Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3566787 times)

HalfMeasure

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12540 on: May 24, 2019, 06:17:58 AM »
if I was running the recap, I would first do an institutional private placement, before doing a public underwriting, and ask brk to backstop the PP...giving him warrants to agree to buy any amount not raised in the PP.  maybe PP=$20B. then with that as a successful first step, I would do a follow on $30B public offering. that would be a very good two step. so I can see Buffett being very helpful and willing, for a pound of flesh

Yes, please.

I reckon Buffett would be willing to buy the whole business if he were allowed. I think he's very fond of the core mortgage guarantee business.


james22

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12541 on: May 24, 2019, 06:37:19 AM »
It seems such an obvious solution. I'd love to see it happen.
BRK, BAM l SV, EM l Fannie Mae, Freddie Mac l Stable Value, Cash Value

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12542 on: May 24, 2019, 07:08:20 AM »
Why do some seem to think that Tsy and FHFA will agree to execute an IPO 5x the size of the largest IPO of all time under terms that are unreasonable and not certain to garner full private capital buy-in (i.e. unreasonably high capital requirements)?   

These guys aren't going to close their eyes and hope for the best under this much spotlight.  If they genuinely go with recap approach they will acknowledge reality.  Reasonable capital requirements and treat prior private capital fairly while providing a decent rate of return for new investors. 

I can't do chaos math theory but if you remove the noise and think about this using first principles, incentives, and invert the final outcome - what are you worried about? 

There won't be a failed IPO attempt - just isn't a plausible downside scenario.

Maybe Im just drinking the kool aid but Ill let everyone else worry too. I dont think at this point the worry should be whether or not this all goes through but on ultimate return at these prices. Second on my list of worries is just how long it will take to ultimately realize the final upside return and that is only because crazy or not Im contemplating buying more on margin. 

My biggest prfd holding is trading at 47% of par. In bedded in final return could be a sweetener conversion to common, dividend turn on? (unlikely). At a 7% margin rate borrowing at these prices and holding for a year you would break even on a 50% of par final pay out.

So what is coming up?

1. Treasury plan by end of June to end conservatorship?
2. FNMA proposed capital rules by July-Augustish?
3. Amendment by Calabria by fall with treasury to stop sweep by end of year?
4. IPO/recap starting in winter spring of 2020.

So 1 year from now you need 50% of par to break even buying on margin at 7% with FNMAH. Ill take that bet all day this point.  :)

As many has mentioned Calabraia has diarrhea of the mouth and mentioned conversion to common and do prfd holders get par. He also mentions he is very confident he can get to an agreement with Mnuchin. Well of course like Otting said everyone has signed off remember? He speaks and I listen.

HalfMeasure

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12543 on: May 24, 2019, 07:58:41 AM »
Why do some seem to think that Tsy and FHFA will agree to execute an IPO 5x the size of the largest IPO of all time under terms that are unreasonable and not certain to garner full private capital buy-in (i.e. unreasonably high capital requirements)?   

These guys aren't going to close their eyes and hope for the best under this much spotlight.  If they genuinely go with recap approach they will acknowledge reality.  Reasonable capital requirements and treat prior private capital fairly while providing a decent rate of return for new investors. 

I can't do chaos math theory but if you remove the noise and think about this using first principles, incentives, and invert the final outcome - what are you worried about? 

There won't be a failed IPO attempt - just isn't a plausible downside scenario.

Maybe Im just drinking the kool aid but Ill let everyone else worry too. I dont think at this point the worry should be whether or not this all goes through but on ultimate return at these prices. Second on my list of worries is just how long it will take to ultimately realize the final upside return and that is only because crazy or not Im contemplating buying more on margin. 

My biggest prfd holding is trading at 47% of par. In bedded in final return could be a sweetener conversion to common, dividend turn on? (unlikely). At a 7% margin rate borrowing at these prices and holding for a year you would break even on a 50% of par final pay out.

So what is coming up?

1. Treasury plan by end of June to end conservatorship?
2. FNMA proposed capital rules by July-Augustish?
3. Amendment by Calabria by fall with treasury to stop sweep by end of year?
4. IPO/recap starting in winter spring of 2020.

So 1 year from now you need 50% of par to break even buying on margin at 7% with FNMAH. Ill take that bet all day this point.  :)

As many has mentioned Calabraia has diarrhea of the mouth and mentioned conversion to common and do prfd holders get par. He also mentions he is very confident he can get to an agreement with Mnuchin. Well of course like Otting said everyone has signed off remember? He speaks and I listen.

I would think the NWS needs to end and capital rules need to be established first before ending conservatorship.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12544 on: May 24, 2019, 09:03:56 AM »
How do you do TA analysis? What tools do you use? I am interested in learning it. Thank you.

My TA analysis shows this should now make an accelerated run with small volatility. Hold on tight guys.  :D

Wait for news -> wait for stock price to go up -> TA tells you stock will go higher.   Where's TA analysis today on no apparent news but a rumored 5th circuit decision?

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12545 on: May 24, 2019, 09:06:28 AM »
Why do some seem to think that Tsy and FHFA will agree to execute an IPO 5x the size of the largest IPO of all time under terms that are unreasonable and not certain to garner full private capital buy-in (i.e. unreasonably high capital requirements)?   

These guys aren't going to close their eyes and hope for the best under this much spotlight.  If they genuinely go with recap approach they will acknowledge reality.  Reasonable capital requirements and treat prior private capital fairly while providing a decent rate of return for new investors. 

I can't do chaos math theory but if you remove the noise and think about this using first principles, incentives, and invert the final outcome - what are you worried about? 

There won't be a failed IPO attempt - just isn't a plausible downside scenario.

Maybe Im just drinking the kool aid but Ill let everyone else worry too. I dont think at this point the worry should be whether or not this all goes through but on ultimate return at these prices. Second on my list of worries is just how long it will take to ultimately realize the final upside return and that is only because crazy or not Im contemplating buying more on margin. 

My biggest prfd holding is trading at 47% of par. In bedded in final return could be a sweetener conversion to common, dividend turn on? (unlikely). At a 7% margin rate borrowing at these prices and holding for a year you would break even on a 50% of par final pay out.

So what is coming up?

1. Treasury plan by end of June to end conservatorship?
2. FNMA proposed capital rules by July-Augustish?
3. Amendment by Calabria by fall with treasury to stop sweep by end of year?
4. IPO/recap starting in winter spring of 2020.

So 1 year from now you need 50% of par to break even buying on margin at 7% with FNMAH. Ill take that bet all day this point.  :)

As many has mentioned Calabraia has diarrhea of the mouth and mentioned conversion to common and do prfd holders get par. He also mentions he is very confident he can get to an agreement with Mnuchin. Well of course like Otting said everyone has signed off remember? He speaks and I listen.

I would think the NWS needs to end and capital rules need to be established first before ending conservatorship.

I was referencing the treasury plan via phillip/ mnuchin with the road map etc.

muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12546 on: May 24, 2019, 09:31:00 AM »
How do you do TA analysis? What tools do you use? I am interested in learning it. Thank you.

My TA analysis shows this should now make an accelerated run with small volatility. Hold on tight guys.  :D

Wait for news -> wait for stock price to go up -> TA tells you stock will go higher.   Where's TA analysis today on no apparent news but a rumored 5th circuit decision?

Well, if you guys think I am annoying when I post TA, I'll stop. Sorry that it is not helpful to you guys. I'll just stay quiet as before then, as I am not good FA.

I am muslceman. I have more muscle than brain!

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12547 on: May 24, 2019, 09:48:59 AM »
if I was running the recap, I would first do an institutional private placement, before doing a public underwriting, and ask brk to backstop the PP...giving him warrants to agree to buy any amount not raised in the PP.  maybe PP=$20B. then with that as a successful first step, I would do a follow on $30B public offering. that would be a very good two step. so I can see Buffett being very helpful and willing, for a pound of flesh

Yes, please.

I reckon Buffett would be willing to buy the whole business if he were allowed. I think he's very fond of the core mortgage guarantee business.

my thoughts were that Buffett would detoxify the GSEs if he invested.  it has been fashionable to hate on the GSEs but if warren buys in, GSEs become apple pie and motherhood

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12548 on: May 24, 2019, 10:04:46 AM »
if I was running the recap, I would first do an institutional private placement, before doing a public underwriting, and ask brk to backstop the PP...giving him warrants to agree to buy any amount not raised in the PP.  maybe PP=$20B. then with that as a successful first step, I would do a follow on $30B public offering. that would be a very good two step. so I can see Buffett being very helpful and willing, for a pound of flesh

Yes, please.

I reckon Buffett would be willing to buy the whole business if he were allowed. I think he's very fond of the core mortgage guarantee business.

my thoughts were that Buffett would detoxify the GSEs if he invested.  it has been fashionable to hate on the GSEs but if warren buys in, GSEs become apple pie and motherhood

I would just be afraid that Buffett's terms would be unfavorable to all current shareholders. He can certainly crush the commons if he gets to dictate the terms, and he could probably find a way to hurt the juniors too if it benefits him/Berkshire enough.

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12549 on: May 24, 2019, 10:06:26 AM »
How do you do TA analysis? What tools do you use? I am interested in learning it. Thank you.

My TA analysis shows this should now make an accelerated run with small volatility. Hold on tight guys.  :D

Wait for news -> wait for stock price to go up -> TA tells you stock will go higher.   Where's TA analysis today on no apparent news but a rumored 5th circuit decision?

rumored decision? Source? Either way these things to tend to be a predictive in regards to timing. Should be coming way sooner then later.
« Last Edit: May 24, 2019, 10:09:27 AM by orthopa »