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

[orthopa]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Which will most likely promptly reversed 2 weeks later.

 

Just a general observation from binary net situations, I have found that in most cases absent much indications of progress and with deadlines approaching these often trade on more hope than facts. I guess we will know in two weeks.

 

to piggy back on cherzeca the more you post spek the more it shows how much about this you don't know ruining any credibility you could muster in the last 2 weeks here. Fanning flames is fine I guess, but with your level of understanding of the last 10 years coming down to the next two weeks it might be best to just read along and jeer at the end if this blows up. Its painful to read what you have been typing.

 

 

[orthopa]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Investing is a probability game. What do you think is the likelihood of this? My assigned probability is 0.0005%

 

Which is pari passu with your level of understanding the intricacy's of this investment. I think you got lost in the wrong thread again.

[TwoCitiesCapital]

At this stage, the market appears to be agreeing with the view that nothing is going to happen or any action Mnuchin takes will be very underwhelming...

 

Dates came and passed with no result. I recall the last key date was 12/9 and I don’t think that anything happened then either.

 

Two weeks from now, Mnuchin is out, the administration will change and everything will get a new hard look.

Back in 2016 when Trump got elected, the thesis was that Mnuchin would help out his hedge fund buddies and get Fannie and Freddie privatized again at favorable conditions. This didn’t happen, unless they waited for the last two weeks to do it.

 

The lawsuits didn’t go anywhere either. I don’t see much reason why the preferred and stocks don’t fall back to where they traded in 2016. I know I am only a casual observer but that‘s how I see it - a classic way of thesis creep.

 

Yeah, but those were OUR dates, based on assumptions that sometimes turned out wrong. The question is whether Mnuchin ever had a "date" other than last minute. We may never know, but while time is running out, the last minute has not yet arrived.

What makes you believe something will happen at the last minute? That’s another one of OUR dates? These papers are like call option that on January 20, imo.

At least the executive action part of the value will expire. I am not sure what the lawsuit part is worth.

 

Even if executive action were to occur, there is a strong likelihood that it will just be reversed.

 

Yep. Now Dems control House, Senate, and presidency. Nothing will be done in the next 4 years at least.

 

Or Mnuchin will say, "I don't want to leave this up to Dems" and he'll sign the PSPA amendment.

 

Investing is a probability game. What do you think is the likelihood of this? My assigned probability is 0.0005%

 

Which is pari passu with your level of understanding the intricacy's of this investment. I think you got lost in the wrong thread again.

 

Guys - I really appreciate your contributions to this thread, but personal attacks like this aren't necessary and take away fro the thread as a whole.

 

If you don't like them, hit the ignore button and let the rest of us judge for ourselves or counter their opinions in a respectful manner.

[Guest cherzeca]

of course you are right, two cities, but I have a problem with casual observers who post on this thread to discredit a JP GSE investment without taking the trouble to understand one iota of the very complex merits. what is the purpose or the objective of doing so?

[typicalvalue]

One question that is now on my head that maybe some of you could provide some light to me. What if steve mnuchin resigns? Other treasury officials can execute or its game over for admin reform. Thanks and gl to all.

[COBFInfinity]

One question that is now on my head that maybe some of you could provide some light to me. What if steve mnuchin resigns? Other treasury officials can execute or its game over for admin reform. Thanks and gl to all.

 

I assume you saw Gasparino float this on Twitter last night. I don't think anyone here knows for sure what would happen to PSPA amendment, but the odds that it occurs clearly plummet if Mnuchin is no longer Secretary, whatever the reason.

 

Mnuchin was kind enough to put us at ease overnight (https://www.timesofisrael.com/netanyahu-calls-rampage-in-dc-disgraceful-doesnt-mention-trump/):

 

"Mnuchin indicated that he would not be resigning from his position in light of the attack on the Capitol, as Deputy National Security Adviser Matt Pottinger did Wednesday.

 

“I look forward to getting back to Washington, DC, with our continued work on the transition,” he said.

[typicalvalue]

One question that is now on my head that maybe some of you could provide some light to me. What if steve mnuchin resigns? Other treasury officials can execute or its game over for admin reform. Thanks and gl to all.

 

I assume you saw Gasparino float this on Twitter last night. I don't think anyone here knows for sure what would happen to PSPA amendment, but the odds that it occurs clearly plummet if Mnuchin is no longer Secretary, whatever the reason.

 

Mnuchin was kind enough to put us at ease overnight (https://www.timesofisrael.com/netanyahu-calls-rampage-in-dc-disgraceful-doesnt-mention-trump/):

 

"Mnuchin indicated that he would not be resigning from his position in light of the attack on the Capitol, as Deputy National Security Adviser Matt Pottinger did Wednesday.

 

“I look forward to getting back to Washington, DC, with our continued work on the transition,” he said.

 

Yes saw that and was pretty scared. Having heard that comment back to 13 days left to act.

[muscleman]

what's more likely to happen before 1/20:

Trump declassifying everything, including how Kennedy got assassinated.

Mnuchin saving FnF from the eternal bleeding.

 

 

[Luke 532]

Not like anybody thought he forgot about housing, but this lets you know he is still at work and thinking about housing even while in the Middle East...

[Luke 532]

You guys should follow Michael Kao.  Smart guy.

Re: Fannie/Freddie-Day 2 of Shot Clock. Let’s keep things in perspective. It’s only Day 2 of the real shot clock. Tons of reasons why thesis makes sense; SCOTUS backstop if not. Silly to think SM resigns. #HODLTilYouYodel

[james22]

From the Twitter thread:

 

I wish someone would hold me the way I hold my prefs.

 

Ha.

 

HODLing!

[cameronfen]

I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news.  Just my thought, I could be wrong. 

[Sunrider]

I'd add that rather than fearing Mnuchin resigning, we should worry that the orange-faced nutcase hears that some members of his cabinet are discussing invoking the 25th, and he fires them all out of fear/panic/spite/vengeance/...

 

Sadly, given everything that's come from that man over the last four years, writing this is not even shocking or feels outlandish any more (and I'm on that side of the political spectrum).

 

[SnarkyPuppy]

I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news.  Just my thought, I could be wrong.

 

I'm trying really hard to not add to my position here, but you're making it very difficult.

[undervalued]

My understanding is that PSPA changes cannot just be reversed two weeks later.  It's an agreement between the TSY/GSEs/FHFA.

 

You need both TSY and FHFA as conservator to agree to change it back.  That would likely require a confirmed Calabria replacement.

 

Is there a way to easily confirm this? I am still holding and thinking about what if scenarios on what Yellen will do and what her plan is once she is in office IF SM doesn’t do what we think he’ll do. We have been disappointed many times so if SM does something it’ll be an exception to the norm.

 

Just be careful what you post here, it’s a stressful time for those holdings.

[asterisk]

I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news.  Just my thought, I could be wrong.

 

What value does this add? Unless you have skin in the game this type of post spams the board that includes incredible analysis by Midas, Luke, Chris, etc. No disrespect, but 4th quarter dunking adds nothing to the group.

[cameronfen]

I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news.  Just my thought, I could be wrong.

 

What value does this add? Unless you have skin in the game this type of post spams the board that includes incredible analysis by Midas, Luke, Chris, etc. No disrespect, but 4th quarter dunking adds nothing to the group.

 

What?  Are only bulls allowed to post here?  I was clear about the fact that I don’t know anything, but had an opinion on politics.  I thought that acknowledgement would be a positive seeing as the goal is to make money and I’m revealing what you should trust (and not trust) me on.  I can see how this post can seem like taunting if everyone recognized that Trump is likely not going to do anything, but the post right before mine was someone tweeting about how something would happen in the next 14 days.  I’m not trying to dunk on anyone, I just follow this thread occasionally and can’t understand why people are still so optimistic after all this.  I’m trying to add some information so we can all make money which was why I disclosed that I didn’t understand the stock situation so well.  In fact I was even long the prefs for some time so it’s not like I have a bias opposed to the prefs paying out.  You don’t have to listen to me, I’m just trying to push back on, in my opinion, unfounded optimism based on past political events and save everyone some money.  I didn’t understand the need from you and SnarkyPuppy for the frankly ridiculously defensive responses. 

[muscleman]

I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news.  Just my thought, I could be wrong.

 

What value does this add? Unless you have skin in the game this type of post spams the board that includes incredible analysis by Midas, Luke, Chris, etc. No disrespect, but 4th quarter dunking adds nothing to the group.

 

It does add value. He is making the right judgement call here. Mick Mulvaney just resigned.

 

https://www.cnbc.com/2021/01/07/mick-mulvaney-resigns-from-trump-administration-expects-others-to-follow.html

[Guest cherzeca]

I get it, GSEs have a large political component, and adding one's two cents on the political gloss is not OT, but this investment has been >50% a legal special event, and to preface remarks by saying that the lawsuits have gone nowhere is basically like holding up a sign saying I dont know what I dont know...

[asterisk]

I don’t really follow FNMA and FMCC, but with the attempted coup/riots in the Capitol building, I doubt SM or anyone else in the Trump administration would do anything policy-wise to make the news.  Just my thought, I could be wrong.

 

What value does this add? Unless you have skin in the game this type of post spams the board that includes incredible analysis by Midas, Luke, Chris, etc. No disrespect, but 4th quarter dunking adds nothing to the group.

 

It does add value. He is making the right judgement call here. Mick Mulvaney just resigned.

 

https://www.cnbc.com/2021/01/07/mick-mulvaney-resigns-from-trump-administration-expects-others-to-follow.html

 

Okay- Mnuchin said he will remain. So I added value too. This is politics related, wrong forum.

[orthopa]

I added more. If there ever was a better time to add more its after a ~40% drop from highs a month ago with 9 business days to go!

 

What I do find interesting is the higher div and lower div preferred seem to be coming together a bit in price. Whatever is coming it seems the market believes divs may not matter as much for whatever reason.

 

All of these securities are trading like an option that expires on Jan 21st. When Mnuchin signs the 4th amendment the expiration date goes out to eternity and the time value embedded will soar. Not a bad idea to add a little each day going forward until its signed.

[orthopa]

My understanding is that PSPA changes cannot just be reversed two weeks later.  It's an agreement between the TSY/GSEs/FHFA.

 

You need both TSY and FHFA as conservator to agree to change it back.  That would likely require a confirmed Calabria replacement.

 

Is there a way to easily confirm this? I am still holding and thinking about what if scenarios on what Yellen will do and what her plan is once she is in office IF SM doesn’t do what we think he’ll do. We have been disappointed many times so if SM does something it’ll be an exception to the norm.

 

Just be careful what you post here, it’s a stressful time for those holdings.

 

Per HERA once treasury is out of the picture with another amendment Treasury is out. There is some language that Treasury has to  agree for the GSEs to be released also. The Consent Decree is an agreement between FHFA and the GSEs and Yellen will have no power or input at that point.

[cameronfen]

I get it, GSEs have a large political component, and adding one's two cents on the political gloss is not OT, but this investment has been >50% a legal special event, and to preface remarks by saying that the lawsuits have gone nowhere is basically like holding up a sign saying I dont know what I dont know...

 

Maybe you are misunderstanding, again I don’t know the intricacies of this case, but I was responding to the conversation about handicapping admin reform from SM over the next 14 days which was being discussed right before I posted. 

[Gregmal]

Ive added about 20% across the board to FNMAS, FMCCL, FNMAH today. Albeit small allocation. But market neutral/event driven and both sentiment and expectations are pretty rotten right now. Yea, sometimes I just like to take the other side of a trade.

[Guest cherzeca]

I get it, GSEs have a large political component, and adding one's two cents on the political gloss is not OT, but this investment has been >50% a legal special event, and to preface remarks by saying that the lawsuits have gone nowhere is basically like holding up a sign saying I dont know what I dont know...

 

Maybe you are misunderstanding, again I don’t know the intricacies of this case, but I was responding to the conversation about handicapping admin reform from SM over the next 14 days which was being discussed right before I posted.

 

our posts were simultaneous, I really wasn't responding to you.  if this investment were just a roulette spin, then I would have less objection to the commentary that assumes it is