Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3435122 times)

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12350 on: May 12, 2019, 07:13:05 PM »
let's not forget that IF the NWS is to be rolled back so that treasury ends up with receipts as per original deal, there is a $25B credit due GSEs...can be in form of a credit against future taxes.  calabria should be pounding the table for this initial $25B stake in negotiations with treasury, and if he doesn't, shareholders should in demanding this in exchange for settlement.  $25B is 20% there towards capital target

Two questions. Isn't it the plaintiffs involved in negotiations, with both Calabria and Mnuchin on the other side? Also, how does that tax credit help towards a recap?

What I was thinking is that the Collins plaintiffs are asking for the seniors to be extinguished and the $25B tax credit. Treasury counters with extinguishing the seniors but not granting the tax credit. The plaintiffs accept because they aren't affected by the recap being larger by $25B.

If the plaintiffs demand the $25B on top of the seniors being gone, Treasury conceding would give them everything they want. What incentive would Treasury have to take that deal?


cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12351 on: May 12, 2019, 07:22:09 PM »
let's not forget that IF the NWS is to be rolled back so that treasury ends up with receipts as per original deal, there is a $25B credit due GSEs...can be in form of a credit against future taxes.  calabria should be pounding the table for this initial $25B stake in negotiations with treasury, and if he doesn't, shareholders should in demanding this in exchange for settlement.  $25B is 20% there towards capital target

Two questions. Isn't it the plaintiffs involved in negotiations, with both Calabria and Mnuchin on the other side? Also, how does that tax credit help towards a recap?

What I was thinking is that the Collins plaintiffs are asking for the seniors to be extinguished and the $25B tax credit. Treasury counters with extinguishing the seniors but not granting the tax credit. The plaintiffs accept because they aren't affected by the recap being larger by $25B.

If the plaintiffs demand the $25B on top of the seniors being gone, Treasury conceding would give them everything they want. What incentive would Treasury have to take that deal?

calabria is empowered by HERA  to act in the interests of the conservatee and fhfa.  it is plainly in interest of conservatee to have $25B in tax savings going forward, which will provide GSEs $25B in more retained earnings that can be applied to their capital target.  if collins goes Ps way then this ask would be stronger.
« Last Edit: May 12, 2019, 07:30:04 PM by cherzeca »

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12352 on: May 13, 2019, 10:33:31 AM »
FT reports that sen. brown doesn't expect bipartisan legislation re GSEs.  here is SA's blurb:  https://seekingalpha.com/news/3463049-frannie-privatization-unlikely-says-sherrod-brown-ft?dr=1#email_link

I take this as extremely good news...fhfa/treasury are able to proceed with administrative reform without the expectation that congress will gum up the works while GSEs are raising capital.  markets seems to think otherwise.

privatization is such an imprecise term.  reports that sen. brown is against "privatization" is not a negative for GSE pref sh, though market seems to think it is...because of loose usage of the term privatization.

if anyone disagrees id be interested in the reasoning

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12353 on: May 13, 2019, 10:38:51 AM »
FT reports that sen. brown doesn't expect bipartisan legislation re GSEs.  here is SA's blurb:  https://seekingalpha.com/news/3463049-frannie-privatization-unlikely-says-sherrod-brown-ft?dr=1#email_link

I take this as extremely good news...fhfa/treasury are able to proceed with administrative reform without the expectation that congress will gum up the works while GSEs are raising capital.  markets seems to think otherwise.

privatization is such an imprecise term.  reports that sen. brown is against "privatization" is not a negative for GSE pref sh, though market seems to think it is...because of loose usage of the term privatization.

if anyone disagrees id be interested in the reasoning

I was very happy after I got through the clock bait headline as I took it to mean that congress won't pass anything major. To me it says admin recap with little congress input.

Buying more today. Seriously concentrated here, lol.
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hardincap

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12354 on: May 13, 2019, 10:39:19 AM »
Calabria specifically said he is obligated by the statute to release after recap. That is a BFD for him to say that. But, FUD like this does make it harder to raise capital, so its net negative, imo

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12355 on: May 13, 2019, 10:44:24 AM »
Calabria specifically said he is obligated by the statute to release after recap. That is a BFD for him to say that. But, FUD like this does make it harder to raise capital, so its net negative, imo

what's FUD? 

if this just means that congress doesn't do anything, and having heard that calabria considers himself obligated to restore capital, dont you think this makes institutional investors have fewer rather than more questions in the capital raising process?

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12356 on: May 13, 2019, 10:54:27 AM »
Calabria specifically said he is obligated by the statute to release after recap. That is a BFD for him to say that. But, FUD like this does make it harder to raise capital, so its net negative, imo

what's FUD? 

if this just means that congress doesn't do anything, and having heard that calabria considers himself obligated to restore capital, dont you think this makes institutional investors have fewer rather than more questions in the capital raising process?

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cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12357 on: May 13, 2019, 10:58:53 AM »
Calabria specifically said he is obligated by the statute to release after recap. That is a BFD for him to say that. But, FUD like this does make it harder to raise capital, so its net negative, imo

what's FUD? 

if this just means that congress doesn't do anything, and having heard that calabria considers himself obligated to restore capital, dont you think this makes institutional investors have fewer rather than more questions in the capital raising process?

Fear, Uncertainty, and Doubt.

A value investors best friend, you love it when you see it.

got it.  and so why net negative?

hardincap

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12358 on: May 13, 2019, 11:23:51 AM »
i just think antagonistic comments by influential politicians dont help when you're trying to raise 100bn from the market. the market reaction from this mildly negative headline was fairly sharp.. how bad will it be if/when politicians actively try to derail an admin-led release? im expecting a moelis type recap plan to be released next mo, and we'll see what kind of execution risk discount the market puts on f&f. i suspect at that point, the "easy money" will have been made...

Jcmeg35

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12359 on: May 13, 2019, 11:36:49 AM »
Overall, I also agree that the biggest takeaway is that Congress is unlikely to act.

I also think that @hardincap and the market's reactions are justified because it highlights the numerous moving parts, number of constituents involved, and how complicated this process is. I think part of the problem is that Calabria & co. have just started the narration process about how they plan to act. I think as we move down the road with TSY response to WH and more details emerge Mnuchin, Calabria, etc. will move into "pitch". I think at that stage, once the wheels are fully in motion, they will discuss how congress etc. are not material risks to investors. This is all to say, I think this will all emerge in time.

I also think it is important to keep in mind that while all the talk has been positive, at this stage, there have been no concrete actions that have been taken. I think this is also why Calabria's Fox interview, despite saying some pretty constructive things on IPO, ending NWS, his mandate to R&R, etc. didn't move the price up that much.
« Last Edit: May 13, 2019, 11:52:40 AM by Jcmeg35 »