Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3329790 times)

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12340 on: May 10, 2019, 05:34:43 AM »
So with what we know from Calabria talking anyone have any thoughts why the prfd isnt with par? I think at this point a discussion as to whether or not dividends are eventually turned on is worth a thought too.


DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12341 on: May 10, 2019, 07:17:20 AM »
So with what we know from Calabria talking anyone have any thoughts why the prfd isnt with par? I think at this point a discussion as to whether or not dividends are eventually turned on is worth a thought too.

Dead money until redeemed or Divs turned on. Uncertainty still too high until its official to justify CAGR to Par.
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Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12342 on: May 10, 2019, 07:34:46 AM »
Joe Light thinks that an IPO (but really an SPO, why does everyone keep saying IPO??) will be difficult to impossible.
https://twitter.com/joelight/status/1126840702577577985

The most interesting tweet in the thread, to me, is this one.
https://twitter.com/HoldenWalker99/status/1126843902474977280
It will be tricky, but the most significant variable - #5 - has been a risk since the GSEs were chartered... and a legislatively mandated cap on market share to allow new entrants would result in overcapitalization & return of excess capital to investors.

I fully agree that Congress coming in and messing everything up is a significant risk, but this line of thought hadn't occurred to me before. It makes perfect sense, and if this return of capital idea is built in somehow then it will make the capital raise far easier.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12343 on: May 10, 2019, 07:51:26 AM »
Joe Light thinks that an IPO (but really an SPO, why does everyone keep saying IPO??) will be difficult to impossible.
https://twitter.com/joelight/status/1126840702577577985

The most interesting tweet in the thread, to me, is this one.
https://twitter.com/HoldenWalker99/status/1126843902474977280
It will be tricky, but the most significant variable - #5 - has been a risk since the GSEs were chartered... and a legislatively mandated cap on market share to allow new entrants would result in overcapitalization & return of excess capital to investors.

I fully agree that Congress coming in and messing everything up is a significant risk, but this line of thought hadn't occurred to me before. It makes perfect sense, and if this return of capital idea is built in somehow then it will make the capital raise far easier.

can someone post tweet text

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12344 on: May 10, 2019, 08:06:35 AM »
can someone post tweet text

So Fannie, Freddie will have:
1. No QM advantage
2. No explicit guarantee
3. Bank-like capital reqs
4. No securitization infrastructure advantage
5. Uncertain outlook for future legislation or competitors
2020 IPO roadshow here we come?

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12345 on: May 10, 2019, 08:07:23 AM »
Joe Light thinks that an IPO (but really an SPO, why does everyone keep saying IPO??) will be difficult to impossible.
https://twitter.com/joelight/status/1126840702577577985

The most interesting tweet in the thread, to me, is this one.
https://twitter.com/HoldenWalker99/status/1126843902474977280
It will be tricky, but the most significant variable - #5 - has been a risk since the GSEs were chartered... and a legislatively mandated cap on market share to allow new entrants would result in overcapitalization & return of excess capital to investors.

I fully agree that Congress coming in and messing everything up is a significant risk, but this line of thought hadn't occurred to me before. It makes perfect sense, and if this return of capital idea is built in somehow then it will make the capital raise far easier.

can someone post tweet text

So Fannie, Freddie will have:
1. No QM advantage
2. No explicit guarantee
3. Bank-like capital reqs
4. No securitization infrastructure advantage
5. Uncertain outlook for future legislation or competitors
2020 IPO roadshow here we come?

2 is no issue to me. 3 wont happen, if it does RoE will be utility like so abbsolute return will still be $11-$12b per year. 5 has always been the case.



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BTShine

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12346 on: May 10, 2019, 09:09:36 AM »
"@MarkCalabria is waiting on a plan from @USTreasury on reform for Fannie & Freddie, which he expects this summer. (one of two)"

Entire tweets and replies compiled here, or should I say his stated timeline of activity as per the reporter (video of interview awaited):
https://twitter.com/Jenniferisms/with_replies

Video is live now:

https://video.foxbusiness.com/v/6035185923001/#sp=show-clips

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12347 on: May 10, 2019, 09:22:07 AM »
thanks for posting text.  here is my reaction.

light:
So Fannie, Freddie will have:
1. No QM advantage
2. No explicit guarantee
3. Bank-like capital reqs
4. No securitization infrastructure advantage
5. Uncertain outlook for future legislation or competitors
2020 IPO roadshow here we come?

1. Calabria has said pro and con on this.  will be removed, but not right away, in his senate confirm testimony.
2. treasury can come up with an implicit guaranty fee, which should signal to market that GSEs are tbtf
3. calabria has intimated that the current proposal (3.25%) is fine in senate testimony.  was this Calabria foot in mouth disease again?
4. never really was one
5. true

Jcmeg35

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12348 on: May 10, 2019, 09:41:16 AM »
@BTShine, thanks for posting

Two important comments that Calabria made that were not tweeted out:

1. Treasury will lead the Recap - not surprising but broadly positive.
2. Capital levels of 4-5%...this is substantially higher than previous comments and FHFA's initial proposal - obviously a negative. Hard to see how investors would be willing to pony that much $$ when it would weigh on ROE and could be further dampened down the line by competition. 

"@MarkCalabria is waiting on a plan from @USTreasury on reform for Fannie & Freddie, which he expects this summer. (one of two)"

Entire tweets and replies compiled here, or should I say his stated timeline of activity as per the reporter (video of interview awaited):
https://twitter.com/Jenniferisms/with_replies

Video is live now:

https://video.foxbusiness.com/v/6035185923001/#sp=show-clips

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12349 on: May 10, 2019, 10:33:45 AM »
@BTShine, thanks for posting

Two important comments that Calabria made that were not tweeted out:

1. Treasury will lead the Recap - not surprising but broadly positive.
2. Capital levels of 4-5%...this is substantially higher than previous comments and FHFA's initial proposal - obviously a negative. Hard to see how investors would be willing to pony that much $$ when it would weigh on ROE and could be further dampened down the line by competition. 

"@MarkCalabria is waiting on a plan from @USTreasury on reform for Fannie & Freddie, which he expects this summer. (one of two)"

Entire tweets and replies compiled here, or should I say his stated timeline of activity as per the reporter (video of interview awaited):
https://twitter.com/Jenniferisms/with_replies

Video is live now:

https://video.foxbusiness.com/v/6035185923001/#sp=show-clips
On minute 15:20 reporter actually said 4.5% of risk-weighted assets. That would make it half the value. Risk weight is set at 50% for single family mortgage-related assets. GSEs have mostly single family loans pooled.
« Last Edit: May 10, 2019, 11:47:37 AM by rros »