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


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On 8/4/2021 at 6:11 PM, Wiggins said:

I listened to the oral argument today and agree with the comment posted by Tim Howard on his blog today.

I am not encouraged at all and felt the Judges were trying every stupid argument imaginable to find the exits. Thumbs on the scales of justice. I hope allnatural's analysis is correct, but I could believe anything now. Looking forward to Lamberth

FWIW Tim Howard finished listening to the rest of the oral arguments and his conclusion was in line with mine above, that the constitutional takings derivative claim should survive based off oral arguments.

Edited by allnatural
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On 8/6/2021 at 10:48 AM, allnatural said:

FWIW Tim Howard finished listening to the rest of the oral arguments and his conclusion was in line with mine above, that the constitutional takings derivative claim should survive based off oral arguments.

Survival of claims is good.

I haven't seen any indication that Biden would do anything and DOJ continues to stupidly fight in court. But the fact the administration had the cojones to get out of a losing war has given me a sliver of hope. The conservatorships are similarly the product of multiple administrations and the way forward really couldn't be clearer particularly with the just published stress tests. They also got an infrastructure bill passed. So maybe they can focus on this.

Edited by Wiggins
fixed typo
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Any view on this? 

https://careers.freddiemac.com/us/en/job/JR2254
 

"Experience drafting disclosure for periodic reports (Form 10-Ks, Form 10-Qs, and Form 8-Ks) and beneficial ownership reports filed with the SEC as well as disclosure documents for offerings of equity securities offerings."

 

"Knowledge of listing requirements for national securities exchanges, such as NASDAQ or NYSE." 

 

 

 

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On 8/23/2021 at 5:56 PM, typicalvalue said:

Any view on this? 

https://careers.freddiemac.com/us/en/job/JR2254
 

"Experience drafting disclosure for periodic reports (Form 10-Ks, Form 10-Qs, and Form 8-Ks) and beneficial ownership reports filed with the SEC as well as disclosure documents for offerings of equity securities offerings."

 

 

"Knowledge of listing requirements for national securities exchanges, such as NASDAQ or NYSE." 

 

 

 

 

 

Had me excited for a second, but then I remembered that they've been filing SEC reports like any other publicly owned company as if they had not been expropriated from shareholders ...

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On 8/24/2021 at 9:39 PM, Sunrider said:

Had me excited for a second, but then I remembered that they've been filing SEC reports like any other publicly owned company as if they had not been expropriated from shareholders ...

 

Yeah but what about listing requirements? And security offerings? anyway it may  not mean anything at all.

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20 hours ago, allnatural said:

Here we go again... Calhoun is pro recap release into utility model + warrant monetization.

 

If confirmed certainly bullish for shares. Will need to repurpose the capital rule again and of course amend the PSPA. His paper lays out a pretty good explanation of why the GSEs should be released and what the give back for the gov stake should be and why it should happen. The PSPA will of course be all important and he will need to navigate all the lobbyists looking to secure their piece of the pie. 

 

Of all the possible candidates that have been mentioned Calhoun is certainly the best for shareholders. A stumbling block to the release has always been the "political cover". Setting up a housing fund with the gov stake is pretty good cover. Who is going to argue against help for housing for those that cant afford it? The risks of that are a different discussion. 

 

With a utility model the capital requirements will be lower but still how much dilution in this scenario for common still unknown. I still like the preferred here vs common even with a faster recap. With the common trading just below some preferred I think the common getting to $25 is a bit of a stretch and I still like being higher in the capital structure after getting slammed. 

Edited by orthopa
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New round of PSPA:

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-and-Treasury-Suspending-Certain-Portions-of-the-2021-Preferred-Stock-Purchase-Agreements.aspx

 

Key changes I see:

1) Unshrink some of the business activity Calabria tried to shrink- "The suspended provisions include limits on the Enterprises' cash windows (loans acquired for cash consideration), multifamily lending, loans with higher risk characteristics, and second homes and investment properties"

2) Commitment to keep building capital / no NWS 2.0 - "The Enterprises will continue to build capital under the continuing provisions of the PSPAs. FHFA also continues to direct the Enterprises to operate in a safe and sound manner consistent with their statutory mission"

3) Potential capital requirement rework (presumably to lower it)- "Additionally, FHFA is reviewing the Enterprise Regulatory Capital Framework and expects to announce further action in the near future."

 

Net net 3 small incremental positives, put together and with potential news Calhoun nomination could set these back in motion.

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Allnatural,

 

You can't have an NWS 2.0 when NWS 1.0 never ended. The pretend capital account doesn't change the fact that the liability to Treasury is still growing.

 

As for the FHFA's "expect further action" note, that is interesting considering that Mnuchin had tasked the new Treasury with reviewing the agreements by 9/30. But it also seems very unlikely that anything regarding the Treasury stake would be adjusted in any material way before a new director comes in, so I am curious what that might be.

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15 hours ago, allnatural said:

While accounting wise you are obviously correct, the 2 big differences between the 2 is in one case the cash sits on GSEs balance sheets and the Biden admin can't repurpose it for other uses, in the other case the cash in the the treasury's hand to do so with as they please.

 Now that FHA is removable at will by president, there's hardly a difference. 

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FHFA changing aspects of the capital rule already. 

 

https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Amendments-to-the-Enterprise-Regulatory-Capital-Framework-Rule-–-Prescribed-Leverage-Buffer-Amount-and-Credit-Risk-Transfer.aspx

 

Whoever/whatever is behind this doesnt seem to be waiting for whatever reason. Nothing of substance yet for shareholders but interesting to watch. 

 

They do discussed transferring risk to private capital though which of course implies a capital raise and thereby not a large dominating treasury stake. 

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Sandra Thompson just proposed a 25% chop the leverage ratio capital requirement from 4% to roughly 3%.  Overall a $74bn reduction in leverage ratio requirement, which now makes it far less relevant in comparison to the risk based capital requirement which was left unchanged today.    

 

 

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