Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 2495070 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8810 on: December 06, 2017, 05:56:51 PM »
https://www.bloomberg.com/amp/news/articles/2017-12-07/lawmakers-plans-to-overhaul-fannie-and-freddie-come-into-focus?__twitter_impression=true

Under the proposal, preferred shareholders of Fannie and Freddie could be made whole or close to it, depending on the final outlines of the transition, the people said. But common shareholders may not fare as well, they said. Whether and how shareholders get compensated in the transition to the new system is still an open question. Investors in the companies include several prominent hedge funds.

this is unambiguously favorable to GSEs, although the draft bill is likely too sketchy in transition to be implementable (committee staff usually are academics without sufficient real world experience to understand how to get anything complex done).  this is only a start, but it sounds better than the last corker/warner POS


SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8811 on: December 06, 2017, 05:58:22 PM »
https://www.bloomberg.com/amp/news/articles/2017-12-07/lawmakers-plans-to-overhaul-fannie-and-freddie-come-into-focus?__twitter_impression=true

Under the proposal, preferred shareholders of Fannie and Freddie could be made whole or close to it, depending on the final outlines of the transition, the people said. But common shareholders may not fare as well, they said. Whether and how shareholders get compensated in the transition to the new system is still an open question. Investors in the companies include several prominent hedge funds.

High five

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8812 on: December 06, 2017, 06:08:46 PM »
"Made whole" = par for junior prefs? "Some shareholders" = junior pref holders?

Those are the obvious bull conclusions to jump to, but "made whole" = "only compensated for losses, if any" and "some shareholders" = "those who have continuously held shares since before the NWS (or even conservatorship)" also fit.
« Last Edit: December 06, 2017, 06:13:50 PM by Midas79 »

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8813 on: December 06, 2017, 06:11:42 PM »
I hear that both preferreds and common will do well. Preferreds get par and commons won't get $60.00 when they dived. That is what they mean that some won't fare as well as preferreds get 100% of par. . Remember they need to make money off warrants. I would not dance on this reporting by Joe.

Warner and Corker cannot get a bill through with their name stamped on it, no matter how good it is for preferreds or common shareholders. Once you see the bill, you will see that all are dead except large banks, that is all you can expect from Warner and Corker.

https://www.bloomberg.com/amp/news/articles/2017-12-07/lawmakers-plans-to-overhaul-fannie-and-freddie-come-into-focus?__twitter_impression=true

Under the proposal, preferred shareholders of Fannie and Freddie could be made whole or close to it, depending on the final outlines of the transition, the people said. But common shareholders may not fare as well, they said. Whether and how shareholders get compensated in the transition to the new system is still an open question. Investors in the companies include several prominent hedge funds.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8814 on: December 06, 2017, 06:20:00 PM »
Amazing how nothing leaked given what is at stake.

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8815 on: December 06, 2017, 07:25:57 PM »
My own biased interpretation of some shareholders is jr preferred and made whole IMO would be par or close to it. Why? Lawsuits go away, Paulson, Berkowitz, Ackman(depending on how much preferred he has now) are happy and you take the combative nature of the outcome away to a large degree. They start praising the bill, Mnuchin adds his two cents and works with legislators as promised and we go on our merry way. Easy to prime the pump is sneak out the politico/bloomberg piece and see how the market/investors respond.

The common has always been a big crap shoot and has had little representation by those who really matter ( see above). At 20% of par before trading tomorrow is 500% upside not enough when compared to the substantial risk common represents? Even more so after reading the bloomberg piece. Hopefully we see the preferred spike tomorrow.

Who speaks out loudly for the common if they get hosed and what leg to stand on do they have if congress drafts legislation that "upholds the contract" as Berkowitz has wanted.

You now have the 2 of the largest previous opponents of shareholders now switching sides with mnuchin etc. Hensarling is toast.

« Last Edit: December 06, 2017, 07:28:42 PM by orthopa »

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8816 on: December 06, 2017, 07:32:21 PM »
My own biased interpretation of some shareholders is jr preferred and made whole IMO would be par or close to it. Why? Lawsuits go away, Paulson, Berkowitz, Ackman(depending on how much preferred he has now) are happy and you take the combative nature of the outcome away to a large degree. They start praising the bill, Mnuchin adds his two cents and works with legislators as promised and we go on our merry way. Easy to prime the pump is sneak out the politico/bloomberg piece and see how the market/investors respond.

The common has always been a big crap shoot and has had little representation by those who really matter ( see above). At 20% of par before trading tomorrow is 500% upside not enough when compared to the substantial risk common represents? Even more so after reading the bloomberg piece. Hopefully we see the preferred spike tomorrow.

Who speaks out loudly for the common if they get hosed and what leg to stand on do they have if congress drafts legislation that "upholds the contract" as Berkowitz has wanted.

You now have the 2 of the largest previous opponents of shareholders now switching sides with mnuchin etc. Hensarling is toast.

as best as i can tell ackman is all common (derivatives). so unless corker pulled a switheroo on ackman, these reporters are underestimating common's return

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8817 on: December 06, 2017, 07:34:31 PM »
My own biased interpretation of some shareholders is jr preferred and made whole IMO would be par or close to it. Why? Lawsuits go away, Paulson, Berkowitz, Ackman(depending on how much preferred he has now) are happy and you take the combative nature of the outcome away to a large degree. They start praising the bill, Mnuchin adds his two cents and works with legislators as promised and we go on our merry way. Easy to prime the pump is sneak out the politico/bloomberg piece and see how the market/investors respond.

The common has always been a big crap shoot and has had little representation by those who really matter ( see above). At 20% of par before trading tomorrow is 500% upside not enough when compared to the substantial risk common represents? Even more so after reading the bloomberg piece. Hopefully we see the preferred spike tomorrow.

Who speaks out loudly for the common if they get hosed and what leg to stand on do they have if congress drafts legislation that "upholds the contract" as Berkowitz has wanted.

You now have the 2 of the largest previous opponents of shareholders now switching sides with mnuchin etc. Hensarling is toast.

Largely agree but having trouble reconciling Ackman's recent comments (praising corker/warner and related legislation) and his position being primarily common stock.   Unless he has subsequently substantially swapped his stake- which I don't think is very likely and could be easily interpreted as trading on material non public information

no_free_lunch

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8818 on: December 06, 2017, 07:35:01 PM »
This seems big to me.   Not a done deal but a step in the right direction and welcome change after failing litigation. The preferreds willl have to move up tomorrow or I am doubling down.

Found this as well, sorry if it has been reposted.  This thread has blown up a bit.

Quote
Hensarling said it is politically inevitable that any reform package will include a government guarantee of mortgage bonds like those issued by Fannie Mae and Freddie Mac, the government-backed enterprises that were bailed out after the housing collapse. The companies are currently wards of the state, devoid of capital and reliant on a $258 billion taxpayer lifeline they might need to tap as early as next year.

"I donít want a government guarantee, I donít think we need a government affordable housing program but in surveying the political landscape I know they will exist in any bipartisan effort," Hensarling told POLITICO. "At the end of the day I'm here to make progress."

Speaking at a conference sponsored by the National Association of Realtors and S&P Global, Hensarling endorsed a plan from the Milken Institute authored by Edward DeMarco and Michael Bright. DeMarco, former acting director of the Federal Housing Finance Agency, now leads the Housing Policy Council at the Financial Services Roundtable. Bright is executive vice president at Ginnie Mae, the government corporation that stands behind mortgages backed by the Federal Housing Administration, Department of Veterans Affairs and Department of Agriculture.

https://www.politico.com/story/2017/12/06/hensarling-signals-breakthrough-in-mortgage-reform-208774

merkhet

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #8819 on: December 06, 2017, 07:48:00 PM »
I'm surprised at the comments about the commons considering Ackman's recent kind words for Corker/Warner. I would note though that one possible interpretation is that common won't be "made whole" to their pre-conservatorship levels (i.e. $75 per share) so they "may not fare as well."