Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 1697567 times)

HalfMeasure

  • Jr. Member
  • **
  • Posts: 65
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5880 on: February 16, 2017, 06:15:29 PM »
We believe the taxpayers will be in a better position to benefit from any GSE
profits as they are wound down


Then:

Is the taxpayer in a worse off position?
o No - they are in a better position. Under the current arrangement Treasury's
upside was capped at the 10% dividend, now the taxpayer will be the
beneficiary of any future earnings produced by the GSEs.


Didn't they try to play it off at some point in the Perry case that they didn't expect taxpayers to be any better off under the NWS?

there was advocacy in oral argument by i believe fhfa lawyer that govt thought the economic effect of NWS would be a wash.  i am not sure this "better position" language directly contradicts this, because you can be in a better position but not be able to realize upon this if profits dont grow. 

just generally, i havent seen a smoking gun in any of this discovery, but it is certainly true that all this material was before the govt at time of making NWS decision and should have been included in administrative record.

Yeah it seems that what has been brought public thus far is only enough to get the sense that this was much more premeditated and directed than the "death spiral" associated narrative outlines - but as you said, no smoking gun.


Flynnstone5

  • Full Member
  • ***
  • Posts: 210
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5881 on: February 17, 2017, 03:26:54 AM »
We believe the taxpayers will be in a better position to benefit from any GSE
profits as they are wound down


Then:

Is the taxpayer in a worse off position?
o No - they are in a better position. Under the current arrangement Treasury's
upside was capped at the 10% dividend, now the taxpayer will be the
beneficiary of any future earnings produced by the GSEs.


Didn't they try to play it off at some point in the Perry case that they didn't expect taxpayers to be any better off under the NWS?

there was advocacy in oral argument by i believe fhfa lawyer that govt thought the economic effect of NWS would be a wash.  i am not sure this "better position" language directly contradicts this, because you can be in a better position but not be able to realize upon this if profits dont grow. 

just generally, i havent seen a smoking gun in any of this discovery, but it is certainly true that all this material was before the govt at time of making NWS decision and should have been included in administrative record.


Why wouldn't the fact that there was never any intention to act as a conservator, but instead wind down the companies not be a smoking gun? My background is not in law, but I don't understand how the gov can make blatantly false claims to the lower court and selectively omit key info. from the record to get a desired ruling, yet not have these new docs be enough for appeals ct to clearly see this. In any event, I absolutely trust the assessment from the legal experts here. Can you give an indication of what would be considered in your view a smoking gun?

Lets hope the new batch has something significant and is added to the record.

Flynnstone5

  • Full Member
  • ***
  • Posts: 210
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5882 on: February 17, 2017, 05:53:20 AM »
2015: WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $11.0 billion and
annual comprehensive income of $10.6 billion in 2015. For the fourth quarter of 2015, Fannie Mae
reported net income of $2.5 billion and comprehensive income of $2.3 billion. The company reported a
positive net worth of $4.1 billion as of December 31, 2015, resulting in a dividend obligation to Treasury of $2.9 billion, which the company expects to pay in March 2016.

2016: WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $12.3 billion and annual
comprehensive income of $11.7 billion in 2016. For the fourth quarter of 2016, Fannie Mae reported net income of
$5.0 billion and comprehensive income of $4.9 billion. The company reported a positive net worth of $6.1 billion as of December 31, 2016. As a result, the company expects to pay Treasury a $5.5 billion dividend in March 2017.

Does anyone think the removal of "dividend obligation" has any significance considering all indications are they are sweeping in March?

rros

  • Sr. Member
  • ****
  • Posts: 285
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5883 on: February 17, 2017, 05:56:38 AM »
We believe the taxpayers will be in a better position to benefit from any GSE
profits as they are wound down


Then:

Is the taxpayer in a worse off position?
o No - they are in a better position. Under the current arrangement Treasury's
upside was capped at the 10% dividend, now the taxpayer will be the
beneficiary of any future earnings produced by the GSEs.


Didn't they try to play it off at some point in the Perry case that they didn't expect taxpayers to be any better off under the NWS?

there was advocacy in oral argument by i believe fhfa lawyer that govt thought the economic effect of NWS would be a wash.  i am not sure this "better position" language directly contradicts this, because you can be in a better position but not be able to realize upon this if profits dont grow. 

just generally, i havent seen a smoking gun in any of this discovery, but it is certainly true that all this material was before the govt at time of making NWS decision and should have been included in administrative record.

Yeah it seems that what has been brought public thus far is only enough to get the sense that this was much more premeditated and directed than the "death spiral" associated narrative outlines - but as you said, no smoking gun.
The smoking gun is the fact that the government understood there was going to be *more* of something that was not going to be captured by the 10% established in the original agreement. And that capturing that excess would mean favoring only 1 actor to the detriment of all others.

Had the government thought there was a death spiral or an irreversible melt down of the companies none of this language would have existed. It only exists because they were alerted of a melt up.

cherzeca

  • Hero Member
  • *****
  • Posts: 1078
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5884 on: February 17, 2017, 06:01:14 AM »
2015: WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $11.0 billion and
annual comprehensive income of $10.6 billion in 2015. For the fourth quarter of 2015, Fannie Mae
reported net income of $2.5 billion and comprehensive income of $2.3 billion. The company reported a
positive net worth of $4.1 billion as of December 31, 2015, resulting in a dividend obligation to Treasury of $2.9 billion, which the company expects to pay in March 2016.

2016: WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $12.3 billion and annual
comprehensive income of $11.7 billion in 2016. For the fourth quarter of 2016, Fannie Mae reported net income of
$5.0 billion and comprehensive income of $4.9 billion. The company reported a positive net worth of $6.1 billion as of December 31, 2016. As a result, the company expects to pay Treasury a $5.5 billion dividend in March 2017.

Does anyone think the removal of "dividend obligation" has any significance considering all indications are they are sweeping in March?

it never was an obligation in my view, as a matter of delaware corporate law.  but i do think removing the div oblig reference, like adding scheduled in fmcc, is not the sort of changes in an earnings release that are just made willy nilly.  that fhfa was cool with them is also interesting as tim howard points out.

seems to me both fmcc and fnma acknowledge that whether or not the dividends will actually be made will be decided in future and has not been decided yet

Flynnstone5

  • Full Member
  • ***
  • Posts: 210
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5885 on: February 17, 2017, 06:07:52 AM »
We believe the taxpayers will be in a better position to benefit from any GSE
profits as they are wound down


Then:

Is the taxpayer in a worse off position?
o No - they are in a better position. Under the current arrangement Treasury's
upside was capped at the 10% dividend, now the taxpayer will be the
beneficiary of any future earnings produced by the GSEs.


Didn't they try to play it off at some point in the Perry case that they didn't expect taxpayers to be any better off under the NWS?

there was advocacy in oral argument by i believe fhfa lawyer that govt thought the economic effect of NWS would be a wash.  i am not sure this "better position" language directly contradicts this, because you can be in a better position but not be able to realize upon this if profits dont grow. 

just generally, i havent seen a smoking gun in any of this discovery, but it is certainly true that all this material was before the govt at time of making NWS decision and should have been included in administrative record.

Yeah it seems that what has been brought public thus far is only enough to get the sense that this was much more premeditated and directed than the "death spiral" associated narrative outlines - but as you said, no smoking gun.
The smoking gun is the fact that the government understood there was going to be *more* of something that was not going to be captured by the 10% established in the original agreement. And that capturing that excess would mean favoring only 1 actor to the detriment of all others.

Had the government thought there was a death spiral or an irreversible melt down of the companies none of this language would have existed. It only exists because they were alerted of a melt up.

I would infer same, but the legal experts here don't seem to think that's the case.

rros

  • Sr. Member
  • ****
  • Posts: 285
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5886 on: February 17, 2017, 06:13:52 AM »
We believe the taxpayers will be in a better position to benefit from any GSE
profits as they are wound down


Then:

Is the taxpayer in a worse off position?
o No - they are in a better position. Under the current arrangement Treasury's
upside was capped at the 10% dividend, now the taxpayer will be the
beneficiary of any future earnings produced by the GSEs.


Didn't they try to play it off at some point in the Perry case that they didn't expect taxpayers to be any better off under the NWS?

there was advocacy in oral argument by i believe fhfa lawyer that govt thought the economic effect of NWS would be a wash.  i am not sure this "better position" language directly contradicts this, because you can be in a better position but not be able to realize upon this if profits dont grow. 

just generally, i havent seen a smoking gun in any of this discovery, but it is certainly true that all this material was before the govt at time of making NWS decision and should have been included in administrative record.

Yeah it seems that what has been brought public thus far is only enough to get the sense that this was much more premeditated and directed than the "death spiral" associated narrative outlines - but as you said, no smoking gun.
The smoking gun is the fact that the government understood there was going to be *more* of something that was not going to be captured by the 10% established in the original agreement. And that capturing that excess would mean favoring only 1 actor to the detriment of all others.

Had the government thought there was a death spiral or an irreversible melt down of the companies none of this language would have existed. It only exists because they were alerted of a melt up.

I would infer same, but the legal experts here don't seem to think that's the case.
Possibly. But we will not find an email that says DTAs will revive the companies and make vulture speculators rich. That conversation may have happened around some water cooler. So what is the best second smoking gun we could hope for?

Flynnstone5

  • Full Member
  • ***
  • Posts: 210
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5887 on: February 17, 2017, 06:15:53 AM »
2015: WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $11.0 billion and
annual comprehensive income of $10.6 billion in 2015. For the fourth quarter of 2015, Fannie Mae
reported net income of $2.5 billion and comprehensive income of $2.3 billion. The company reported a
positive net worth of $4.1 billion as of December 31, 2015, resulting in a dividend obligation to Treasury of $2.9 billion, which the company expects to pay in March 2016.

2016: WASHINGTON, DC — Fannie Mae (FNMA/OTC) reported annual net income of $12.3 billion and annual
comprehensive income of $11.7 billion in 2016. For the fourth quarter of 2016, Fannie Mae reported net income of
$5.0 billion and comprehensive income of $4.9 billion. The company reported a positive net worth of $6.1 billion as of December 31, 2016. As a result, the company expects to pay Treasury a $5.5 billion dividend in March 2017.

Does anyone think the removal of "dividend obligation" has any significance considering all indications are they are sweeping in March?

it never was an obligation in my view, as a matter of delaware corporate law.  but i do think removing the div oblig reference, like adding scheduled in fmcc, is not the sort of changes in an earnings release that are just made willy nilly.  that fhfa was cool with them is also interesting as tim howard points out.

seems to me both fmcc and fnma acknowledge that whether or not the dividends will actually be made will be decided in future and has not been decided yet


2014 language is also same: The company reported a positive net worth of $3.7 billion as of December 31, 2014, resulting in a dividend obligation to Treasury of $1.9 billion, which the company expects to pay in March 2015.

Flynnstone5

  • Full Member
  • ***
  • Posts: 210
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5888 on: February 17, 2017, 06:35:49 AM »
We believe the taxpayers will be in a better position to benefit from any GSE
profits as they are wound down


Then:

Is the taxpayer in a worse off position?
o No - they are in a better position. Under the current arrangement Treasury's
upside was capped at the 10% dividend, now the taxpayer will be the
beneficiary of any future earnings produced by the GSEs.


Didn't they try to play it off at some point in the Perry case that they didn't expect taxpayers to be any better off under the NWS?

there was advocacy in oral argument by i believe fhfa lawyer that govt thought the economic effect of NWS would be a wash.  i am not sure this "better position" language directly contradicts this, because you can be in a better position but not be able to realize upon this if profits dont grow. 

just generally, i havent seen a smoking gun in any of this discovery, but it is certainly true that all this material was before the govt at time of making NWS decision and should have been included in administrative record.

Yeah it seems that what has been brought public thus far is only enough to get the sense that this was much more premeditated and directed than the "death spiral" associated narrative outlines - but as you said, no smoking gun.
The smoking gun is the fact that the government understood there was going to be *more* of something that was not going to be captured by the 10% established in the original agreement. And that capturing that excess would mean favoring only 1 actor to the detriment of all others.

Had the government thought there was a death spiral or an irreversible melt down of the companies none of this language would have existed. It only exists because they were alerted of a melt up.

I would infer same, but the legal experts here don't seem to think that's the case.
Possibly. But we will not find an email that says DTAs will revive the companies and make vulture speculators rich. That conversation may have happened around some water cooler. So what is the best second smoking gun we could hope for?

Right. I hope that the best is yet to come in the 40+ we haven't seen. Like to see merket, cherzeca, hardincap and steve_berk all saying, holy shit....have you see this!....lol

Flynnstone5

  • Full Member
  • ***
  • Posts: 210
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #5889 on: February 17, 2017, 07:10:53 AM »
Tim Howard:

The bigger change in Fannie’s press release is in the table titled “Treasury Draws and Dividend Payments: 2008-2016” on page 8. In previous years Fannie simply titled this table “Treasury Draws and Dividend Payments,” and included the payment it expected to make in the first quarter of the following year, both in the bar graph and a box within that graph (which, in the 2015 10K, showed “Total Dividend Payments Through 1Q 2016, with a footnote explaining that it expected to pay the first quarter amount based on its fourth quarter 2015 earnings). In the 2016 10K that came out this morning, this same table shows just the payments made through the end of 2016. The expected payment for the first quarter of 2017 is discussed verbally in the paragraph following the table, but, in contrast to the presentation in previous years, appears nowhere in the table itself. Like the change in the wording in Freddie’s press release yesterday, this presentational change by Fannie was deliberate.