Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3226255 times)

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10770 on: November 09, 2018, 07:42:16 AM »
Partial conversion of prefs...  I wonder what percentage of prefs will convert vs. the amount that will not.  I wonder at what percentage of par the conversion will take place. It will also be interesting to see at what price (relative to par) the non-converted prefs trade in the market.
« Last Edit: November 09, 2018, 07:48:38 AM by Luke 5:32 »
Invest for retirement?  Sure.  But investing in eternity is infinitely more important.  Don't get it twisted.  "...but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal."  Matthew 6:20


Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10771 on: November 09, 2018, 08:01:39 AM »
Partial conversion of prefs...  I wonder what percentage of prefs will convert vs. the amount that will not.  I wonder at what percentage of par the conversion will take place. It will also be interesting to see at what price (relative to par) the non-converted prefs trade in the market.

Specifically, I'm curious about FMCCL, FNMAH, and FNMAS.

I know it depends on dividend rate, when the dividend might be re-instated, etc. but (1) what are your thoughts on where these three securities would trade if NOT converted?  (2) Would yield even matter for conversion terms, settlement terms, etc.?


Thanks in advance for your input!
« Last Edit: November 09, 2018, 08:05:57 AM by Luke 5:32 »
Invest for retirement?  Sure.  But investing in eternity is infinitely more important.  Don't get it twisted.  "...but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal."  Matthew 6:20

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10772 on: November 09, 2018, 10:46:25 AM »
Partial conversion of prefs...  I wonder what percentage of prefs will convert vs. the amount that will not.  I wonder at what percentage of par the conversion will take place. It will also be interesting to see at what price (relative to par) the non-converted prefs trade in the market.

Specifically, I'm curious about FMCCL, FNMAH, and FNMAS.

I know it depends on dividend rate, when the dividend might be re-instated, etc. but (1) what are your thoughts on where these three securities would trade if NOT converted?  (2) Would yield even matter for conversion terms, settlement terms, etc.?


Thanks in advance for your input!

one additional data point is when issuer can call these prefs.  if there is a near term call date and rates stay low to moderate, issuer can simply call and refinance at lower rate.  if no near term call date, then issuer might contemplate richer conversion offer

Wiggins

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10773 on: November 09, 2018, 11:48:58 AM »
Partial conversion of prefs...  I wonder what percentage of prefs will convert vs. the amount that will not.  I wonder at what percentage of par the conversion will take place. It will also be interesting to see at what price (relative to par) the non-converted prefs trade in the market.

Specifically, I'm curious about FMCCL, FNMAH, and FNMAS.

I know it depends on dividend rate, when the dividend might be re-instated, etc. but (1) what are your thoughts on where these three securities would trade if NOT converted?  (2) Would yield even matter for conversion terms, settlement terms, etc.?


Thanks in advance for your input!

one additional data point is when issuer can call these prefs.  if there is a near term call date and rates stay low to moderate, issuer can simply call and refinance at lower rate.  if no near term call date, then issuer might contemplate richer conversion offer

The contracts of the JPS securities each specify different terms for callability. Last time I checked they are all callable either continuously or  quarterly except FNMAS (callable 12/31/2020) and FMCKJ (callable 12/31/2022).

Another reason Moelis may have raised the share price is the lowering of corporate tax rates from 35% to 21%, which makes the companies more profitable.

When would the sweep for Q4 occur? I ask because if Moelis is enacted they will have to make an announcement before that date.

DocSnowball

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10774 on: November 09, 2018, 01:01:27 PM »
Updated Moelis Blueprint


http://gsesafetyandsoundness.com/2018/11/09/oneyearlater/

thanks onyx!

someone from maxine Walter's district should send her a copy and give her office a call.  (my experience is that house staff respect district-based constituent inquiries only)

great idea!

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10775 on: November 11, 2018, 05:35:15 AM »
the Mba cohort is pushing for legislative reform to occur before recapitalization.   

does this view hold water?  or is it better to get going on the recap in December as a catalyst / spark for legislative reform (my view)?

in theory, the potential for action would open after the congress recesses for the year in December.

mnuchin appears conservative on the matter to date.  but the moelis / paulson / schwarzman group is quite close to trump.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10776 on: November 11, 2018, 05:44:06 AM »
Partial conversion of prefs...  I wonder what percentage of prefs will convert vs. the amount that will not.  I wonder at what percentage of par the conversion will take place. It will also be interesting to see at what price (relative to par) the non-converted prefs trade in the market.

Specifically, I'm curious about FMCCL, FNMAH, and FNMAS.

I know it depends on dividend rate, when the dividend might be re-instated, etc. but (1) what are your thoughts on where these three securities would trade if NOT converted?  (2) Would yield even matter for conversion terms, settlement terms, etc.?


Thanks in advance for your input!


these are good questions with no easy answers.  (obviously much of this is premature at this point). 

it likely depends on if there are guidelines set out in any plan as to if / when dividends would be restored.  if they want a healthy conversion rate of pref to common in the Moelis plan, then they might make dividend re-instatement murky to prevent people from holding out. the jr pref securities would likely trade below par, with some differential between them (as is now) based on yield.   there's also some chance they could target only select series for conversion.  in terms of yield mattering for conversion terms, i'd guess that it's a tradeoff between simplicity (treat them all equal) and precision (modestly better terms for higher yielders).

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10777 on: November 11, 2018, 08:10:17 AM »
all junior pref holders should have mindset they are holding out for par, whether by being called or in a conversion rate that they like.  I don't see treasury doing a re-IPO of common without being able to pay dividends on common, and this will only happen if dividends are turned on for prefs (which will cause them to trade to par...or even at a premium in cases of high div rate) or the prefs are "convinced" to convert, or they are called and paid out at par.

we are par-seeking missiles

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10778 on: November 11, 2018, 08:56:05 AM »
all junior pref holders should have mindset they are holding out for par, whether by being called or in a conversion rate that they like.  I don't see treasury doing a re-IPO of common without being able to pay dividends on common, and this will only happen if dividends are turned on for prefs (which will cause them to trade to par...or even at a premium in cases of high div rate) or the prefs are "convinced" to convert, or they are called and paid out at par.

we are par-seeking missiles
This makes sense.


rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10779 on: November 11, 2018, 08:58:15 AM »
the Mba cohort is pushing for legislative reform to occur before recapitalization.   

does this view hold water?  or is it better to get going on the recap in December as a catalyst / spark for legislative reform (my view)?

in theory, the potential for action would open after the congress recesses for the year in December.

mnuchin appears conservative on the matter to date.  but the moelis / paulson / schwarzman group is quite close to trump.
Mnuchin is on record saying any serious talk of reform requires companies to have capital first. But this was in the early days, before radio silence.