Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3231408 times)

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11950 on: March 19, 2019, 06:11:44 AM »
Mulvaney to be Chief of Staff, no longer acting Chief of Staff
https://www.politico.com/story/2019/03/19/white-house-mulvaney-acting-chief-staff-1226055
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


Luke 5:32

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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

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11952 on: March 20, 2019, 11:55:21 AM »
I like the fact the nws this quarter is on a Sunday. just saying...  ;)
Not Investment Advice. Do Your Own Research.

DocSnowball

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11953 on: March 20, 2019, 01:35:25 PM »
Prospects For Fannie/Freddie Recapitalization In An Environment Of Political Risk:  An Allegory

https://www.dropbox.com/s/3r34frvf1p0hfgp/The%20Set%20Up.docx?dl=0

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"?  ::)

With that said, I do think Collins is promising. But we have been wrong all along the way. ::)
Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey.

Hats off to you. Do you think the "house money" makes you less risk averse to a loss from these levels? Or is there loss aversion from threat of a big chunk of profit being taxed? If the security was available at today's prices, would you enter into the investment and build this level of allocation? Just curious. I have enjoyed your comments along the ride a lot, worth much more than 2c on the dollar, closer to priceless!

Seahug

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11954 on: March 20, 2019, 10:33:35 PM »
As has been history, better not to add/buy when there's a lot of hype/chatter/optimism on this board.

Since it's been quiet past few weeks and looking like going no where, especially if march earnings are paid out, maybe this is the time to add.

Then mnuchin et al can just surprise us w a done deal like tax reform

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11955 on: March 20, 2019, 10:51:56 PM »
Prospects For Fannie/Freddie Recapitalization In An Environment Of Political Risk:  An Allegory

https://www.dropbox.com/s/3r34frvf1p0hfgp/The%20Set%20Up.docx?dl=0

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"?  ::)

With that said, I do think Collins is promising. But we have been wrong all along the way. ::)
Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey.

Hats off to you. Do you think the "house money" makes you less risk averse to a loss from these levels? Or is there loss aversion from threat of a big chunk of profit being taxed? If the security was available at today's prices, would you enter into the investment and build this level of allocation? Just curious. I have enjoyed your comments along the ride a lot, worth much more than 2c on the dollar, closer to priceless!
Well.. I am far from being in the same league as those members here who write technically savvy, mathematically thorough, legally correct and well researched posts and answers. Those indeed are priceless. So thank you for overestimating me :)

It's difficult to say where being risk averse is coming from. As you mentioned, the hatred of having to pay a small fortune to the IRS, the greed of perhaps leaving money on the table, the comfort of sitting on large paper profits... all play a part. Maybe it's inertia. Maybe obstinacy. But over the years and after seeing shares losing a lot of ground -on occasions- I came to the conclusion that at 60% of par it may not be worth to wait for full face value. The time and the battle... Believing there may be other "close to doubles" that can fill the gap of Jrs. at 60% helps keep greed in check. Or transplant it, I should say.

Today I would not build the position I originally built back then. Not because of prices nor because risk/reward has changed. But because today's reality (and the information we acquired) is vastly different than the one we faced in 2010. All we had then was our (correct) interpretation of HERA, our correct interpretation of the SPSPAs and a leftist President who had been in office less than 2 years and appeared too timid in the aftermath of decades of Reaganomics. Now we are waking up to the fact the companies had been nationalized and neither courts nor the government seem to know where to go.

Still, in this utter confusion I do see benign signs. Since Lamberth, we've had nothing but good news. Scratch that. News becoming better at a compounding rate. While the smallest victories may have gone unnoticed at first -Sweeney's discovery for one-, news from courts continued to build momentum to the upside in an ever so slightly upward slope. More recently, from Willet's dissent to the En Banc proceedings. Perhaps one day this curve goes parabolic.

In the face of an improving rate of change of court news, under the belief that Otting, Calabria, Mnuchin and Mulvaney are beneficial to shareholders and being close to a price level I would consider satisfactory, would you recommend becoming conservative taking some chips off the table?

In other words, do you think 60% is achievable sometime this year?
« Last Edit: March 20, 2019, 10:56:59 PM by rros »

muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11956 on: March 21, 2019, 07:28:23 AM »
Thursday again. Are we getting Calabria confirmation today?
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DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11957 on: March 21, 2019, 07:33:11 AM »
Thursday again. Are we getting Calabria confirmation today?

Smart money says 50/50.
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allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11958 on: March 21, 2019, 07:41:28 AM »
Senate is off this week.

DocSnowball

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #11959 on: March 21, 2019, 08:34:21 AM »
Prospects For Fannie/Freddie Recapitalization In An Environment Of Political Risk:  An Allegory

https://www.dropbox.com/s/3r34frvf1p0hfgp/The%20Set%20Up.docx?dl=0

Isn't it amazing that every time there was an admin delay, we say "Now the thesis is back to courts", and every time there was a negative court ruling, we say "Courts don't matter. Now the thesis is back to admin reform"?  ::)

With that said, I do think Collins is promising. But we have been wrong all along the way. ::)
Just to add some perspective. My cost basis on the Jrs. is 47 cents or about 2 cents on the dollar. If I were to sell today that would mean 1700% correctness. I would love to be wrong this way only 1 more time in my investing journey.

Hats off to you. Do you think the "house money" makes you less risk averse to a loss from these levels? Or is there loss aversion from threat of a big chunk of profit being taxed? If the security was available at today's prices, would you enter into the investment and build this level of allocation? Just curious. I have enjoyed your comments along the ride a lot, worth much more than 2c on the dollar, closer to priceless!
Well.. I am far from being in the same league as those members here who write technically savvy, mathematically thorough, legally correct and well researched posts and answers. Those indeed are priceless. So thank you for overestimating me :)

It's difficult to say where being risk averse is coming from. As you mentioned, the hatred of having to pay a small fortune to the IRS, the greed of perhaps leaving money on the table, the comfort of sitting on large paper profits... all play a part. Maybe it's inertia. Maybe obstinacy. But over the years and after seeing shares losing a lot of ground -on occasions- I came to the conclusion that at 60% of par it may not be worth to wait for full face value. The time and the battle... Believing there may be other "close to doubles" that can fill the gap of Jrs. at 60% helps keep greed in check. Or transplant it, I should say.

Today I would not build the position I originally built back then. Not because of prices nor because risk/reward has changed. But because today's reality (and the information we acquired) is vastly different than the one we faced in 2010. All we had then was our (correct) interpretation of HERA, our correct interpretation of the SPSPAs and a leftist President who had been in office less than 2 years and appeared too timid in the aftermath of decades of Reaganomics. Now we are waking up to the fact the companies had been nationalized and neither courts nor the government seem to know where to go.

Still, in this utter confusion I do see benign signs. Since Lamberth, we've had nothing but good news. Scratch that. News becoming better at a compounding rate. While the smallest victories may have gone unnoticed at first -Sweeney's discovery for one-, news from courts continued to build momentum to the upside in an ever so slightly upward slope. More recently, from Willet's dissent to the En Banc proceedings. Perhaps one day this curve goes parabolic.

In the face of an improving rate of change of court news, under the belief that Otting, Calabria, Mnuchin and Mulvaney are beneficial to shareholders and being close to a price level I would consider satisfactory, would you recommend becoming conservative taking some chips off the table?

In other words, do you think 60% is achievable sometime this year?

Thanks for sharing. If I knew whether this will reach 60% of par, wouldn't that be great. Do I think so, yes more likely than not. My context in this is of a small private investor who is not at the negotiation table in a situation without margin of safety and dependent on the kindness of strangers who I can't bring myself to trust; with the legal system so far not standing behind me to serve its role of enabling trust in contracts.

My asset allocation approach here is to put in only so much that if it reaches par on best case scenario, then it represents what I'd want at steady state in my portfolio; and so little that if it goes to zero or very low then I won't lose sleep. For me this is 2%, and at par 5%, leaving me with another 5% I can allocate after the binary outcome is over. One can argue using Kelly's formula would be another option, and reach a much higher allocation. I'd have to say I have subjectively felt much better after cutting down my allocation from 15% to 2% here in the last few months, but unlike you it was not a 1700% gain, only 150% and much of it helped offset another investment that didn't work out.