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

[Sunrider]

Is this a joke? Prices seem to say otherwise ... but then again Mnuchin was preparing for four years just to mislocate his Cohones when the time came ... so maybe it'll be another four years of the same stuff.

 

 

[orthopa]

Certainly hard to say. Thats the most positive headline that could have come out of that fireside chat. I think everyone in the FHFA, and Treasury understand what needs to be done. Its how to do it and when that continue to plague the issue. 

 

In my mind a couple catalysts that could move us forward. 

 

1. Lamberth not granting summary judgement. 

2. Lamberth going to trial and all the protected documents coming to light

3. Democrats mid term shellacking and a move to monetize the govts stake for affordable housing before a new president (trump) gets in.

4. Longer term 2024 and after if Trump is re elected in light of letter etc.  

Edited April 4, 2022 by orthopa

[Sweet]

Is the thesis dead or alive?

[Wiggins]

On 4/17/2022 at 7:13 PM, Sweet said:

Is the thesis dead or alive?

Alive.

[allnatural]

On 4/4/2022 at 9:49 AM, orthopa said:

Certainly hard to say. Thats the most positive headline that could have come out of that fireside chat. I think everyone in the FHFA, and Treasury understand what needs to be done. Its how to do it and when that continue to plague the issue. 

 

In my mind a couple catalysts that could move us forward. 

 

1. Lamberth not granting summary judgement. 

2. Lamberth going to trial and all the protected documents coming to light

3. Democrats mid term shellacking and a move to monetize the govts stake for affordable housing before a new president (trump) gets in.

4. Longer term 2024 and after if Trump is re elected in light of letter etc.  

 

Without placing any odds of the probability of any of these events occurring as some are very low, here is my list of "shots on goal" for the jr pfds that could cause shares to move higher.

 

1) Surviving Implied Covenant Motion for Summary Judgement (~June/July '22)

2) SCOTUS Accepts Takings Case if petitioned to them by May 23 (~Q3 '22)
3) Implied Covenant Trial Decision (~2H '22)
4) Unconstitutional Remedy Decision(s), Bhatti/Collins/Rop (~2H '22)
5) Post-Midterms Admin Actions (~Q1 '23)
6) Trump Re-Election Campaign (~2H '23)
7) Trump Wins Presidency (11/5/24)
TINA
 

[DRValue]

I'm really sceptical on this 'investment' now although I'm still holding. The govt wanted them gone/policy tools and even if the nws is reversed or they're allowed to 'leave conservatorship' they've deliberately made the capital requirement so high they're uneconomical. 

 

There are no honest actors involved in the regulation as if there were, CRTs would be gone and capital required would be lowered. 

 

With homes being bought up by investment Co's and Obama wanting a policy of Americans being "well housed" home ownership doesn't seem like a desired outcome. 

 

The status quo could be maintained for however long its desired. A possible incentive is the warrants and up to $100b but with the national debt as high as it is ($100b is next to nothing by comparison) and no one acting to realise it, I just don't think they care about the money. 

 

 

[james22]

Burn me once...

[DRValue]

Will the lamberth trial be televised? 

Edited April 30, 2022 by DRValue

[allnatural]

We know it will be a jury trial... no clue if it will be live/open to general public (audio or televised).

[DRValue]

https://podcasts.apple.com/us/podcast/banking-with-interest/id1506774121?i=1000561763860

 

Such a mess. 

[DRValue]

Anyone expecting the capital plans to be filled with an 8k? Pretty material but not sure it'll be public till earnings?

[COBFInfinity]

On 5/17/2022 at 9:13 AM, DRValue said:

https://podcasts.apple.com/us/podcast/banking-with-interest/id1506774121?i=1000561763860

 

Such a mess. 

Just more self-serving B.S. He acts like his absurd capital levels have nothing to do with the GSEs staying in conservatorship. And now he's talking again about how the GSEs were looted, a view which he choose not to mention or use to forward his agenda during his leadership at FHFA.

[DRValue]

44 minutes ago, COBFInfinity said:

Just more self-serving B.S. He acts like his absurd capital levels have nothing to do with the GSEs staying in conservatorship. And now he's talking again about how the GSEs were looted, a view which he choose not to mention or use to forward his agenda during his leadership at FHFA.

It's total nonsense. The twins are now just political tools now.

[DRValue]

On 5/20/2022 at 7:41 PM, DRValue said:

It's total nonsense. The twins are now just political tools now.

Setting the politics of Toomey's tweet aside, it's good to see a call to end the conservatorship.

 

 

I'm sure I've heard similar from Congress before and let's be honest, what can they actually do to force the regulator / treasury to do it? 

 

[investorG]

On 4/17/2022 at 7:13 PM, Sweet said:

Is the thesis dead or alive?

 

Capital is building nicely.   Barring a significant economic shock, FNMA should be close to a 2% leverage ratio in 2 years.  Assuming a revised ~3% leverage ratio target, an IPO is a possibility in the 2024-2026 time frame.

[TwoCitiesCapital]

45 minutes ago, investorG said:

 

Capital is building nicely.   Barring a significant economic shock, FNMA should be close to a 2% leverage ratio in 2 years.  Assuming a revised ~3% leverage ratio target, an IPO is a possibility in the 2024-2026 time frame.

 

Glen Bradford has a SeekingAlpha piece recently expecting some resolution on the legal cases in the next 3 months. 

 

Sounds like a pipe dream after the decade I've been holding the securities, but we shall see. 

[Wiggins]

There are a lot of sealed motions from defendants in the Lamberth trial. I suspect that they're trying to exclude a lot of damaging emails from Treasury and other government officials, stating they aren't official views. That's just a guess but what else could it be? Hopefully at some point some of this information makes it to the jury and gets released to the public. The ulterior motives we've already seen from officials such as Jim Parrot seem relevant to the plaintiffs' side given the "good faith" portion of the contract breach.

 

I hope we can get some information about the trial as it unfolds. Someone will have to be there taking notes. Anyone that has seen a jury trial up close knows that juries are unpredictable; we have to hope the odds lean heavily toward the plaintiffs.

 

I hope some investors are still monitoring these boards and also doing well otherwise. And I wish everyone good luck. I miss the great analysis that used to happen here and I hope we can get some more discussion going about the trial. This seems a good place to discuss trial matters and updates.

[COBFInfinity]

On 9/29/2022 at 5:27 AM, Wiggins said:

There are a lot of sealed motions from defendants in the Lamberth trial. I suspect that they're trying to exclude a lot of damaging emails from Treasury and other government officials, stating they aren't official views. That's just a guess but what else could it be? Hopefully at some point some of this information makes it to the jury and gets released to the public. The ulterior motives we've already seen from officials such as Jim Parrot seem relevant to the plaintiffs' side given the "good faith" portion of the contract breach.

 

I hope we can get some information about the trial as it unfolds. Someone will have to be there taking notes. Anyone that has seen a jury trial up close knows that juries are unpredictable; we have to hope the odds lean heavily toward the plaintiffs.

 

I hope some investors are still monitoring these boards and also doing well otherwise. And I wish everyone good luck. I miss the great analysis that used to happen here and I hope we can get some more discussion going about the trial. This seems a good place to discuss trial matters and updates.

How big is the jury? How many of them need to agree for a decision?

[orthopa]

Im still here following along. Not much to comment on at this time other then the upcoming trial. 

 

Good news:

 

1. Trial moving forward. Looks like it may get pushed back from Oct 17 date as pre trial hearing not done and jury not selected yet. 

2. Lamberths SJ opinion will be totally unsealed and hopefully out monday. 

3. Key in SJ will be what determination of damages he will let through or will be recognized. 

 

Rumor is Yellen and Deese maybe out after midterms. Big names in the trade but nothing seems to be happening administratively  so probably a nothing burger. 

[maude]

Judge Lamberth's opinion was unsealed (see attached) the other day. Does anyone know (1) whether any damages would be paid directly to shareholders or to the companies and (2) what a plausible range of damages would be, given the theory of damages the judge has allowed to go forward?

2022-09-23 opinion re. motions for summary judgment.pdf

[Wiggins]

10 jurors were selected today. Likely they will all be sworn in and one is an alternate, so one will be dismissed if all 10 are there at the time of verdict and 9 will make the decision. This is a civil trial, so the jury does not have to agree unanimously. They just have to reach consensus according to the foreman they will select. Any damages paid to shareholders would be from the GSEs themselves.

[maude]

14 hours ago, Wiggins said:

10 jurors were selected today. Likely they will all be sworn in and one is an alternate, so one will be dismissed if all 10 are there at the time of verdict and 9 will make the decision. This is a civil trial, so the jury does not have to agree unanimously. They just have to reach consensus according to the foreman they will select. Any damages paid to shareholders would be from the GSEs themselves.

Thank you. I didn't know that. If the shareholders win any damages, will all GSE shareholders receive a payment from the GSEs or only those who are plaintiffs in the case? And any thoughts on the range of plausible damages that might actually get awarded?

[Wiggins]

On 10/18/2022 at 10:40 AM, maude said:

Thank you. I didn't know that. If the shareholders win any damages, will all GSE shareholders receive a payment from the GSEs or only those who are plaintiffs in the case? And any thoughts on the range of plausible damages that might actually get awarded?

All shareholders of Fannie and Freddie preferred, and Freddie common will get paid unless they specifically opted out of this class action suit. I have read that the plaintiffs are only asking for $1.6 billion in damages which would result in a cash payment for about what they're selling for today. I don't know what the jurors will decide and all I know is what I am reading in the newspapers and on Twitter

[fareastwarriors]

U.S. Supreme Court rejects investor suits over Fannie Mae, Freddie Mac

[TwoCitiesCapital]

1 hour ago, fareastwarriors said:

U.S. Supreme Court rejects investor suits over Fannie Mae, Freddie Mac

 

I just can't fathom how this keeps failing

 

It's so blindingly obvious to anyone who looks at it but keeps being barred for technical reasons because the court reads the law as 'the government needs to sue itself' or 'we can't review the law because the law says we can't review it'. 

 

I figured a conservative court would have a field day with this, but I guess not. So much for checks and balances...

 

 

Edited January 9, 2023 by TwoCitiesCapital