Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 2673692 times)

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9210 on: January 19, 2018, 02:38:20 PM »
there's obviously a lot to think about from this week.

I was disappointed with phillips' comments about lack of shareholders.  yes, it might be explained away by governance issues, but he said it so casually (and laughed at one point) which suggests to me some caution, particularly lower in the capital structure.

It also sounds like they want to do something comprehensive which argues against administrative actions and warrant maximization, as this would be a more narrow change. 

so i'm guessing either they will sneak through the senate bill (with bribes) or just close up shop and retry in with congress in 2019, perhaps under different leadership.

the court cases may be more important than expected in 2018. my hopes have been down on the courts but maybe someone out there sees how wrong the NWS was.



hardincap

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9211 on: January 19, 2018, 02:54:04 PM »
^ agree with this. can will be kicked yet again. this is like waiting for godot

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9212 on: January 19, 2018, 05:03:58 PM »
Audio of Craig Phillips' talk yesterday...
https://app.voicebase.com/autonotes/private_detail/58549613/hash=bpyaZG1rZ2uWaZmWxmGWnZ2PnG2XlGZsaWqYkZqWlJRmyMmSl25na5psmJSU

https://twitter.com/bwadden/status/954475627809255424

Wadden Golf Academy @bwadden
Hey everyone, Joe Light is right here. I was there yesterday. The audio clip cuts off the last few questions. The final one was mine! I asked CP if we get to the August recess and no legislation is forthcoming, will you undertake administrative action. He said No! We will wait.

nodnub

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9213 on: January 19, 2018, 06:35:10 PM »
Why can't MBA, Corker, Warner let shareholders survive? Current shareholders are the rightful owners who have suffered for last 10 years, took a loss in the 2008 crisis (common shares fell from $60 to $0.19, preferreds haven't seen any dividends in last 10 years). I don't know what MBA/Corker/Warner has to gain by not appeasing current shareholders who are real people, working people, moms, dads, students, patients, voters, veterans and hardworking taxpayers. If they are fair to them while taking care of other things, they may even get an applause. Something is seriously wrong with Corker-Stevens-Warner-Watt.

Life is not fair and the "rightful owners" often get screwed.  The sooner we learn that, the less of our life we waste waiting for court judgments or politicians to provide our own subjective version of "justice".

Good luck :)

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9214 on: January 20, 2018, 08:54:39 AM »
My 2 pennies

1. Corker hasn't squawked about the capital buffer since it happened even though he was very against it last summer.  Wonder why that is? It hasnt changed much I guess but when he engaged Watt at that one senate hearing he said that a capital buffer went against what was going on/or talked about/or what he was thinking if I remember correctly.

2. As much as Joe Light may have an angle against shareholders in his reporting he did report preferred shareholders would get treated favorably in the CW bill. The talk of receivership obviously is making and should make common holders nervous but for whatever reason in that drastic scenario preferred shareholders were still recognized. If that is the worse case scenario and he is the enemy working for the banks why would anyone hold common with a ~350-400% upside on some pfd issues? Secondly and blindly what is there to worry about. If the worst enemy is willing to recognize preferred shareholders what me worry? Just wait it out right?

3. FHFA does carry a lot of clout and their idea does seem to be much more favorable to shareholders in language but how favorable still remains to be seen. The utility structure though seems as if it would effect eps thus commons valuation vs a par for preferred.

4. Paulsons latest letter still mentions that he sees a favorable outcome, and there is still the political connection between Trump, Paulson, Mnuchin, Berkowitz which I think ultimately is what makes the outcome favorable or not. Without influence from these guys I think there is little to no empathy from congress and if so just enough to get a deal through.

5. Whats most bothersome is time. This has taken long enough and the latest information points to this taking longer.

6. Contemplating all of that I cant say other then waiting longer Im all that annoyed or worried about the final outcome yet as a preferred shareholder then I was last month. I would say just the opposite if I was a common holder. All of those heavily in common called CW 2.0 DOA and thats fine but now Watt is suggesting a utility model which after at least 80% dilution would lead to suggestively substantially lower rates of return and equity dilution and warrant selling by the gov that would overhang for presumably another couple of years.

7.  As optimistic as I am it still could be a year or two until any resolution but if par is a possible outcome its worth the wait. Other then a token amount of speculative common I cant wrap my head around a large common position. There are many on other websites who stubbornly still fail to believe that they could end up with a zero or a heavily diluted share with a fraction of earnings power.  Obviously a lot anchoring bias to an idea that money was stolen and someone is going to swoop in and give it all back.

For those that do hold more then just a speculative amount of common how do you still justify it now with what we know and what level of return are you looking for to justify the position? An investment in this has always been binary, but, the preferred seems to have an added put politically, valuation wise (par), and more so legally then common.  Outside of taking a paper loss on avg cost or an unrealistic dream of endless valuation and riches I dont see why a switch to preferred wouldn't make you sleep better at night for the reasons above.

« Last Edit: January 20, 2018, 09:04:41 AM by orthopa »

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9215 on: January 20, 2018, 09:24:20 AM »
@orthopa

thanks for writing down the thought process.

i would only add that the fhfa perspectives letter is bigger than mr market seems to give it credit for.  all politicians need spine stiffening, and watt has just provided that for all democrats (watt is a former democrat house member).  i dont see how any democratic senator (other than warner?) votes for a GSE receivership/runoff when fhfa has just planted a flag for GSE recap/utility regulation.

time is not our IRR friend, but it is our ultimate result friend.  my IRR expectation has already been busted.  as per usual.

listened to phillips speech at luncheon.  insipid generalizations.  this guy has been on the case for almost a year. what has he been doing?  if you think watt first cleared sending letter to congress with mnuchin, then keeping an eye on phillips is just a waste of time.
 

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9216 on: January 20, 2018, 09:55:31 AM »
My 2 pennies

1. Corker hasn't squawked about the capital buffer since it happened even though he was very against it last summer.  Wonder why that is? It hasnt changed much I guess but when he engaged Watt at that one senate hearing he said that a capital buffer went against what was going on/or talked about/or what he was thinking if I remember correctly.

2. As much as Joe Light may have an angle against shareholders in his reporting he did report preferred shareholders would get treated favorably in the CW bill. The talk of receivership obviously is making and should make common holders nervous but for whatever reason in that drastic scenario preferred shareholders were still recognized. If that is the worse case scenario and he is the enemy working for the banks why would anyone hold common with a ~350-400% upside on some pfd issues? Secondly and blindly what is there to worry about. If the worst enemy is willing to recognize preferred shareholders what me worry? Just wait it out right?

3. FHFA does carry a lot of clout and their idea does seem to be much more favorable to shareholders in language but how favorable still remains to be seen. The utility structure though seems as if it would effect eps thus commons valuation vs a par for preferred.

4. Paulsons latest letter still mentions that he sees a favorable outcome, and there is still the political connection between Trump, Paulson, Mnuchin, Berkowitz which I think ultimately is what makes the outcome favorable or not. Without influence from these guys I think there is little to no empathy from congress and if so just enough to get a deal through.

5. Whats most bothersome is time. This has taken long enough and the latest information points to this taking longer.

6. Contemplating all of that I cant say other then waiting longer Im all that annoyed or worried about the final outcome yet as a preferred shareholder then I was last month. I would say just the opposite if I was a common holder. All of those heavily in common called CW 2.0 DOA and thats fine but now Watt is suggesting a utility model which after at least 80% dilution would lead to suggestively substantially lower rates of return and equity dilution and warrant selling by the gov that would overhang for presumably another couple of years.

7.  As optimistic as I am it still could be a year or two until any resolution but if par is a possible outcome its worth the wait. Other then a token amount of speculative common I cant wrap my head around a large common position. There are many on other websites who stubbornly still fail to believe that they could end up with a zero or a heavily diluted share with a fraction of earnings power.  Obviously a lot anchoring bias to an idea that money was stolen and someone is going to swoop in and give it all back.

For those that do hold more then just a speculative amount of common how do you still justify it now with what we know and what level of return are you looking for to justify the position? An investment in this has always been binary, but, the preferred seems to have an added put politically, valuation wise (par), and more so legally then common.  Outside of taking a paper loss on avg cost or an unrealistic dream of endless valuation and riches I dont see why a switch to preferred wouldn't make you sleep better at night for the reasons above.

phillips' speech did not sound favorable for common, imo.

but since you asked,

1) if the warrants are ever in play, common might be a better risk reward.  the pref most own are more like 2:1 or 2.5:1 than 3.5x or 4x.

2) if it's delayed til 2019+, then common might have less downside in the mean time than preferred since the pref has risen a lot the last 2 months.

3) if they go through receivership, there's some chance common in the end gets a windfall relative to it's 2bn current market cap.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9217 on: January 20, 2018, 10:14:57 AM »
@orthopa

thanks for writing down the thought process.

i would only add that the fhfa perspectives letter is bigger than mr market seems to give it credit for.  all politicians need spine stiffening, and watt has just provided that for all democrats (watt is a former democrat house member).  i dont see how any democratic senator (other than warner?) votes for a GSE receivership/runoff when fhfa has just planted a flag for GSE recap/utility regulation.

time is not our IRR friend, but it is our ultimate result friend.  my IRR expectation has already been busted.  as per usual.

listened to phillips speech at luncheon.  insipid generalizations.  this guy has been on the case for almost a year. what has he been doing?  if you think watt first cleared sending letter to congress with mnuchin, then keeping an eye on phillips is just a waste of time.
 

here's the issue, though -- we only know bits of what's been released. we don't know all the details. of course corker knows he needs 9 democrats, or 8 if warner's on board.  can he bribe 8 senators in some fashion?  perhaps crapo attaches this to the bipartisan dodd frank overhaul which is about to go through?  if mnuchin is on the side of FnF, as I have hoped, then could he just tell the D senators to wait for 2019.  but maybe mnuchin wants to leave in 2019 and wants this to be his legacy along with the tax cut.  on the other side, joe light could have been given misinformation for some to scoop up cheap common.

more questions than answers, i'm trying to remain flexible to multiple outcomes.  I believe FnF are good for this country, but understand that's up for debate based on one's political leanings.  At a minimum, however, shareholders have been absolutely violated with the NWS and should participate in some fashion in FnF's recent resurgence, even if the politicians go a different route for the future of housing finance.

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9218 on: January 20, 2018, 10:58:06 AM »
Why did Capital Group spend more than half a billion dollars and bought ton of commons and preferreds? Do you think they invested in speculation? As far as I can see most companies they hold are rock solid in their portfolio.  They aren't so called vulture hedge funds either. This fund is Virginia fund where both Fannie and Fredddie are located? Coincidence? Do they know something? I am not sure but it says College America 529? Taking childrens education for a ride if it is related to 529 plan administered in Virginia?

Virginia College America Growth Fund of America 529F
67 million shares of commons (5.79%)
NEW

https://beta.morningstar.com/stocks/pinx/fnma/quote.html

Virginia College America 529-F-1
http://www.savingforcollege.com/529_plan_details/index.php?page=plan_details&plan_id=89
« Last Edit: January 20, 2018, 11:11:42 AM by emily »

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9219 on: January 20, 2018, 04:20:47 PM »
Why did Capital Group spend more than half a billion dollars and bought ton of commons and preferreds? Do you think they invested in speculation? As far as I can see most companies they hold are rock solid in their portfolio.  They aren't so called vulture hedge funds either. This fund is Virginia fund where both Fannie and Fredddie are located? Coincidence? Do they know something? I am not sure but it says College America 529? Taking childrens education for a ride if it is related to 529 plan administered in Virginia?

Virginia College America Growth Fund of America 529F
67 million shares of commons (5.79%)
NEW

https://beta.morningstar.com/stocks/pinx/fnma/quote.html

Virginia College America 529-F-1
http://www.savingforcollege.com/529_plan_details/index.php?page=plan_details&plan_id=89

Who knows and unfortunately activity and research like this couldn't be more useless.  I think its time to put a conspiracy theory or that maybe the manager of a 529 fund "knows something"