Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 1533617 times)

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7960 on: August 10, 2017, 07:24:49 PM »
fwiw, from paulson's 1H 17 letter: 

"In Fannie Mae and Freddie Mac, our view is that the net worth sweep will not likely change until there is a broader plan in place to recapitalise the entities. We believe there is considerable upside to our holdings despite potential volatility and a high probability of a resolution before the end of 2017."

http://www.valuewalk.com/2017/08/paulson-co/
That is just 5 months away. Right now it isn't looking that good, I am afraid.


FreeOption

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7961 on: August 11, 2017, 10:40:12 AM »
An off-the-wall thought:

Could Watt direct the GSEs to use their profits to start retiring/redeeming the junior prefs? Any money used to do that is out the door and is no longer part of net worth, meaning that the GSEs wouldn't have to send any money to Treasury. It could help with a restructuring of the balance sheet and maybe even undercut the lawsuits; perhaps Berkowitz and others would drop their suits if they're paid at par. High-dividend series like FNMAS and FMCKJ are Fairholme's main holdings and also the most prudent to pay off first.

Of course, this doesn't address Watt's concern with the lack of capital for short-term fluctuations. But it would help with a post-conservatorship future by not having dividend obligations. Watt might see this as a better use of money than just sending it to Treasury for no consideration.

I believe the chances of this happening are very small, but are they non-zero? Or would this violate the PSPAs in some way?
zero.
negative 1 million %, doesn't make sense financially or politically.

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7962 on: August 12, 2017, 10:22:25 AM »
Both Paulson and Berkowitz expect this to be resolved in 2017. Do you see it that way? I am not sure how this could be done when Watt is out there playing politics. They need him to get this done. May be all of the 12000 documents will be released and there would be no other option than to release and return all of the money that was looted. Trump administration does have all the power to release all of the documents.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7963 on: August 12, 2017, 01:08:13 PM »
Both Paulson and Berkowitz expect this to be resolved in 2017. Do you see it that way? I am not sure how this could be done when Watt is out there playing politics. They need him to get this done. May be all of the 12000 documents will be released and there would be no other option than to release and return all of the money that was looted. Trump administration does have all the power to release all of the documents.
The last thing I see is a windfall. That would be for Jrs. to go from $6ish today to $25 or $50 full value when this is Paulson-Berkowitz-resolved. There is too much resistance from everywhere for anything like that to happen. Even Carson said something like shareholders should get their money back but not all at once. So I am fairly pessimistic regarding the 12/31/17 deadline.

About the only thing I can think of is a coordinated announcement by the Treasury, FHFA and Congress that shareholders will have a seat at the table regarding reform, their rights respected and HERA upheld. Then, lawsuits are settled and we all move along. While this may not get us full value we may trade at a premium from today.
« Last Edit: August 12, 2017, 01:15:26 PM by rros »

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7964 on: August 12, 2017, 03:19:12 PM »
Then, lawsuits are settled and we all move along. While this may not get us full value we may trade at a premium from today.

One can almost bet their life that lawsuits (Perry, Berkowitz, etc.) won't settle for anything less than 80% par at a bare minimum.
"I am not just a man vastly lost in this world, lost in a sea of faces. Your body's the bread, Your blood is the wine, because you traded Your life for mine." -Sea of Faces by Kutless https://www.youtube.com/watch?v=jLHE4P-B2FA

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7965 on: August 12, 2017, 05:42:29 PM »
Then, lawsuits are settled and we all move along. While this may not get us full value we may trade at a premium from today.

One can almost bet their life that lawsuits (Perry, Berkowitz, etc.) won't settle for anything less than 80% par at a bare minimum.

They are likely tired, I'd guess they'd likely settle now for something solid but below 80pct.

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7966 on: August 12, 2017, 06:51:39 PM »
They are likely tired, I'd guess they'd likely settle now for something solid but below 80pct.

Anything lower than 80% would be weak, not solid.
"I am not just a man vastly lost in this world, lost in a sea of faces. Your body's the bread, Your blood is the wine, because you traded Your life for mine." -Sea of Faces by Kutless https://www.youtube.com/watch?v=jLHE4P-B2FA

hardincap

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7967 on: August 12, 2017, 09:40:18 PM »
@luke, if they can't win any cases, what are their alternatives? at that point settling for 5% is better than zero

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7968 on: August 12, 2017, 11:17:46 PM »
@luke, if they can't win any cases, what are their alternatives? at that point settling for 5% is better than zero

If they can't win any cases, then sure.  But that's one heck of a strong statement.  Remand on contractual claims isn't losing a case.  Sweeney releasing documents isn't losing a case.  And so on.  I think it's a huge stretch to say with any certainty that they can't win any case. 

I understand that people are fatigued, and Berkowitz/Perry probably are to a certain degree as well, but to me at least that doesn't mean I start thinking it's impossible to win any court cases. 

With that said, the likelihood of winning a case might not even matter if the Administration simply wants to put these cases behind them.

And with that said, I don't even think court cases are what will determine this... I'd be very surprised if court cases determined the outcome.  I think this is more a bet on what one believes Mnuchin, Watt, Trump, etc. will do and I've seen enough, and continue to see more and more, that makes me think they'll do something favorable for the housing market, taxpayers, and shareholders (at least preferred).  But that's just how I see it and I could be wrong.
"I am not just a man vastly lost in this world, lost in a sea of faces. Your body's the bread, Your blood is the wine, because you traded Your life for mine." -Sea of Faces by Kutless https://www.youtube.com/watch?v=jLHE4P-B2FA

ValueMaven

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #7969 on: August 13, 2017, 07:45:49 AM »
'I'd be very surprised if court cases determined the outcome'

1000% - you nailed it!

ValueMaven