite congress's participation, probably refer to fed mbs guarantee and additional charters, and talk about recapitalizing GSEs with some form of private capital to be placed before a federal guarantee...and be short on specifics as to how private capital will be raised etc  it will be written both to avoid inciting congress and laying the foundation for a negotiation with fhfa...which will result in vagueness.  those who expect detail will be disappointed.what I am unclear on is Mnuchin's call for an integrated approach to housing finance. whether plan calls for substantial changes to FHA/HUD etc.  that sounds like too heavy of a lift, but we may see some of that, and if we do, we might even see a call for congress to change approach to how to promote low-income housing

[muscleman]

Sunrider, my intention is to help contribute to this thread, instead of messing up with people for fun. I am pretty sure showing you output from a blackbox will not help you at all. No strategy can be correct 100% of the time, and when it is wrong, you will start to doubt it. It will only let you second guess your own decisions. I've seen a psychological study about this. For a black box that's right 50% of the time, traders following it will soon start to take the signals 50% of the time. For a black box that's right 80% of the time, traders following it will soon start to take the signals 80% of the time. The % of time traders taking the signal is in line with the % of it being right. That's how human brains are constructed.

 

I think maybe the other way I could contribute is to share my FA, which some of you think may be helpful because it offers a different view from your main stream view.

I am not as good as doing FA but I use my TA to guide what my FA should be, so it could offer you a different alternative view that may help.

 

Notice this tweet:

"The Treasury plan to reform FanFred is at the White House, has been for weeks. Will it see the light of day? Yes. but who gets to see it first? And will it be set in motion?"

 

My current view on FA since this tweet is that the treasury plan will be a disappointment. Jul 15 2019 minus "weeks" probably implies early June. Stock started declining around then. What a coincidence.

Later we saw Calabria's maneuver in the Collins' case for FHFA constitutionality, and his 2024 statement. Those probably give some hints on the treasury plan too.

 

[Guest cherzeca]

I think using an IMF muolo tweet for the basis of a view on the investment is misplaced

[Midas79]

I already realized the problem with TA so I stopped talking about it, but I wanted to share with you my own pain and hope it helps with some of you.

I don't see how my comment on "If you don't learn, you get slapped by Mr. market" upset people. I got slapped several times by Mr. market by taking big losses on some names in those 9 years, and vowed to not to let it happen again.

Maybe it was because Midas kept thinking I was referring to him when I was not.

 

My comments actually had nothing to do with TA or your style of investing at all. They were solely focused on the "slapdown" comments, which were much more personally directed than your characterization above. It is one thing to say that in general Mr. Market will slap people down (certainly true), but quite another to relish in the idea of it happening to specific people that said mean things in the past.

 

I was never pissed by rude comments from them because I know sooner or later Mr market will slap people who are arrogant and think they are smarter than everyone else in the world.

 

A few people got pissed. That's fine. Mr. Market will teach them.

 

I didn't know if you were referring to me or not, which is why I asked.

 

I do feel like I have made too big a deal out of this so I will stop here. The comments levied against you, i.e. the ones that led to your posts, were also over the line in my opinion. Apologies if it seems that I am picking on you here, this post is more for clarification of my position.

 

 

 

As for the larger FA versus TA debate, I agree with whoever said that neither really applies to FnF; the name of the poster escapes me and I don't know exactly what to search for. The main return on the prefs will depend on when and if FnF ever get recapped and released, but the fundamentals of the companies themselves are some of the best in the world. This is a speculative play that is an unholy amalgamation of politics, court cases, the economy, and politics again. The potential impact of news events dwarfs attempts to use either FA or TA. I can't blame anyone for putting this on the "too hard" (or at least "too complicated to predict") pile, though I'm glad for that because it meant a cheaper entry point for me.

[Guest cherzeca]

for example, I will be most interested if the treasury plan calls for the existing line of credit to be maintained, subject to the payment of an acceptable commitment fee.  the plan may not refer to this because it may not go into that fine detail. 

[Luke 532]

Apparently Kyle Bass' highest conviction, as of today, is the prefs being worth par.  Interesting.

 

[Jcmeg35]

@luke, where did you see/hear that? Would be curious to hear his thinking.

[Luke 532]

@luke, where did you see/hear that? Would be curious to hear his thinking.

 

Just added the twitter link...forgot to post the source initially.

[DRValue]

Apparently Kyle Bass' highest conviction, as of today, is the prefs being worth par.  Interesting.

 

 

Kyle Bass is working with Steve Bannon on China, who is close to trump. May be nothing but there you go.

[Guest cherzeca]

bass is super smart but can be too smart by half.  still, i'm happier with him being with us rather than against us

[muscleman]

I think using an IMF muolo tweet for the basis of a view on the investment is misplaced

 

Well..... What part of his tweet do you think is suspicious? He only said one thing: "Treasury plan has been in white house for weeks".

Do you think this statement is not credible?

It seems inline with when Craig Philips left.

 

 

[hardincap]

My current view on FA since this tweet is that the treasury plan will be a disappointment. Jul 15 2019 minus "weeks" probably implies early June. Stock started declining around then. What a coincidence.

 

how, specifically, will it disappoint in your view? and how confident are you in this: 50%? 80%? lets talk in probabilistic terms

[muscleman]

My current view on FA since this tweet is that the treasury plan will be a disappointment. Jul 15 2019 minus "weeks" probably implies early June. Stock started declining around then. What a coincidence.

 

how, specifically, will it disappoint in your view? and how confident are you in this: 50%? 80%? lets talk in probabilistic terms

 

Good question. I am only 50% confident in this. I think the bull case is not died yet.

 

[muscleman]

“Too much hope on En Banc where they may have spread their wings already. Fraud didn’t stop at stealing money and hiding documents for last 11 years and wonder if it will ever stop. There was hope but no more. Stopping NWS can be immediate than Calabria continue giving bullshit interviews in the press “

 

 

Where does this quote come from?

Or are you simply making baseless statements?

[investorG]

“Too much hope on En Banc where they may have spread their wings already. Fraud didn’t stop at stealing money and hiding documents for last 11 years and wonder if it will ever stop. There was hope but no more. Stopping NWS can be immediate than Calabria continue giving bullshit interviews in the press “

 

As I look at the FnF non-govt common market caps hovering around $5bn, and jr prefs trading well below par, I don't know if I should be more embarrassed at myself for having non-gutter level expectations for the government or the actual government for waking up every day trying to screw tens of thousands of its citizens. 

 

The 2008 deal was the deal.  conservatorship, not receivership;  shares still traded.  harsh on the shareholders and juicy rewards for the government -- as it should have been.  The 2012 NWS was a travesty and it's a shame that it's now 7 years later there's no apparent urgency to right the wrong.  It's hard to believe but at this point it is what it is. 

 

good luck, everyone.

[Guest cherzeca]

@IG

 

add to that the notion that i) there is no alternative, as the SBC has found out over the last 7 years, much to corker's consternation, and ii) to recap GSEs, you ave to go back to original 2008 deal.  the NWS was a move into a twilight zone that had no follow-on move that anyone had thought through, and so the question is, do you keep GSEs in limbo or do you reverse the move that put you into the twilight zone.  mnuchin and calabria have answered that question clearly, though we may be perplexed by their delays and timing. and none of this is dependent on the outcome of collins en banc, about which I am bullish

[Luke 532]

https://www.americanbanker.com/news/a-gse-plan-before-the-election-has-risks-but-so-does-doing-nothing

[DRValue]

Commons down 12%, have I missed some big news??

[Luke 532]

Commons down 12%, have I missed some big news??

 

Maybe they anticipated the NWS ending announcement to be in earnings this morning?  I think that's foolish because that announcement will come from Treasury, FHFA, White House, etc. and not from the two GSE companies themselves.