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

[Guest cherzeca]

nothing more than his ongoing campaign to dispel myths:

 

http://howardonmortgagefinance.com/2016/02/03/thoughts-on-delaware-amicus-curiae-brief/

 

it seems that plaintiffs want to make hay out of the "fraudulent" ugoletti affadavit.  you have two howard amicus briefs, perry and hindes/jacobs, and a perry reply brief filing that is sealed undoubtedly making the point that lamberth decided based upon a fraudulent presentation of facts by govt.  this is just one more voice for the choir

[Mephistopheles]

Ok, so I know the rules say his lawyers can't discuss the discovery with him. But how much do they really have to divulge for him to get a hint on where the case is going? All it takes is a wink wink. He upped his stake from an already significant position that he had before (for a coin flip anyway). He got back into the common after selling out a while ago to Icahn. Call me crazy, but I think that's a pretty good sign.

 

Besides, if I know one thing about Berkowitz, it's that he never stubbornly gets attached to his investments if the facts change.

[orthopa]

Ok, so I know the rules say his lawyers can't discuss the discovery with him. But how much do they really have to divulge for him to get a hint on where the case is going? All it takes is a wink wink. He upped his stake from an already significant position that he had before (for a coin flip anyway). He got back into the common after selling out a while ago to Icahn. Call me crazy, but I think that's a pretty good sign.

 

Besides, if I know one thing about Berkowitz, it's that he never stubbornly gets attached to his investments if the facts change.

 

True and there is a difference between being a stubbornly right value investor and stupid.

 

I know I commented a while back that there seems to really not be much of a voice on the other side defending these claims other then that clown Carney. I'm sure the gov wants to keep their arguments in the court  and stay out of the media but how can they honestly refute all of these cases successfully?

 

Granted I'm biased holding common and preferred but outside of outright lying how can you defend all of these cases successfully with what has been argued on the plaintiff side?

 

Unless we have a judge throws a huge curve ball the plaintiffs chances seem much better. The market seems to think otherwise though with prices where they are.

 

 

[Guest cherzeca]

"Unless we have a judge throws a huge curve ball the plaintiffs chances seem much better. The market seems to think otherwise though with prices where they are."

 

that judge was lamberth and the curve ball was huge indeed.

 

i do believe that lamberth made many reversible errors, and there is the perry institutional plaintiffs appeal (just filed yesterday under seal containing the fairholme discovery) that seeks to rectify that.  you also have saxton in iowa where a similar motion to dismiss to the one lamberth granted is under consideration by the judge, so that is another bite of essentially the same apple.

 

then you have hindes/jacobs in delaware, which is similar in that govt seeks to cloak itself if the anit-injunction provision just like in perry, but where the claim that govt acted without the requisite power is stronger imo (lack of power to issue a pref having NWS terms).

 

then you have the the class action plaintiffs perry appeal (brief just filed), which says essentially that because fhfa is claiming in federal court of claims that it is not the govt, then we can sue fhfa here in DC for breach of contract (most pref claim) and breach of fiduciary duty (both pref and common).

 

then you have fairholme in fed ct of claims.  there is the merits case there, which is subject to a motion to dismiss that has triggered ongoing substantial discovery, and imo more importantly, the motion to compel disclosure of various documents (mostly emails) that govt is withholding under claims of privilege.  i suspect that if judge sweeney grants motion to compel even in part, this will lift kimono on some things govt very much wants to keep quiet.  howards recent amicus brief in delaware case highlights the pathway to the govt's thinking, but these emails will provide the details.

 

and the share prices are depressed, at least in part because of the corker jumpstart legislation.  while the shareholder base is composed of some very smart guys who understand that jumpstart has no bearing on the judicial outcome of these cases, i think alot of investors on the margin have decided to sit it out because of that.

 

 

[merkhet]

Besides, if I know one thing about Berkowitz, it's that he never stubbornly gets attached to his investments if the facts change.

 

I feel like some people might quibble with that re Sears & St. Joe, but, that aside, I think he's probably correct about Fannie & Freddie. (Except, I'm likely biased given my ownership of Fannie Preferred.)

[Mephistopheles]

Besides, if I know one thing about Berkowitz, it's that he never stubbornly gets attached to his investments if the facts change.

 

I feel like some people might quibble with that re Sears & St. Joe, but, that aside, I think he's probably correct about Fannie & Freddie. (Except, I'm likely biased given my ownership of Fannie Preferred.)

 

I know, I was being sarcastic :P

 

Referring to SHLD

[merkhet]

Haha. Okay. Sometimes, it's hard to tell on the Internet. :)

[orthopa]

"Unless we have a judge throws a huge curve ball the plaintiffs chances seem much better. The market seems to think otherwise though with prices where they are."

 

 

and the share prices are depressed, at least in part because of the corker jumpstart legislation.  while the shareholder base is composed of some very smart guys who understand that jumpstart has no bearing on the judicial outcome of these cases, i think alot of investors on the margin have decided to sit it out because of that.

 

Great point

[merkhet]

This is interesting.

 

@JonAPrior: Reps. Mulvaney, Fincher ask Lew and Watt about raising Fannie, Freddie capital levels, want response this month politico.pro/1L1JmoQ

 

[merkhet]

From GSE Links

 

New filing in the Fairholme case.

 

Peter Chapman writes, "The Government filed a Reply (Doc. 291) today, under seal, in Fairholme v. U.S. The docket entry says it's a Reply to a Response (Doc. 286) filed under seal by Fairholme to the Government's mysterious Motion (Doc. 285) for expedited relief for something it wanted that was filed under seal. We thought that Judge Sweeney's Order (Doc. 287) dated Jan. 26, 2016, also filed under seal, brought an end to whatever dispute was articulated in Docs. 285 and 286.

 

Apparently not. There's something swirling in the either related to Doc. 285 that's still under wraps and wasn't completely resolved when the parties filed their Joint Status Report (Doc. 288) on Jan, 28, 2016."

[Guest cherzeca]

New filing in the Fairholme case.

 

Peter Chapman writes, "The Government filed a Reply (Doc. 291) today, under seal, in Fairholme v. U.S. The docket entry says it's a Reply to a Response (Doc. 286) filed under seal by Fairholme to the Government's mysterious Motion (Doc. 285) for expedited relief for something it wanted that was filed under seal. We thought that Judge Sweeney's Order (Doc. 287) dated Jan. 26, 2016, also filed under seal, brought an end to whatever dispute was articulated in Docs. 285 and 286.

 

Apparently not. There's something swirling in the either related to Doc. 285 that's still under wraps and wasn't completely resolved when the parties filed their Joint Status Report (Doc. 288) on Jan, 28, 2016."

 

thanks for that merkhet.  do you have chapman's site handy?

[merkhet]

Nope, Chapman has a site?

 

I got that from http://www.gselinks.com

[doughishere]

Nope, Chapman has a site?

 

I got that from http://www.gselinks.com

 

I think Chapman writes emails to other investors who share the excerpts.

[Mephistopheles]

Haha. Okay. Sometimes, it's hard to tell on the Internet. :)

 

Haha yea.

 

But just curious as to what you think about my assumption, given you've worked in the field. Is it fair to assume that the lawyers would give hints to the client, without divulging all the information? Frankly, if I were Bruce's lawyer, I'd have a harder time holding a poker face than keeping the information from him via subtle clues.

 

Looking at the inverse - what are the odds that discovery has been worse than expected for the plaintiffs, yet Bruce continues to increase his stake? In my humble opinion, human nature exists here and he knows a tad bit more than the rest of the public of what's going on.

[merkhet]

I don't think the lawyers would want to take the risk.

[TonyG]

Anyone have access to the Fairholme article on Inside Mortage Finance by any chance?

[Guest cherzeca]

I don't think the lawyers would want to take the risk.

 

let's remember that conversations between lawyer and client are privileged, so whatever conversation cooper & kirk may have had with berkowitz would not be discoverable, unless berkowitz were to waive privlege...which he wouldn't

 

i fully expect that berkowitz has a fair idea what is in the discovery. not details of course, but color, body language.  we are talking about real life and big bucks here.

[orthopa]

I don't think the lawyers would want to take the risk.

 

let's remember that conversations between lawyer and client are privileged, so whatever conversation cooper & kirk may have had with berkowitz would not be discoverable, unless berkowitz were to waive privlege...which he wouldn't

 

i fully expect that berkowitz has a fair idea what is in the discovery. not details of course, but color, body language.  we are talking about real life and big bucks here.

 

Seems like only obstacle to Berkowitz to a fantastic IRR is time for this to run though the court system and judge decision. Do you think Ackman has similar knowledge based on sharing of information?

[merkhet]

I don't think the lawyers would want to take the risk.

 

let's remember that conversations between lawyer and client are privileged, so whatever conversation cooper & kirk may have had with berkowitz would not be discoverable, unless berkowitz were to waive privlege...which he wouldn't

 

i fully expect that berkowitz has a fair idea what is in the discovery. not details of course, but color, body language.  we are talking about real life and big bucks here.

 

To be clear, Berkowitz probably knows IF the documents are favorable, but he probably doesn't know HOW/WHY the documents are favorable -- my comment was towards whether Cooper & Kirk is feeding Berkowitz document content (even w/ a wink & a nudge) with the idea that their conversations wouldn't ever see the light of day. My guess is no.

[Mephistopheles]

I don't think the lawyers would want to take the risk.

 

let's remember that conversations between lawyer and client are privileged, so whatever conversation cooper & kirk may have had with berkowitz would not be discoverable, unless berkowitz were to waive privlege...which he wouldn't

 

i fully expect that berkowitz has a fair idea what is in the discovery. not details of course, but color, body language.  we are talking about real life and big bucks here.

 

To be clear, Berkowitz probably knows IF the documents are favorable, but he probably doesn't know HOW/WHY the documents are favorable -- my comment was towards whether Cooper & Kirk is feeding Berkowitz document content (even w/ a wink & a nudge) with the idea that their conversations wouldn't ever see the light of day. My guess is no.

 

I agree and I never thought that they'd be feeding document content to him - but yes even with just body language I'm sure he knows if they are favorable. Which is still significant IMO. And he did up his stake so it's a good sign. Unless of course he's in denial like he is with SHLD.

 

Not something to base an investment thesis on obviously but just to take it as a good sign.

[Guest cherzeca]

this horse is already dead, but one more whack:  in my view, cooper & kirk could run down a list of arguments/testimony cited by the govt and tell berkowitz that in their view such arguments/testimony are unavailing or false. for example, they could specifically tell their client that in their view the ugolleti affidavit was false. all of this is fair advice-giving from lawyer to client. now, the premise for cooper & kirk's belief may be the discovery content, and none of that can specifically be provided berkowitz given the confidentiality order.  but the conclusions that cooper & kirk draw from discovery relating to the govt's case, and thus the strategic implications of the discovery for fairholme's case going forward, could all be related to berkowitz in real time...which might have encouraged fairholme to buy more stock in real time.  and all of this discussion is rotected by the client/atty privilege

[hardincap]

Not something to base an investment thesis on obviously but just to take it as a good sign.

 

Given that he was quite bullish to begin with, I think all you can derive from his adding is that the discovery didn't invalidate his thesis, not that the discovery added something that made him even more bullish. He could just be rebalancing his portfolio %-wise to what it was pre-Lamberth

[Mephistopheles]

That's true - but at least it tells us the discovery is not worse than expected. Also, assuming he's being 100% rational, he's willing to go back to pre Lamberth levels even after the Lamberth decision. Meaning the odds didn't get worse after Lamberth threw out the case, if you count for all the good info produced.

[doughishere]

That's true - but at least it tells us the discovery is not worse than expected. Also, assuming he's being 100% rational, he's willing to go back to pre Lamberth levels even after the Lamberth decision. Meaning the odds didn't get worse after Lamberth threw out the case, if you count for all the good info produced.

 

I don't know why we keep talking about lamberths decision. Especially, In light of the documentation and discovery it now seems silly at best(judicial authority abuse?)...and to be absolutely honest it seems like poor decision form the view of my hs civics class the fact that he didn't even allow for discovery. Poor Carney who still thinks that Lamberths decision was the right one but whatever we all have our cognitive biases. And we all have our incentives.

 

Now you have discovery however many months later...and you get hints at very conflicting accounts...reminds me of the Freddie gray cases I posted a few months back. I don't know but I use to think it was judges jobs to handle things like this.

 

And...

Who cares what Bruce does know or doesn't know, that's insider information. If you think he knows something special hen maybe you think Kirk and cooper should start accumulating a position also.(hint: I think he doesn't know anything special and don't think he's getting any material info from Kirk and cooper). To me it's fairly obvious that you should be continuing to buy here...where there's smoke there's fire. From the docs there's a lot of smoke...but hey lets pretend we don't see it

 

I also don't get why no one is willing to say any of this until chapman comes out with the comments he made the other week.  At best there's misrepresentation and at worst there's outright fraud(normally people see jail time for that...but to be honest if the govt was on its game maybe they would have gotten someone at a big bank for the shit in 08...they didn't). We've known about this for the last 3months at least...maybe closer to 6. I forget.

 

It seems to me that this case is basically won(I have not heard one compelling case for the Govts position)....all that needs to be applied is pressure. To get it done in a timely manner.

 

 

 

 

 

[doughishere]

Anyone have access to the Fairholme article on Inside Mortage Finance by any chance?

 

What's the link?