Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3445691 times)

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12520 on: May 23, 2019, 07:25:42 AM »
I will, but at lower prices.

I'm pretty insensitive to price, given the range of outcomes.

I'll have to pay a higher price as uncertainty is resolved, but the risk/reward should only improve.

That's funny, as I'm sensitive to price given the range of outcomes!  :)

Really? If FNMA is $9-18 next year, I'll wish I'd have added today whether the shares were $2 or $4.

while possible, it's unlikely those price targets you mentioned are achieved.  Entry points should matter. 


investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12521 on: May 23, 2019, 07:28:22 AM »
POtus just told chuck and Nancy he wouldn’t work with them until investigations stop.  This after Nancy said potus is engaged in a coverup. So a bipartisan legislative solution doesn’t look good for now.

I’m torn by all this jabbering by Calabria. On one hand it shows some momentum and it also shows MBA/tbtf has no response. But all his talk about competition just unsettled the market. Mnuchin should tell him to stop the amateur hour

imo Calabria leading the charge is optimal from an optics standpoint.  He speaks clearly, is smart, and doesn't have some relationship baggage that others carry.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12522 on: May 23, 2019, 07:39:22 AM »
@orthopa

I doubt moelis can present plans to and work with treasury and then change the terms at the last minute.

They had to sell it to govt to make treasury the maximum return. Presenting something too beneficial to juniors would dilute treasury too much and risk not being taken up.

Then again, who says it's moelis 😁

Your right who says its moelis? You reference it in a previous reply to Midas.  ;)But every common shareholder is wringing that report in their hands and the vast majority of the reason why many have invested. 2nd most argued reason is treasury maximizing their return. I can tell you right now treasury without a doubt will maximize their return and I bet it will fundamentally come separate from the legacy common holder. As a result its not treasury vs prfd but prfd vs common in a conversion scenario and at the bargaining table.

A nice sweetener for a prfd conversion would be a favorable conversion ratio and warrant with a lower strike price of common.

I'm guessing at this point that Tsy values getting their plan completed > maximizing their return. 

while Tsy might attempt to do both, one way to increase odds of a potential deal getting done is to give new shareholders a larger portion of the pro forma market cap, perhaps at the expense of Tsy's share (warrants).   after already making > $100bn, is it absolutely crucial to the decision makers whether the Tsy makes another $70 vs $40bn in a potential deal?

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12523 on: May 23, 2019, 08:19:04 AM »
@orthopa

I doubt moelis can present plans to and work with treasury and then change the terms at the last minute.

They had to sell it to govt to make treasury the maximum return. Presenting something too beneficial to juniors would dilute treasury too much and risk not being taken up.

Then again, who says it's moelis 😁

Your right who says its moelis? You reference it in a previous reply to Midas.  ;)But every common shareholder is wringing that report in their hands and the vast majority of the reason why many have invested. 2nd most argued reason is treasury maximizing their return. I can tell you right now treasury without a doubt will maximize their return and I bet it will fundamentally come separate from the legacy common holder. As a result its not treasury vs prfd but prfd vs common in a conversion scenario and at the bargaining table.

A nice sweetener for a prfd conversion would be a favorable conversion ratio and warrant with a lower strike price of common.

I'm guessing at this point that Tsy values getting their plan completed > maximizing their return. 

while Tsy might attempt to do both, one way to increase odds of a potential deal getting done is to give new shareholders a larger portion of the pro forma market cap, perhaps at the expense of Tsy's share (warrants).   after already making > $100bn, is it absolutely crucial to the decision makers whether the Tsy makes another $70 vs $40bn in a potential deal?

Then why are they happy to sweep 2-3B a quarter while they "formulate a plan"?

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12524 on: May 23, 2019, 09:53:18 AM »
@orthopa

I doubt moelis can present plans to and work with treasury and then change the terms at the last minute.

They had to sell it to govt to make treasury the maximum return. Presenting something too beneficial to juniors would dilute treasury too much and risk not being taken up.

Then again, who says it's moelis 😁

Your right who says its moelis? You reference it in a previous reply to Midas.  ;)But every common shareholder is wringing that report in their hands and the vast majority of the reason why many have invested. 2nd most argued reason is treasury maximizing their return. I can tell you right now treasury without a doubt will maximize their return and I bet it will fundamentally come separate from the legacy common holder. As a result its not treasury vs prfd but prfd vs common in a conversion scenario and at the bargaining table.

A nice sweetener for a prfd conversion would be a favorable conversion ratio and warrant with a lower strike price of common.

I'm guessing at this point that Tsy values getting their plan completed > maximizing their return. 

while Tsy might attempt to do both, one way to increase odds of a potential deal getting done is to give new shareholders a larger portion of the pro forma market cap, perhaps at the expense of Tsy's share (warrants).   after already making > $100bn, is it absolutely crucial to the decision makers whether the Tsy makes another $70 vs $40bn in a potential deal?

this article gets at that in case you haven't read it:  https://seekingalpha.com/article/4252309-will-fannie-freddie-investors-finally-get-relief-potus-memo-collins-en-banc-smart-way

SnarkyPuppy

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cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12526 on: May 23, 2019, 10:15:09 AM »
In case anyone is wondering what will happen-

https://www.americanbanker.com/opinion/give-fannie-freddie-the-same-capital-standards-as-everybody-else

if I understand pollock in this article correctly, he is calling for a $5T govt guarantee...which wont happen. pretty stupid suggestion for a smart guy

Ahab

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12527 on: May 23, 2019, 10:38:16 AM »
I think people are reading too much into journalistic suggestions about high, bank-like capital requirements. The people working on the recap aren't stupid, they aren't going to sabotage the raise by pursuing completely unrealistic standards. Game theory suggests a compromise figure that lets the reform continue apace...
Long: FNMAT, FNMAN, FMCCL, FMCKO, BAC, JPM, GOOG, JD, MO/PM
Short: PCG, TSLA
Twitter: AhabValue

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12528 on: May 23, 2019, 11:13:13 AM »
I think people are reading too much into journalistic suggestions about high, bank-like capital requirements. The people working on the recap aren't stupid, they aren't going to sabotage the raise by pursuing completely unrealistic standards. Game theory suggests a compromise figure that lets the reform continue apace...
Pollock told Craig Philips in the recent interview he had assessed the IRR of Treasury at 11.5%. Philips, who tagged it at 12%, replied: "well... that is open to debate". Looks like Pollock *adopted* Craig Philips 12% IRR and wants to be inline with the Administration. I would not be surprised if there is another article tomorrow where he praises the benefits of a 2.5% capital level and just a small commitment fee to collect 1 or 2 billions a year for a credit line.

james22

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12529 on: May 23, 2019, 12:13:13 PM »
I will, but at lower prices.

I'm pretty insensitive to price, given the range of outcomes.

I'll have to pay a higher price as uncertainty is resolved, but the risk/reward should only improve.

That's funny, as I'm sensitive to price given the range of outcomes!  :)

Really? If FNMA is $9-18 next year, I'll wish I'd have added today whether the shares were $2 or $4.

while possible, it's unlikely those price targets you mentioned are achieved.  Entry points should matter.

Maybe not. What's your price target?

But it's also unlikely you'll be able to buy at prices much lower than today (at the same risk/reward).

Return is what matters.

I accept that I'll get a lesser expected return on the dollars I invest after a favorable en banc ruling than were I to invest today, but it'll be a positive expected return nonetheless.
BRK, BAM l SV, EM l Fannie Mae, Freddie Mac l Stable Value, Cash Value