Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3226034 times)

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12580 on: May 24, 2019, 12:21:40 PM »
if I was running the recap, I would first do an institutional private placement, before doing a public underwriting, and ask brk to backstop the PP...giving him warrants to agree to buy any amount not raised in the PP.  maybe PP=$20B. then with that as a successful first step, I would do a follow on $30B public offering. that would be a very good two step. so I can see Buffett being very helpful and willing, for a pound of flesh

Yes, please.

I reckon Buffett would be willing to buy the whole business if he were allowed. I think he's very fond of the core mortgage guarantee business.

my thoughts were that Buffett would detoxify the GSEs if he invested.  it has been fashionable to hate on the GSEs but if warren buys in, GSEs become apple pie and motherhood

I would just be afraid that Buffett's terms would be unfavorable to all current shareholders. He can certainly crush the commons if he gets to dictate the terms, and he could probably find a way to hurt the juniors too if it benefits him/Berkshire enough.

Sure, but the value he would add might more than offset?
What added value he may bring to offset the loss of value on the Jrs. if he requests cumulative preferreds senior to them?


Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12581 on: May 30, 2019, 09:12:10 AM »
Gasparino.  I know, I know, but still...

https://twitter.com/CGasparino/status/1134128869622108167
SCOOP—Trump Administration actively discussing what could be the largest public offerings in history to recapitalize @FannieMae @FreddieMac more now @FoxBusiness @TeamCavuto $FNMA $FMCC

Not that this is news to us on this board, but thought it was worth mentioning this tweet.
« Last Edit: May 30, 2019, 09:14:56 AM by Luke 5:32 »
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

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12582 on: May 30, 2019, 09:22:48 AM »
Gasparino.  I know, I know, but still...

https://twitter.com/CGasparino/status/1134128869622108167
SCOOP—Trump Administration actively discussing what could be the largest public offerings in history to recapitalize @FannieMae @FreddieMac more now @FoxBusiness @TeamCavuto $FNMA $FMCC

Not that this is news to us on this board, but thought it was worth mentioning this tweet.

Any post is a good post when the board has been quiet for so long.
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muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12583 on: May 30, 2019, 09:22:50 AM »
Gasparino.  I know, I know, but still...

https://twitter.com/CGasparino/status/1134128869622108167
SCOOP—Trump Administration actively discussing what could be the largest public offerings in history to recapitalize @FannieMae @FreddieMac more now @FoxBusiness @TeamCavuto $FNMA $FMCC

Not that this is news to us on this board, but thought it was worth mentioning this tweet.

That's interesting from this guy lol. Honestly, I'd rather see him bashing the stock hard. Then I could check how the stock reacts, as part of my technical analysis.  ::)
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Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12584 on: May 30, 2019, 09:42:29 AM »
A couple percent on the common and no movement on the prefs on this "news".

This isn't really a scoop, but it might quash some of the chatter about the recap being difficult due to its sheer size. Trump would see a $75-100B equity raise (a yuge number) as a feather in his cap.

I would just be afraid that, in order to raise that much money, Treasury and FHFA would have to promise a huge chunk of the equity to the investors. That limits the value of the warrants and pushes the outstanding commons into a corner.

muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12585 on: May 30, 2019, 10:30:10 AM »
A couple percent on the common and no movement on the prefs on this "news".

This isn't really a scoop, but it might quash some of the chatter about the recap being difficult due to its sheer size. Trump would see a $75-100B equity raise (a yuge number) as a feather in his cap.

I would just be afraid that, in order to raise that much money, Treasury and FHFA would have to promise a huge chunk of the equity to the investors. That limits the value of the warrants and pushes the outstanding commons into a corner.

i am sure they are smarter than that. If they stop NWS, and do phases equity raises, then it could work out well in a few rounds.
I am muslceman. I have more muscle than brain!

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12586 on: May 30, 2019, 10:41:07 AM »
"This isn't really a scoop, but it might quash some of the chatter about the recap being difficult due to its sheer size."

well, the recap will be VERY hard to execute due to its sheer size.  especially if treasury doesn't want to do a laydown on some of its warrants.

I've been thinking that there may be a pricing game that will go on with the common.  seems to me the common will appreciate first because i) the treasury plan is announced without numbers, and common likes what it sees, and/or ii) Collin en banc is favorable.  this within next 4 weeks.

then eventually the bankers get involved and flesh out what the offering will look like, and the common doesn't like what it sees.  and common goes down, which is fine with bankers since as @IG has mentioned, bankers will want a low selling price target.

of course if things get accelerated then this window for the common to have gone up before it goes down can become quite small, but I dont know how the bankers can do their thing before fhfa finalizes the capital rule, and that should take awhile because calabria is too busy giving interviews.

so the common for a trade...no?

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12587 on: May 30, 2019, 10:50:02 AM »
If (big IF) the capital requirement lines up w/ FHFA's recent proposal pre-Calabria. I have common value at IPO of ~$9 if they win the Collins case (and they receive a $20-25b tax credit), and ~$7 without. This factors in 90-92% dilution (full warrant monetization, 50% of jr pfd converting to new common, and new capital via ipo), 2 years of retained earnings adjusted for commitment fee, and discounting the IPO valuation to 7.5x p/e to entice new investors.

Risk is Calabria wants more capital than the original proposal, common could get smoked with 95-98% dilution. But that would go against best interest of a) raising new private capital (# might be too large, I have it now at ~$60-$80b required via IPO) and b) maximizing treasury's warrant value.

Common isnt a horrible bet here if you believe common sense will prevail.
« Last Edit: May 30, 2019, 10:53:27 AM by allnatural »

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12588 on: May 30, 2019, 10:59:42 AM »
Common isnt a horrible bet here if you believe common sense will prevail.

Careful now.
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allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12589 on: May 30, 2019, 11:06:00 AM »
Pun was intended  8)

Common isnt a horrible bet here if you believe common sense will prevail.

Careful now.