Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 2796096 times)

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9170 on: January 18, 2018, 11:53:16 AM »
I think you have to contextualize it from the perspective that (I think) he was addressing the governance structure, not necessarily the economics.

The market seems to agree with you. I would love to have more context behind those quotes though.


investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9171 on: January 18, 2018, 12:02:17 PM »
Huh???

https://twitter.com/joelight/status/954070600502403072
 Joe Light‏Verified account @joelight
Phillips: "There actually aren't shareholders so there's no longer a fiduciary relationship between stakeholders in the traditional way. We sort of see ourselves as the stakeholder at the Treasury" but not represented by the board and employees because of the shares' nature

wtf?  :o

Watt said that the SMEs should be shareholder-owned companies. Does Phillips (and Mnuchin) think that current shareholders have no rights at all and will just be washed away? Or just that current shareholders are that only in name because they have no voting rights or ability to participate in company earnings?

Common shares took a small hit just now but not nearly to the extent I would have expected. This news seems to drastically increase the uncertainty behind both commons and juniors, though it is much harder to wipe out (or heavily dilute) the juniors.

Joe Light also tweeted this:
https://twitter.com/joelight/status/954066284362240000

Quote
[Phillips] said Mnuchin is committed to ending the conservatorships during this administration

So if Congress gets nothing done at all Mnuchin will eventually act, but it could take up to 3 more years.

imo mnuchin will likely go through the motions in 2018. 

odds favor nothing will get done, the divide with the House R's is probably too deep. and the deadline is 7 months away.  phillips just bought time.

in 2019, maxine waters enters the scene replacing hensearling, if the D's win the house as predicted. i'd guess watt gets renominated to see this through.  and in the senate, it's likely either crapo (or someone else if he takes the finance committee chairmanship post-hatch) OR sherrod brown.  in this base case scenario, things become easier for mnuchin.

in addition, housing reform can stimulate the economy.  we just had taxes.  trump's possibly running for re-election in 34 months.  they might want any economic benefit to come later in his first term.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9172 on: January 18, 2018, 01:40:31 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

constructive

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9173 on: January 18, 2018, 02:19:23 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

waynepolsonAtoZ

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9174 on: January 18, 2018, 02:23:32 PM »
"imo mnuchin will likely go through the motions in 2018."

I like your scenario. I tend to view Mnuchin as a bad guy for FnF, but one never knows for sure.

waynepolsonAtoZ

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9175 on: January 18, 2018, 02:35:10 PM »
"Huh???"

That's my concern. As a practical matter, the commoners and preferreds are dead in the water. Not explicitly, but FnF equities are pretty much dead--other than the senior preferred stock, LOL. And, Treasury and Calabria seem to like it that way. Treasury is Treasury is Treasury--it doesn't really matter who the President is, the financial oligarchy is in control of Treasury.

Sweeney really is the only one that is going to save us on this one I think. Mnuchin, I think, is a bad guy although hard to be sure.

I've always thought that FnF can't be recapitalized if existing shareholders aren't treated fairly. But, Trump is President, so anything can happen (i.e., pigs can fly). Maybe it can be done.

Anyway, Sweeney is the key at this point. I seriously doubt she's going to dismiss her case, but one never knows.


rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9176 on: January 18, 2018, 02:57:26 PM »
I think you have to contextualize it from the perspective that (I think) he was addressing the governance structure, not necessarily the economics.

The market seems to agree with you. I would love to have more context behind those quotes though.
Isn't that the terms of the c-ship? That our rights are suspended? Maybe he is referring to that.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9177 on: January 18, 2018, 04:12:36 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

Precisely what doesn't make any sense to me.   They entered into an agreement to hold $3bn.  It was very obvious at the time that $3bn would not be enough to prevent a draw.   What gives?

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9178 on: January 18, 2018, 04:15:36 PM »
When do we expect supreme court to hear the case ? The defendants filed yesterday. Would plaintiff file a rebuttal? This back and forth process can keep going on or not?
« Last Edit: January 18, 2018, 04:19:49 PM by emily »

constructive

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9179 on: January 18, 2018, 04:36:58 PM »
"Treasury's Craig Phillips also told a group today that Fannie Mae and Freddie Mac will require a draw from Treasury as a result of tax reform which reduced the value of deferred tax assets. This is despite a deal with FHFA to allow each to retain $3 billion in capital"

Doesn't make any sense.  Only conclusive is they are saying one thing and doing another.

Their writedowns are going to be much bigger than $3B, roughly $12.4B and $5.9B.

https://www.housingwire.com/articles/41727-republican-tax-plan-will-trigger-another-fannie-freddie-bailout

Precisely what doesn't make any sense to me.   They entered into an agreement to hold $3bn.  It was very obvious at the time that $3bn would not be enough to prevent a draw.   What gives?

The retained capital agreement wasn't intended to prevent a Treasury draw, it was really just political theater.

Here's what they said: "While it is apparent that a draw will be necessary for each enterprise if tax legislation results in a reduction to the corporate tax rate, FHFA considers the $3 billion capital reserve sufficient to cover other fluctuations in income in the normal course of each Enterprise’s business.”