Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3076278 times)

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12390 on: May 13, 2019, 01:06:37 PM »
As I think back into the last time treasury had to raise money via TARP style bailouts they sold their warrants. Any chance Treasury converts the Sr to common dilutes common right off the bat, then raises money on top of that? As a sweetener they could sell their warrants after modifying the strike price to something more reasonable. The majority of the value could be in time value of a 5-10 yr warrant and would surely be bought.


cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12391 on: May 13, 2019, 02:43:30 PM »
As I think back into the last time treasury had to raise money via TARP style bailouts they sold their warrants. Any chance Treasury converts the Sr to common dilutes common right off the bat, then raises money on top of that? As a sweetener they could sell their warrants after modifying the strike price to something more reasonable. The majority of the value could be in time value of a 5-10 yr warrant and would surely be bought.

treasury will have to decide how much it wants to keep from this transaction, knowing that to date it has been already paid in accordance with original terms plus $25B, understanding that the more it wants to keep the less likely it will be able to execute the transaction in the capital markets

Ahab

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12392 on: May 13, 2019, 04:58:22 PM »
I'm curious what others think about Fannie Mae common at these levels. My very speculative opinion is that they currently are a better value than the preferreds (currently only in preferreds myself). The common share price reflects a wider dispersion of outcomes. To me, a bet on common is a bet on moderate dilution instead of maximum dilution. Yet, assessing probabilities about the recap's mechanics is what trips me up..

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12393 on: May 13, 2019, 05:17:58 PM »
I'm curious what others think about Fannie Mae common at these levels. My very speculative opinion is that they currently are a better value than the preferreds (currently only in preferreds myself). The common share price reflects a wider dispersion of outcomes. To me, a bet on common is a bet on moderate dilution instead of maximum dilution. Yet, assessing probabilities about the recap's mechanics is what trips me up..

recap mechanics should trip you up since no one knows what the hell is coming.  this board is a bunch of wild and crazy guys who are into the least speculative bet you can make in this name. which is junior prefs, but still plenty speculative.  but then, ahab, you are a hunter for the big whale....

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12394 on: May 13, 2019, 11:38:15 PM »
I'm curious what others think about Fannie Mae common at these levels. My very speculative opinion is that they currently are a better value than the preferreds (currently only in preferreds myself). The common share price reflects a wider dispersion of outcomes. To me, a bet on common is a bet on moderate dilution instead of maximum dilution. Yet, assessing probabilities about the recap's mechanics is what trips me up..

recap mechanics should trip you up since no one knows what the hell is coming.  this board is a bunch of wild and crazy guys who are into the least speculative bet you can make in this name. which is junior prefs, but still plenty speculative.  but then, ahab, you are a hunter for the big whale....

The more I think of the common the more I like them. I'm heavy in them but hedged with prefs. I've been looking for decent investments for years and they seldom come along so when they do I have to go big. I'm looking for a home run so commons have to be involved for me. Some see this as a risky investment but the way I've always seen it is that these are two of the best businesses in the world in an unsustainable position not of their making. Eventually it'll work out.
Or I'll go back to work...
Not Investment Advice. Do Your Own Research.

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12395 on: May 14, 2019, 06:21:33 AM »
Eventually it'll work out.

I think regarding the prefs this statement is accurate.  But perhaps not so much with the common.  Long-term, after dilution, I will strongly consider buying common but to me that is a better bet once the companies are operating normally again, with the prefs being a better bet now.
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 #12396 on: May 14, 2019, 07:00:10 AM »
I'm curious what others think about Fannie Mae common at these levels. My very speculative opinion is that they currently are a better value than the preferreds (currently only in preferreds myself). The common share price reflects a wider dispersion of outcomes. To me, a bet on common is a bet on moderate dilution instead of maximum dilution. Yet, assessing probabilities about the recap's mechanics is what trips me up..

Not knowing the mechanics not doubt keeps me away from the common. Once we get a target capital level from treasury the picture gets a little more clear. Problem is from 2.5%-4.5% your talking about a huge range of values not to mention other possible dilution on top of that as Im sure your alluding too. One could start to maybe argue final value vs preferred now with some trading at 40% of par. Is common worth more then 2.5 times here? Possibly

Knowing what we know now Prfd by far is still the safer bet and FWIW I do put a lot of value in Paulson/Mnuchin/Otting connection. As crazy at it seems the way everything has gone has validated the entire suspicion that this all started when Paulson supported Trump early and became an economic advisor. You do for me, I do for you. That being said I think undoubtedly prfd gets the best treatment compared to common due to those at the bargaining table regarding the lawsuits and those in the circle of the money that will make up a recap.


muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12398 on: May 14, 2019, 06:11:58 PM »
Is Calabria supposed to talk today? Does anyone know any update?

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12399 on: May 14, 2019, 07:00:33 PM »
Is Calabria supposed to talk today? Does anyone know any update?

he was interviewed by Bethany McLean at NAR conference. dont have much reporting other than he wants
GSEs to build capital