Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3143854 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11170 on: January 10, 2019, 07:57:06 PM »
An announcement that the NWS has been stopped seems imminent.

https://twitter.com/JoshRosner/status/1083440288415260672
@JoshRosner
OTTING in Politico Pro: "Our goal is to be able to complete the release of the GSEs but at the same time make sure that it supports the U.S. housing market."


https://twitter.com/Fanniegate101/status/1083441893340573696
@Fanniegate101
Joseph Otting has made his first on the record comments about ending $FNMA & $FMCC conservatorships & releasing them. The end of this charade is getting closer by the day. Capital is the next logical step by amending the 'net worth sweep' #FannieGate


Hopefully really imminent. That piece from October said new people were going to act fast. Lets see it!
They can immediately suspend dividends and go for full earnings retention. But they cannot kill the NWS completely and do away with the Srs. That may have to be part of a complete overhaul, warrants, Srs. and perhaps conversion of Jrs.

I agree the first part, stopping dividend distributions, is a likely first step in isolation, and I found the timing of the recent Milken report, advocating for that as well, may indicate that it will come sooner than one might think.  Milken's sources are likely not too shabby.  once that step is taken, then you will see Milken and others saying fine (of course that is not fine with them) but now lets do the heavy congressional work (competition and fed guarantee).  given the current congressional impasse and govt shutdown, good luck with that.  judging from the Otting interview, working with congress didn't seem to be at the top of his list.


SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11171 on: January 10, 2019, 08:56:37 PM »
Does anyone have a creative downside scenario which is consistent with all of these data points we now have?   Genuinely have none aside from Trump impeachment etc.  Anything else would contradict something one these guys said (when they simply could have stayed silent...)

Eye4Valu

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11172 on: January 10, 2019, 09:54:00 PM »
Not even sure a Trump impeachment and conviction represents true downside, as Calabria was Pence's economist.

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11173 on: January 11, 2019, 12:20:02 AM »
Otting will be acting director for at most 6 months? Assuming calabria is confirmed.
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allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11174 on: January 11, 2019, 04:35:05 AM »
Tail-risk downside we must all be aware of even if low probability:

1) Market and housing market take a serious u-turn / recession. If capital markets dry up, there would be no appetite for this IPO. All the more reason they need to act while the window of opportunity is still there.
2) Trump wakes up on wrong side of the bed and fires Mnuchin- short term this would be hairy and im not sure they can replace him quick enough to act ahead of election cycle and with someone who shares his views.

The bull thesis remains stronger than ever today across the board when you evaluate the players in charge, their commentary to date, the recent court developments (dc circuit and fifth circuit + court of federal claims T'ed up finally). As Howard always says. TINA + WARRANTS. Get it done

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11175 on: January 11, 2019, 04:40:15 AM »
It would seem that the one remaining key risk that Calabria represented - receivership - is out of the question based on Calabria's statements.   Assuming the guys first public statement wasn't an outright lie (when there was no incentive to lie)

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11176 on: January 11, 2019, 06:44:27 AM »
Important : no mention of legislation. It is finally crystal clear that legislative action is dead after a decade of politics and a lot of taxpayer money wasted on farce bills by Corker and Warner.



Full text:

Otting: ‘A lot’ can get done during acting FHFA tenure

By Victoria Guida
01/10/2019 12:45 PM EDT

Joseph Otting, who took over as acting director of the Federal Housing Finance Agency this week, said today there’s a lot he can accomplish to further housing finance reform during his tenure at the agency, despite the temporary nature of his position.

Otting, who is also comptroller of the currency, will be in charge of the agency that oversees Fannie Mae and Freddie Mac until a permanent replacement is confirmed. President Donald Trump has nominated vice presidential aide and libertarian economist Mark Calabria for that position.
“There’s a clear mission that’s outlined by the Treasury and the White House, what they want to accomplish,” Otting said in an interview this morning inside the building that houses both the OCC and FHFA.

“If I can move that down the rails before Mark is confirmed, there’s a lot of things I think we can get done, and then Mark could come in and continue down the path of the mission that’s been laid out,” he added.

Otting echoed Treasury Secretary Steven Mnuchin by saying that “ending conservatorship is a priority,” and maintaining the 30-year mortgage is important.
He declined to go into detail about his views on what type of reforms might be needed to the mortgage giants, often referred to as government-sponsored enterprises.

“We have to look at the capital and liquidity requirements of the GSEs,” he said. “But by all accounts … I think the GSEs can be commended for the way they have repositioned their business models and the way they are serving the market.”

He said he was still getting his bearings in his new role, but added: “Our goal is to be able to complete the release of the GSEs but at the same time make sure that it supports the U.S. housing market.”

What I find interesting is that he comments that there is a clear path and mission that has been laid out by Treasury and White house and what they want to accomplish. He also mentions a lot can be accomplished, and the path of the mission that has been laid out.

Did all of this go over my head? All we have heard from Treasury is ending conservatorship and not putting tax payers at risk. What has the White house said about this entire thing? Nothing from what I an remember or have read?

Clearly there is an administrative plan that looks at the liquidity capital (ie NWS dividends etc) and all of the above. That plan hasn't leaked but for sure Otting and Calabria/Mnuchin are aware of it.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11177 on: January 11, 2019, 06:52:28 AM »
Important : no mention of legislation. It is finally crystal clear that legislative action is dead after a decade of politics and a lot of taxpayer money wasted on farce bills by Corker and Warner.



Full text:

Otting: ‘A lot’ can get done during acting FHFA tenure

By Victoria Guida
01/10/2019 12:45 PM EDT

Joseph Otting, who took over as acting director of the Federal Housing Finance Agency this week, said today there’s a lot he can accomplish to further housing finance reform during his tenure at the agency, despite the temporary nature of his position.

Otting, who is also comptroller of the currency, will be in charge of the agency that oversees Fannie Mae and Freddie Mac until a permanent replacement is confirmed. President Donald Trump has nominated vice presidential aide and libertarian economist Mark Calabria for that position.
“There’s a clear mission that’s outlined by the Treasury and the White House, what they want to accomplish,” Otting said in an interview this morning inside the building that houses both the OCC and FHFA.

“If I can move that down the rails before Mark is confirmed, there’s a lot of things I think we can get done, and then Mark could come in and continue down the path of the mission that’s been laid out,” he added.

Otting echoed Treasury Secretary Steven Mnuchin by saying that “ending conservatorship is a priority,” and maintaining the 30-year mortgage is important.
He declined to go into detail about his views on what type of reforms might be needed to the mortgage giants, often referred to as government-sponsored enterprises.

“We have to look at the capital and liquidity requirements of the GSEs,” he said. “But by all accounts … I think the GSEs can be commended for the way they have repositioned their business models and the way they are serving the market.”

He said he was still getting his bearings in his new role, but added: “Our goal is to be able to complete the release of the GSEs but at the same time make sure that it supports the U.S. housing market.”

What I find interesting is that he comments that there is a clear path and mission that has been laid out by Treasury and White house and what they want to accomplish. He also mentions a lot can be accomplished, and the path of the mission that has been laid out.

Did all of this go over my head? All we have heard from Treasury is ending conservatorship and not putting tax payers at risk. What has the White house said about this entire thing? Nothing from what I an remember or have read?

Clearly there is an administrative plan that looks at the liquidity capital (ie NWS dividends etc) and all of the above. That plan hasn't leaked but for sure Otting and Calabria/Mnuchin are aware of it.
I believe the WH published a roadmap for Fannie and Freddie and it was mainly about (re)privatizing them. Could have been Mulvaney with OMB. I will look for it. It was a broader paper with a section for the GSEs.

Found it
https://www.whitehouse.gov/wp-content/uploads/2018/06/Government-Reform-and-Reorg-Plan.pdf

Page 75
« Last Edit: January 11, 2019, 06:56:05 AM by rros »

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11178 on: January 11, 2019, 06:54:22 AM »
What has the White house said about this entire thing? Nothing from what I an remember or have read?

https://www.politico.com/f/?id=00000164-2324-dbdc-a96d-373e4e2a0000

Page 17 (and repeated on page 75 nearly word-for-word)
Transform the way the Federal Government delivers support for the U.S. housing finance system to ensure more transparency and accountability to taxpayers, and to minimize the risk of tax payer-funded bailouts, while maintaining responsible and sustainable support for homeowners.  Proposed changes, which would require broader policy and legislative reforms beyond restructuring Federal agencies and programs, include ending the conservatorship of Fannie Mae and Freddie Mac, reducing their role in the housing market, and providing an explicit, limited Federal backstop that is on-budget and apart from the Federal support for low- and moderate-income homebuyers.

Page 75 (this part is in addition to the page 17 repeat)
This proposal would reorganize the way the Federal Government delivers mortgage assistance and go beyond restructuring Federal agencies and programs by transitioning Fannie Mae and Freddie Mac to fully private entities.

Looks like the document was created on June 6th of this year if you right click and look at document properties.

These were notes I kept back in June on this...

They are giving a major hint, possibly.  Mentioning that they are private companies repeatedly is encouraging.

Explicitly stating that they are privately-owned, and then completely wiping out shareholders (instead of just massive dilution to common), would seem to set the White House up for lawsuits that could come back to hurt them.  I think they are smarter than that.

It reads to me that they are making a concerted effort to mention that they are privately-owned companies.

"However, this system is challenged by the operation of two privately-owned Government sponsored-enterprises (GSEs), Fannie Mae and Freddie Mac..." (page 75)

"Competition to the duopolistic role played by the two privately-owned GSEs
would be an essential element..." (page 75)

"In order to propose changes in the Federal Government’s role in housing finance, this proposal outlines policies related to the privately-owned GSEs and ending their conservatorship." (page 75)

"Under the current system, Fannie Mae and Freddie Mac, two privately-owned GSEs, buy and guarantee..." (page 76)
« Last Edit: January 11, 2019, 06:56:40 AM by Luke 5:32 »
Invest for retirement?  Sure.  But investing in eternity is infinitely more important.  Don't get it twisted.  "...but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal."  Matthew 6:20

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11179 on: January 11, 2019, 07:19:33 AM »
What has the White house said about this entire thing? Nothing from what I an remember or have read?

https://www.politico.com/f/?id=00000164-2324-dbdc-a96d-373e4e2a0000

Page 17 (and repeated on page 75 nearly word-for-word)
Transform the way the Federal Government delivers support for the U.S. housing finance system to ensure more transparency and accountability to taxpayers, and to minimize the risk of tax payer-funded bailouts, while maintaining responsible and sustainable support for homeowners.  Proposed changes, which would require broader policy and legislative reforms beyond restructuring Federal agencies and programs, include ending the conservatorship of Fannie Mae and Freddie Mac, reducing their role in the housing market, and providing an explicit, limited Federal backstop that is on-budget and apart from the Federal support for low- and moderate-income homebuyers.

Page 75 (this part is in addition to the page 17 repeat)
This proposal would reorganize the way the Federal Government delivers mortgage assistance and go beyond restructuring Federal agencies and programs by transitioning Fannie Mae and Freddie Mac to fully private entities.

Looks like the document was created on June 6th of this year if you right click and look at document properties.

These were notes I kept back in June on this...

They are giving a major hint, possibly.  Mentioning that they are private companies repeatedly is encouraging.

Explicitly stating that they are privately-owned, and then completely wiping out shareholders (instead of just massive dilution to common), would seem to set the White House up for lawsuits that could come back to hurt them.  I think they are smarter than that.

It reads to me that they are making a concerted effort to mention that they are privately-owned companies.

"However, this system is challenged by the operation of two privately-owned Government sponsored-enterprises (GSEs), Fannie Mae and Freddie Mac..." (page 75)

"Competition to the duopolistic role played by the two privately-owned GSEs
would be an essential element..." (page 75)

"In order to propose changes in the Federal Government’s role in housing finance, this proposal outlines policies related to the privately-owned GSEs and ending their conservatorship." (page 75)

"Under the current system, Fannie Mae and Freddie Mac, two privately-owned GSEs, buy and guarantee..." (page 76)

I agree and just read rros link. I caught the emphasis on privately owned also. Looks we have at this point privately owned companies out of conservatorship cross referencing ottings comments, WH, Mnuchin etc.  :) That being said I added more preferred.