Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3239329 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12940 on: July 11, 2019, 06:58:26 AM »
That is just a summary. Here is the actual document.

the meat of Collins is in the APA claim IMO.  it's cleaner and more direct.   In addition, Calabria's change is an attempt to protect his job for a full term which makes sense.   

the pending Collins verdict is huge.  a loss, and we're at the mercy of the govt, price targets and goals will likely be cut for both preferred and common.   a win, and we have a real seat in negotiations.    guessing here, but that's likely why things are stalled, everyone is waiting for this.   I'm nervous for the outcome.   

Good luck, everyone.

+1


SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12941 on: July 11, 2019, 07:05:05 AM »
Fair, my comments were unnecessary and didn't add value.  Apologies.   This thread has been extremely beneficial to me. 

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12942 on: July 11, 2019, 07:05:13 AM »
The Hamish hume letter regarding conversion is surprising to me.   maybe he wants them to turn back on dividends and certain preferred classes could possibly trade > par?   or is he mainly concerned about new lawsuits from common holders slowing down the whole process if they get diluted too much?

conversion will require coercion, and Hume is against coercion.  why coercion? because treasury will want to eliminate the junior prefs and to do this it needs at least 2/3rds of each class to agree to convert into common.  this is a high threshold which is why I believe the conversion rate that will be on offer will be acceptable, but treasury won't want the remaining non-converters to have hold-up/nuisance value, so in connection with the conversion each holder will consent to amend the junior pref on the way into common that will trash the pref...which will force the remaining minority to convert as well.

now can treasury use this exit consent coercion to try to impose a harsh conversion rate?  sure, and this is what I think hume is concerned about.  but this is where big junior holders need to stand firm and in effect protect us little guys.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12943 on: July 11, 2019, 07:08:30 AM »
That is just a summary. Here is the actual document.

the meat of Collins is in the APA claim IMO.  it's cleaner and more direct.   In addition, Calabria's change is an attempt to protect his job for a full term which makes sense.   

the pending Collins verdict is huge.  a loss, and we're at the mercy of the govt, price targets and goals will likely be cut for both preferred and common.   a win, and we have a real seat in negotiations.    guessing here, but that's likely why things are stalled, everyone is waiting for this.   I'm nervous for the outcome.   

Good luck, everyone.

This makes sense from Calabria's perspective but I think the negative way of looking at this is from a signaling perspective.  This seems to be a clear signal that Otting and Calabria (and through possible extension, Mnuchin) were not necessarily as coordinated as I initially thought. 

Part of why I've been ignored the noise of some of Calabria's comments is the simple thesis that these extremely calculated men in high visibility positions are not publicly commenting an a restructuring with massive execution risk without clear coordination and strategy behind the scenes. 

The amateurish about face on the constitutionality claim seems to contradict this thesis. 

The bullish way of looking at the change is simply to try to buy time on the release of the Tsy plan and Sr Pref amendment.  But if that's the case, it necessarily implies that the plan is inconsistent with a positive remedy from the en banc ruling...
« Last Edit: July 11, 2019, 07:10:28 AM by SnarkyPuppy »

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12944 on: July 11, 2019, 07:36:30 AM »
as a lawyer I find Calabria's move to be stupid and embarrassing.  but I also agree with IG that taking the position his office is constitutionally structured may help him/the agency/the recap down the road.  I also dont think he did this without treasury's concurrence, and treasury must have had its reasons for thinking this was a good idea.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12945 on: July 11, 2019, 10:29:25 AM »
as a lawyer I find Calabria's move to be stupid and embarrassing.  but I also agree with IG that taking the position his office is constitutionally structured may help him/the agency/the recap down the road.  I also dont think he did this without treasury's concurrence, and treasury must have had its reasons for thinking this was a good idea.

Why the action by Otting then?  Under this theory, he either acted on his own or the plan has changed

DRValue

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12946 on: July 11, 2019, 12:03:10 PM »
:o :o
SnarkyPuppy, DRValue, you guys are just making fun of me right?

I'm only joking, but i did find it funny.   :D
Not Investment Advice. Do Your Own Research.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12947 on: July 11, 2019, 12:04:00 PM »
More receivership BS from IMF

“If you’re wondering why everyone in the mortgage industry is waiting with bated breath for the new capital standards for Fannie Mae and Freddie Mac, it’s simple: Those standards, once cast in stone, will give the Federal Housing Finance Agency a powerful tool. One GSE observer who used to work on Capitol Hill told IMFnews those standards will give the FHFA legal cover to declare Fannie (or Freddie, take your pick) “critically” undercapitalized. Once that determination is made, the agency can move to terminate the conservatorship and enter into a receivership…

The next step might be to create a limited liability regulated entity (LLRE) which would succeed the GSE. After that, the LLRE (once capital is raised) becomes a new company and the charter is sold to new owners. From what we understand, the FHFA has the legal power to sell the charter. We also understand that the Treasury Department under former Senior Counselor Craig Phillips was well aware of all of this. More to come in the weeks ahead…”

Jcmeg35

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12948 on: July 11, 2019, 12:07:29 PM »
Clear FUD. The person they quote doesn't say he heard that this was the plan or anything close to it. I guess can't expect much during this news lul and perceived delay in the release of the plan...

More receivership BS from IMF

“If you’re wondering why everyone in the mortgage industry is waiting with bated breath for the new capital standards for Fannie Mae and Freddie Mac, it’s simple: Those standards, once cast in stone, will give the Federal Housing Finance Agency a powerful tool. One GSE observer who used to work on Capitol Hill told IMFnews those standards will give the FHFA legal cover to declare Fannie (or Freddie, take your pick) “critically” undercapitalized. Once that determination is made, the agency can move to terminate the conservatorship and enter into a receivership…

The next step might be to create a limited liability regulated entity (LLRE) which would succeed the GSE. After that, the LLRE (once capital is raised) becomes a new company and the charter is sold to new owners. From what we understand, the FHFA has the legal power to sell the charter. We also understand that the Treasury Department under former Senior Counselor Craig Phillips was well aware of all of this. More to come in the weeks ahead…”

Wiggins

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12949 on: July 11, 2019, 12:23:14 PM »
I think this would make a takings case a slam dunk.

A) Gov't declares NWS along with a "new capital paradigm" whereby a funding commitment serves to make GSEs safe and sound, and successfully argues this for years in court.

B) Whoopsie-daisies, just kidding, that was all BS and now that all capital has been siphoned out, Gov't deems GSEs critically undercapitalized thus receivership is in order.

Schizophrenia is too nice of a word to describe this.


More receivership BS from IMF

“If you’re wondering why everyone in the mortgage industry is waiting with bated breath for the new capital standards for Fannie Mae and Freddie Mac, it’s simple: Those standards, once cast in stone, will give the Federal Housing Finance Agency a powerful tool. One GSE observer who used to work on Capitol Hill told IMFnews those standards will give the FHFA legal cover to declare Fannie (or Freddie, take your pick) “critically” undercapitalized. Once that determination is made, the agency can move to terminate the conservatorship and enter into a receivership…

The next step might be to create a limited liability regulated entity (LLRE) which would succeed the GSE. After that, the LLRE (once capital is raised) becomes a new company and the charter is sold to new owners. From what we understand, the FHFA has the legal power to sell the charter. We also understand that the Treasury Department under former Senior Counselor Craig Phillips was well aware of all of this. More to come in the weeks ahead…”