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

[Sunrider]

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 ...

[Spekulatius]

51 minutes ago, 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 ...

Probably just for the debt.

[typicalvalue]

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.

[DRValue]

3 hours ago, typicalvalue said:

 

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

I think it's positive. 

 

Think the treasury will comment on GSEs in September? 

[allnatural]

Will try to keep this updated every ~2 months or so

 

[allnatural]

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

 

 

Edited September 12, 2021 by allnatural

[orthopa]

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 September 13, 2021 by orthopa

[allnatural]

Don't think the current capital structure has ever been this out of wack:

 

Jr Pfd market cap: $1.9b ($33b par value)

Common market cap (including gov't warrants): $8.5b

[orthopa]

According to inside mortgage finance multiple sources put Calhoun as the next FHFA chief with an announcement this week. 

 

Apparently CRL has accepted funds from "controversial sources, including John Paulson."

 

Here we go again 

[orthopa]

And so it begins. I think Calhoun is very bullish for shares at these prices over the next 12 months. Im going to add to my position heavily at these prices. 12 months from now I can see the preferred trading much higher then $.07 on the dollar

[DRValue]

Added more. Can't decid if I'm mighty brave or mighty stupid 

Edited September 14, 2021 by DRValue

[allnatural]

2 hours ago, DRValue said:

Added more. Can't decid if I'm mighty brave or mighty stupid 

If Calhoun is the pick, its a steal. If his nomination gets derailed, prob not.

[orthopa]

13 minutes ago, allnatural said:

If Calhoun is the pick, its a steal. If his nomination gets derailed, prob not.

 with dem controlled congress, kamala harris the tie breaking vote and an affordable housing bent how can he not?

[allnatural]

1 minute ago, orthopa said:

 with dem controlled congress, kamala harris the tie breaking vote and an affordable housing bent how can he not?

Seems like the people trying to derail it are the progressives more than anyone...

[Wiggins]

Been adding since the SCOTUS decision. It's a steal here.. crazy.

[allnatural]

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.

[COBFInfinity]

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.

[allnatural]

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.

[TwoCitiesCapital]

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. 

[orthopa]

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. 

[investorG]

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.    

 

 

[typicalvalue]

Seems like this is not over. Does anyone know Sandra Thompson views Re: Conservatorship if its 

 finally elected as permanent director?

Edited September 15, 2021 by typicalvalue

[investorG]

The eventual FHFA selection is less important than in prior instances because the head of the agency now reports to the President.   Our opponents might convince the White House to select Sandra but the likely fact that Calhoun and his utility paper were at least close to being selected indicates some sliver of potential from this administration over the next 3 years.

Edited September 16, 2021 by investorG

[genesis01]

1 hour ago, investorG said:

The eventual FHFA selection is less important than in prior instances because the head of the agency now reports to the President.   Our opponents might convince the White House to select Sandra but the likely fact that Calhoun and his utility paper were at least close to being selected indicates some sliver of potential from this administration over the next 3 years.

If Thompson is selected, the companies aren't leaving the conservatorship as regulated utilities. The value transfer will occur to interested financial establishment parties without any help to the affordable housing agenda that is supposedly what this Administration ran on. Just look who is pushing for her to be in- the same crew that was in favor of the NWS.

[typicalvalue]

Still waiting for the nomination, this week looked like the one, but "two weeks" mode on.