Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3424771 times)

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12390 on: May 16, 2019, 06:16:53 AM »
Treasury beginning to line up w/ Calabria.

@KatyODonnell_
Craig Phillips, Treasury counselor, on GSEs this morning: “The current state is the worst possible state. We can preserve the system and reform it – we want to get Fannie and Freddie out of conservatorship, and we want to use private capital to do that.”

*PHILLIPS: WE WANT TO GET FANNIE-FREDDIE OUT OF CONSERVATORSHIP
*PHILLIPS: WE'VE HAD WORKING SESSIONS ON RECAPITALIZING GSES
*PHILLIPS: CALABRIA'S PLAN FOR GSES FOOTPRINT HAS BEEN DISCUSSED
*TREASURY'S CRAIG PHILLIPS SAYS COMPETITION WOULD BE GOOD
Good news.


Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12391 on: May 16, 2019, 07:10:20 AM »
Treasury beginning to line up w/ Calabria.

@KatyODonnell_
Craig Phillips, Treasury counselor, on GSEs this morning: “The current state is the worst possible state. We can preserve the system and reform it – we want to get Fannie and Freddie out of conservatorship, and we want to use private capital to do that.”

This has me thinking, how could FHFA and Treasury tap current shareholders for more money? There could be some sort of rights offering, perhaps with current shareholders being given priority either as an incentive to drop the lawsuits or as a reward for being first in (or both). And how would that work for the pref shares? Common shareholders could buy warrants or be forced to put up cash to maintain their position, I think.

I beliebe it was Tim Pagliara who said that the government won't screw existing shareholders because they will be providing some of the recap money. That's what started this train of thought.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12392 on: May 16, 2019, 08:38:25 AM »
Good news re Phillips quote. I’m not even fussed anymore by competition reference. Sen brown isn’t convinced it’s needed and mad Maxine will side with brown so no legislation creating competition during this Congress

Luke 5:32

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Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12394 on: May 16, 2019, 10:33:21 AM »
Phillips is leaving next month: https://www.nytimes.com/2019/05/16/business/craig-phillips-treasury-fannie-mae-freddie-mac.html

On the surface, I don't like this. There are still too many moving parts, and Phillips has been one of the main people pushing things along. But perhaps his part of the heavy lifting is already done?

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12395 on: May 16, 2019, 10:46:37 AM »
Phillips is leaving next month: https://www.nytimes.com/2019/05/16/business/craig-phillips-treasury-fannie-mae-freddie-mac.html

On the surface, I don't like this. There are still too many moving parts, and Phillips has been one of the main people pushing things along. But perhaps his part of the heavy lifting is already done?

frankly, I love it

I never trusted the guy, thought he was a tbtf inside plant.  he was in charge of PLS at Morgan Stanley, no fan of the GSEs, he hated them when he was on street.  my best guess is that the treasury plan is baked and ready to go, he has no more value to add, and he is going to one of the banks that will get the mandate for the capital raise, claim all the credit and get a windfall bonus next year.  now would be the right time to cash in on two years in DC

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12396 on: May 16, 2019, 10:50:05 AM »
My understanding is his job was to help come up with details for the plan while Mnuchin was working on other things. The plan is being delivered to the White House next month... and he is stepping down next month... as his job is completed and he has nothing left to do at that point. Additionally, the guy is rumored going back to work on wallstreet... ahead of the IPO. Interesting.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12397 on: May 16, 2019, 11:07:57 AM »
My understanding is his job was to help come up with details for the plan while Mnuchin was working on other things. The plan is being delivered to the White House next month... and he is stepping down next month... as his job is completed and he has nothing left to do at that point. Additionally, the guy is rumored going back to work on wallstreet... ahead of the IPO. Interesting.

phillips predecessor as counselor to treasury secretary (for Obama) was Antonio Weiss former head of M&A at Lazard.  Weiss did not have a good exit.  had to start his own boutique and is not ringing the bell frankly. Phillips knows this, believe me, and has been having his eye on a good exit.  and what better time to get back on street than when the street is about to get a multi-billion mandate.  this is all good news.  if more work needed to be done on the treasury plan, my guess is that he wouldn't have been able to pull the ripcord
« Last Edit: May 16, 2019, 11:19:51 AM by cherzeca »

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12398 on: May 16, 2019, 11:12:00 AM »
My understanding is his job was to help come up with details for the plan while Mnuchin was working on other things. The plan is being delivered to the White House next month... and he is stepping down next month... as his job is completed and he has nothing left to do at that point. Additionally, the guy is rumored going back to work on wallstreet... ahead of the IPO. Interesting.

Exactly. His job is done. Everyone signed off remember?

cherzeca, I bet you like this part of the article.

"Mr. Phillips and other Treasury officials have been meeting with the biggest American banks to determine how best to raise capital for Fannie and Freddie — a prerequisite to releasing them from government control — as well as how the housing finance system might be restructured, according to two people who participated in the meetings."

There is the news they are lining up the bankers. Another check on the list. Mnuchins goal of within 6 months or by the end of the year seems intact.

Question for me would be do any of the big preferred holders have influence on "Americas biggest banks"?

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12399 on: May 16, 2019, 11:57:08 AM »
In less-liquid news, two 9,000 share blocks of FMCCT changed hands at $20.32 and $20.33, and two 12,200 share blocks of FNMAL changed hands at $20.25 and $20.26 today. Those caught my eye because they are relatively large blocks, but mainly because they mark the first over-$20 trades I have seen on the $50-par series, though FMCCT has had other small blocks trade at $20 and $20.50 today.

FMCCT has a somewhat high fixed dividend compared to other series (6.42%), but FNMAL has a low fixed dividend (4.75%). The correlation that I track is still around 0.8 in aggregate, but things are starting to stratify rather than fall along a regression line. The Fannie 50s are all trading near each other despite their different dividend rates, as are the Fannie 25s (I swapped some FNMAJ for FNMAT at near parity just now!). In the Freddie 25s, FMCKL (6.02%) and FMCKI (6.55%) are outperforming, but FMCKO (5.9%) is lagging well behind. The Freddie 50s have a similar pattern, where FMCCT is the clear leader, but FMCCP (6%) for some reason stays much closer to FMCCT than the others (dividends from 5.7-5.81%).

I am somewhat loath to part with my now-sizeable FNMAT stake, but it seems that the market is starting to prioritize par value. This makes sense because FNMAT has no call protection, and if any series are to be called it will be first.

Note: I only follow the fixed-dividend series because those are the only ones I can buy. Analysis that includes the variable-dividend series will have to be done by someone else.