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


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I would take the Delaware idea with a grain of salt. We have literally zero evidence that the idea is credible.

 

It does make me wonder why Fairholmes lawyers didnt think of this already.

 

No, I mean the idea that the briefing suspension has to do with a Delaware ruling of some sort. The Delaware amicus brief is incredibly credible. It's just that no one has any evidence as to the why of the briefing suspension.

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Someone should open a new front in Delaware Court just as we have in the Claims Court and District Court. Then there will be 3 separate issues challenged - 1) 5th Amendment violation by the Treasury, 2) Conservatorship/HERA violation by FHFA, 3) Corporate law violation. We just need to win 1 to win the whole thing. i.e. even if it's found that FHFA didn't violate terms of cship or Treasury didn't violate 5th amendment, there can still be a violation of corporate law. Seems like pretty good odds to me.

 

Just wanted to bump this. Merkhet, do you agree with this line of reasoning?

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I would take the Delaware idea with a grain of salt. We have literally zero evidence that the idea is credible.

 

It does make me wonder why Fairholmes lawyers didnt think of this already.

 

No, I mean the idea that the briefing suspension has to do with a Delaware ruling of some sort. The Delaware amicus brief is incredibly credible. It's just that no one has any evidence as to the why of the briefing suspension.

 

 

No worries. Heres a SeekingAlpha from last month.

'

The Perry Appeal, Prospects For Reversal And The Possible Effects On Fannie Mae And Freddie Mac Share Prices

 

http://seekingalpha.com/article/3328555-the-perry-appeal-prospects-for-reversal-and-the-possible-effects-on-fannie-mae-and-freddie-mac-share-prices

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Someone should open a new front in Delaware Court just as we have in the Claims Court and District Court. Then there will be 3 separate issues challenged - 1) 5th Amendment violation by the Treasury, 2) Conservatorship/HERA violation by FHFA, 3) Corporate law violation. We just need to win 1 to win the whole thing. i.e. even if it's found that FHFA didn't violate terms of cship or Treasury didn't violate 5th amendment, there can still be a violation of corporate law. Seems like pretty good odds to me.

 

Just wanted to bump this. Merkhet, do you agree with this line of reasoning?

 

No need to do it right now. Pershing had a similar argument in its complaint before they withdrew their lawsuit. I presume they did so tactically for a reason.

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I would take the Delaware idea with a grain of salt. We have literally zero evidence that the idea is credible.

 

It does make me wonder why Fairholmes lawyers didnt think of this already.

 

No, I mean the idea that the briefing suspension has to do with a Delaware ruling of some sort. The Delaware amicus brief is incredibly credible. It's just that no one has any evidence as to the why of the briefing suspension.

 

I agree, who knows with the briefing suspension but the Delaware amicus breif makes perfect sense. I think it pretty much in black in white says that all of the profits cannot be sweeped in totality and in perpetuity for a Delaware corporation. Takes a lot of the time consuming interpration of the whole situation otherwise out of the discussion.

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What was Fridays extension for?

 

It extended Fairholme's obligation to respond to the government's supplemental motion to dismiss.

 

A newbie question, is the deadline for government response EOD today? What if the government fails to respond? Seems to me that they are not capable to come up with valid arguments and responses.

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A failure to respond would likely result in Sweeney ordering an unsealing.

 

Respond = ball is in Sweeney's court  (pun intended) to make a ruling.

Don't respond = upsets Sweeney, likely orders unsealing.

 

The gov't has gotten itself in quite the pickle.  Final day for them to do the right thing or they risk opening Pandora's Box.

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Pershing Square Conference Call

https://www.pscmevents.com/quarterly-conference-call/

 

F&F starts at approximately 41:30. Gives a general overview over the case so far. Mentioned they are trying to get access to the testimony. Also mentioned that Tim Howards amicus brief.

 

Q&A on F&F stats at 1:11:45. G-Fees will add to the bottom line over time.

$2-$3B. Historically low. WSJ articles are factually inaccurate that their earnings power is wrong. Quarterly earnings are different than Annual Earnings. Worst he has seen in the history of the newspaper. Sending them a binder to help them out with basic math. Ackman Quote time: "Heard on the street Fannie and Freddie has been a disaster"

 

Any dilution will still be a multiple of what it is now. "Once theres a resolution and thy are allowed to build capital the stock wont be a $2.50"

 

Relisting: Dont care. Not helping. They could relist if they wanted to FHFA controls that and they the only thing stopping relisting.

 

Encourages everyone to read Former FDIC Chairs amicus brief. Link:www.valueplays.net/wp-content/uploads/INDEPENDENT-COMMUNITY-BANKERS-OF-AMERICA-THE-ASSOCIATION-OF-MORTGAGE-INVESTORS.pdf

 

Conservatorship: He goes though a history of what Conservatorship for all FDIC Bank Rescues is.

 

"A conservator steps to preserve and enhance the assets of the banks and then they distribute assets according to the various creditors in the hierarchy of corporate clams." "If it becomse settled law that the conservator can wake up one day and keep 100% of the profits of a bank then no one is safe let alone providing equity to a bank  but even providing a bond or preferred stock or making a loan to a financial institution. If a banks can not leverage  their capital structures then it will materially increase the cost of capital of the financial institution as a result will also lower the share price of the institution. The combination of those things will meaningfully increase the cost of credit not  just for mortgages but for all business."

 

Unintended consequences are very very materially negative for the country

 

 

Will you get a board seat on F&F? Board controlled by conservator. We have no ability. Shareholders stripped rights. Considered "Shadow" Board to represent shareholders.

 

1:29:15 How long for F&F to get to $50-$40 per share? Depends on what happens over a period of time.

 

 

 

 

Interesting note on Pershing is that hes nearly 100% invested?

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Yeah. Just as I expected.  :) When is the deadline for the judge to rule?

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Just read the gov response. What the hell besides incriminating documents would affect markets so much 6-7 years later?

 

"the grave harm to the nation’s economy that would result from the disclosure of information subject to the protective order, inadvertent or otherwise”

 

Makes no sense. Something really good must be protected, not that this point hasn't already been made.

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In the NYT response

 

"The potential harm to FHFA in its ability to operate the conservatorships, and the grave market consequences should sensitive information be made public vastly outweighs the concededly non-existent “right” to access discovery material"

 

What ability? How exactly are they "operating the conservatorship"?

 

Grave consequences? Really?  Sounds like we got a lot of important shit we dont want coming out and we F'd up.

 

"The information contained in the deposition transcripts is Protected Information, as defined in this Court’s valid protective order, and public disclosure of this information is likely to cause tangible harm"

 

Sounds like an admission of guilt to me.

 

Im buying more today. :)

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Just read the gov response. What the hell besides incriminating documents would affect markets so much 6-7 years later?

 

 

 

Only lawyers and politicians could believe this nonsense.  The real disruption comes from the inability of financial institutions to raise capital at reasonable rates, which would result if the government wins its argument that they have the power to seize all assets at anytime without any judicial review.

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Looks like the government has rolled the dice on unsealing. Responded to both NY Times & Fairholme today.

 

Fairholme:

https://www.dropbox.com/s/jgsoie0zma0fjgx/2015-08-10%20Defendant%27s%20Repsonse%20in%20Opposition%20to%20Fairholme%27s%20Motion%20to%20Unseal.pdf?dl=0

 

 

The government referenced Nixon vs. Warner Communications.  Probably not the only similarity between the two cases that will be discussed in the history books.

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Looks like the government has rolled the dice on unsealing. Responded to both NY Times & Fairholme today.

 

Fairholme:

https://www.dropbox.com/s/jgsoie0zma0fjgx/2015-08-10%20Defendant%27s%20Repsonse%20in%20Opposition%20to%20Fairholme%27s%20Motion%20to%20Unseal.pdf?dl=0

 

 

The government referenced Nixon vs. Warner Communications.  Probably not the only similarity between the two cases that will be discussed in the history books.

 

+1

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http://www.mortgageorb.com/e107_plugins/content/content.php?content.17082#.VcsRZCSUZMk.twitter

 

Cooper says the next step is to collect the information and prepare documents for filing in the U.S. Court of Appeals. There is no timeline on that, but Cooper hopes the government will mediate. "We reached our hand out to the government," Cooper says. "We would like to do that, [but] so far to no avail. I still hold out some hope the government may agree to resolve this dispute amicably."

 

It's unclear how recently they reached out -- but it reads like this was post-discovery.

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