Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3431098 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13750 on: September 12, 2019, 05:59:29 AM »
Dick Bove sent out an e-mail this morning. 

“The pressure is on for the FHFA to come up with a plan for the GSEs before year-end.  There is now a possibility that preferred shareholders will receive $31 per share for their stock.  Common shares continue to hold no appeal to me”

$31?? That's piss poor

He probably meant on the $25-par shares. 125% of par would certainly be fine with me but I'm not going to hold my breath.

never have been impressed with bove.  another example is this, not using % of par. may not even realize there are some $50 par prefs


muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13751 on: September 12, 2019, 06:07:25 AM »
Also, buying more prefs on Monday. Bash and sell please.

The ideal situation is that all talking heads are bashing while the stock mysteriously inches up. Right now we have all good news blowing but stock steadily going down, which is the opposite.
I am still waiting for the ship to turn before buying

while waiting for your ship to set sail the train may be leaving the station

I am no longer a value investor. I am very disciplined, and if the ship leaves the station, I'll find another stock to buy.
I also don't even care if I am buying at the lowest price anymore. What I care about is the EXPECTED return should be highest when I buy, not the highest return when the OPTIMAL situation happens.
I am muslceman. I have more muscle than brain!

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13752 on: September 12, 2019, 06:38:19 AM »
Downside risk:   

Buffett takes 51% of post govt warrant common stock + govt keeps 49%.   Government and Buffett split settlement payment to large private litigating shareholders and we expire worthless. 

Thoughts?

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13753 on: September 12, 2019, 07:25:37 AM »
Downside risk:   

Buffett takes 51% of post govt warrant common stock + govt keeps 49%.   Government and Buffett split settlement payment to large private litigating shareholders and we expire worthless. 

Thoughts?

asteroids.  dont forget about asteroids. 

imo there are many relatively small risk tail scenarios in which we lose.  the higher probability result is some sort of positive outcome, though we can agree that none of us knows what that outcome will be, or how likely

EDIT:  https://www.thesun.co.uk/tech/9912329/interstellar-space-object-solar-system/
« Last Edit: September 12, 2019, 08:40:34 AM by cherzeca »

Jcmeg35

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13754 on: September 12, 2019, 08:24:19 AM »
While I don't think it is a great idea to rely on "smart" money. I think, in an instance like this, if one is aligned with very large sophisticated investors with deep pockets, it provides some peace of mind that we are not going to get "screwed". 

I know some have talked about the risk of preferential settlement treatment for the large institutional holders of preferred vs. the small guy. I think it is important to keep in mind that the optics of this would be horrific for Treasury, and based on how this has been playing out, it is clear that Mnuchin and co are mindful of the optics. Hence giving congress as many opportunities as possible, and the need for, potentially, excessively capitalized companies.

Downside risk:   

Buffett takes 51% of post govt warrant common stock + govt keeps 49%.   Government and Buffett split settlement payment to large private litigating shareholders and we expire worthless. 

Thoughts?

Cox022

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13755 on: September 12, 2019, 08:27:24 AM »
Just pointing out peculiar word choice and phrasing from Mnuchin on CNBC today at 12:00.  https://www.cnbc.com/2019/09/12/treasury-secretary-mnuchin-says-trump-has-approved-reform-plan-for-fannie-mae-and-freddie-mac.html?__source=sharebar|twitter&par=sharebar

Quote
"What we would be doing is allowing Fannie Mae and Freddie mac to increase capital, and that’s an important step on the way to recapitalizing them.  And what we are negotiating is making sure the taxpayers receive proper compensation for that delay."

The simplest explanation is that he just meant 'compensation for deferred or forgone dividends' but I thought I'd point that out in case anyone else saw a different meaning.


Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13756 on: September 12, 2019, 08:32:20 AM »
Just pointing out peculiar word choice and phrasing from Mnuchin...

I found this word choice interesting as well, using "amendment"... could the amendment be done this month instead of simply replacing sweep with commitment fee?  Could things on the amendment be done prior to December?  Very interesting if so, but probably he wasn't choosing his words carefully and he just meant NWS replaced by commitment fee...
https://www.reuters.com/article/us-usa-treasury-housing/u-s-treasury-eyes-action-on-fannie-mae-freddie-mac-by-months-end-mnuchin-idUSKCN1VX1NM
“That’s something that the FHFA (Federal Housing Finance Agency) and we are working on. We are actively negotiating an amendment, and I think our objective is to try to get it done by the end of the month,” Mnuchin told CNBC in an interview.
Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

Cox022

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13757 on: September 12, 2019, 08:42:32 AM »
Just pointing out peculiar word choice and phrasing from Mnuchin...

I found this word choice interesting as well, using "amendment"... could the amendment be done this month instead of simply replacing sweep with commitment fee?  Could things on the amendment be done prior to December?  Very interesting if so, but probably he wasn't choosing his words carefully and he just meant NWS replaced by commitment fee...
https://www.reuters.com/article/us-usa-treasury-housing/u-s-treasury-eyes-action-on-fannie-mae-freddie-mac-by-months-end-mnuchin-idUSKCN1VX1NM
“That’s something that the FHFA (Federal Housing Finance Agency) and we are working on. We are actively negotiating an amendment, and I think our objective is to try to get it done by the end of the month,” Mnuchin told CNBC in an interview.


https://www.wsj.com/articles/trump-appointed-official-promises-full-push-to-overhaul-plumbing-of-mortgage-market-11555938001
This was from April, just FYI.  Not sure what to conclude, if anything. 

Quote
He has no immediate plans to curtail the existing sweep of the companies’ profits to the Treasury Department, part of an arrangement related to the firms’ conservatorship.  Such a move would allow the firms to keep profits and begin to build up capital, eventually operating without taxpayer support. The change could be considered as part of a separate package of changes negotiated with Treasury, he said, adding he doesn’t wish to amend the existing arrangement more than once. Allowing the pair to retain their profits is widely seen as an initial step toward ending the conservatorship.

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13758 on: September 12, 2019, 08:56:35 AM »
Recording of the Investors Unite conference call...
https://investorsunite.org/wp-content/uploads/2019/09/GSE-091119.mp3
Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13759 on: September 12, 2019, 09:05:40 AM »
Just pointing out peculiar word choice and phrasing from Mnuchin...

I found this word choice interesting as well, using "amendment"... could the amendment be done this month instead of simply replacing sweep with commitment fee?  Could things on the amendment be done prior to December?  Very interesting if so, but probably he wasn't choosing his words carefully and he just meant NWS replaced by commitment fee...
https://www.reuters.com/article/us-usa-treasury-housing/u-s-treasury-eyes-action-on-fannie-mae-freddie-mac-by-months-end-mnuchin-idUSKCN1VX1NM
“That’s something that the FHFA (Federal Housing Finance Agency) and we are working on. We are actively negotiating an amendment, and I think our objective is to try to get it done by the end of the month,” Mnuchin told CNBC in an interview.


Your right it certainly could have been choice of words but what the hell would take 90 more days to work on a final amendment? You know full well Calabria and Mnuchin have been discussing this for months and know what they are going to do. Your telling me they are just negotiating this now? They havent modeled this stuff out from start to finish ie Treasury Plan release to recap? Of course they have. Just write the damn amendment, negotiate terms and lets go.

I do have to say hearing the CNBC interview my impression was he was implying a new final amendment not just stopping the NWS as he says "amendment by the end of the month". He also said 90 days working with congress. He said 3-6 months I think last week on Fox business news but I think the SBC hearing and the recent lawsuit result has moved things up internally in the treasury.

3 months puts us 1st of the year, 11 months to election. Absolutely no reason why IMO why FHFA captial rules are not out (I believe they are done already and if not only due to recap scenarios being worked out) and final amendment not done by 1st of 2020.  At that point lets go with the recap plan. I know Calabria recently said will retain a year of earnings next year but he also said IPO in early 2020.

Treasury and FHFA may not have come out and said it but I think the recent ruling really has moved things up in regards to acting. I think if there is a final amendment by end of Sept and not just ending NWS there is no question this is the case and I think capital plan out/action by early 2020 is a very high likelyhood.  Maybe they are relieved as this is what they wanted anyway.

I think after years of waiting all of these interviews/comments by Mnuchin and Calabria (urgency and hints more and more every day) we are going to be presently surprised for once both on what happens and how fast.
« Last Edit: September 12, 2019, 09:07:53 AM by orthopa »