Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3442851 times)

muscleman

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13810 on: September 17, 2019, 05:20:14 PM »
are we in orthopa land where there is an effective floor for the juniors and we should back up the truck?

You'd think. Yet the preferreds fall every day. Just rotation to commons?

Im honestly perplexed to a degree also.  Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling.

TA hasnít turned full bullish yet, and the ruling isnít strong enough to disrupt TA completely like a full NWS cancellation would.
I think itíll just be a matter of few weeks before it is ready to go, which is why I havenít bought yet.
I am muslceman. I have more muscle than brain!


orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13811 on: September 17, 2019, 06:15:53 PM »
are we in orthopa land where there is an effective floor for the juniors and we should back up the truck?

You'd think. Yet the preferreds fall every day. Just rotation to commons?

Im honestly perplexed to a degree also.  Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling.

TA hasnít turned full bullish yet, and the ruling isnít strong enough to disrupt TA completely like a full NWS cancellation would.
I think itíll just be a matter of few weeks before it is ready to go, which is why I havenít bought yet.

We will see!

Wiggins

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13812 on: September 18, 2019, 03:27:21 AM »
Rop was filed in Michigan just prior to Bhatti being filed in Minnesota, and the two complaints are virtually identical. Rolg or others, have any idea what's going on here? If the judge is slow-walking this, how does that work exactly and when can we expect some action? Thanks

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13813 on: September 18, 2019, 08:42:48 AM »
Rop was filed in Michigan just prior to Bhatti being filed in Minnesota, and the two complaints are virtually identical. Rolg or others, have any idea what's going on here? If the judge is slow-walking this, how does that work exactly and when can we expect some action? Thanks

bhatti is being argued in 4 weeks before 8th C merits panel.  all 3 judges are bush appointees.  rop is going nowhere

DocSnowball

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13814 on: September 18, 2019, 11:57:15 AM »
are we in orthopa land where there is an effective floor for the juniors and we should back up the truck?

You'd think. Yet the preferreds fall every day. Just rotation to commons?

Im honestly perplexed to a degree also.  Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling.

Personally I was disappointed that even if NWS ends, the capital retained will simply be added to the senior liquidation preference. In essence, all 100% still flows to the Treasury likely for the next couple of years. This combined with the capital raise plans being deferred to after the election is disappointing. I had loaded up my position to 20% of portfolio after Calabria's statements in the early summer about capital building and shareholders getting some conversion, but after this information have cut it down to 5% again. Surprised no one else is bothered about continued usurping of profits despite the court ruling.

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13815 on: September 18, 2019, 03:13:40 PM »
If there is settlement, we go to a world where the NWS never existed and therefore the liquidation preference never increased. Settlement / remedy won't recognize the increase in liq. pref. so non issue and clever workaround/interim step to retain significant capital immediately.

Shareholders hold great leverage after Collins and both Mnuchin and Calabria have made comments regarding lawsuits in the last week in favor of shareholders. Mnuchin said he won't let litigation stand in way of pursuing recap/release (only way that's possible is settlement) and Calabria said he isn't worried about the lawsuits bc they will take care of themselves once they do the PSPA amendment (only way that happens is if they address senior pfds).

Admin is pursuing a recap release and as junior pfd holder we are sitting pretty. I expect a settlement in conjunction with the PSPA amendment in the next 3-6 months. Don't overthink it at this stage :)

are we in orthopa land where there is an effective floor for the juniors and we should back up the truck?

You'd think. Yet the preferreds fall every day. Just rotation to commons?

Im honestly perplexed to a degree also.  Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling.

Personally I was disappointed that even if NWS ends, the capital retained will simply be added to the senior liquidation preference. In essence, all 100% still flows to the Treasury likely for the next couple of years. This combined with the capital raise plans being deferred to after the election is disappointing. I had loaded up my position to 20% of portfolio after Calabria's statements in the early summer about capital building and shareholders getting some conversion, but after this information have cut it down to 5% again. Surprised no one else is bothered about continued usurping of profits despite the court ruling.
« Last Edit: September 18, 2019, 03:15:39 PM by allnatural »

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13816 on: September 18, 2019, 04:42:40 PM »
If there is settlement, we go to a world where the NWS never existed and therefore the liquidation preference never increased. Settlement / remedy won't recognize the increase in liq. pref. so non issue and clever workaround/interim step to retain significant capital immediately.

The liquidiation preference had already hit $187B when the NWS was put into place. It has only increased twice since then, due to the 2017 tax bill forcing a DTA writedown, and the December 2017 letter agreement.

In a world where the NWS never happened, FnF would have most likely kept all the extra cash they made over the 10% cash dividend. I say this, rather than pay down the seniors, because I don't think the SPSPAs even allow the seniors to be paid down at FnF's (or FHFA's, in this case) discretion. The only two ways I remember seeing to pay down the seniors were if either the funding commitment was pulled (never happened) or FnF issued stock (the proceeds of which would have to go towards paying down the seniors).

In fact, in a world without the NWS, Treasury would have likely reinstated the commitment fee on its funding commitment because FnF would have been able to pay it. That means that the $131B that FnF would have had (total dividend payments over the 10% rate) is somewhat less.

Extinguishing the seniors is a way to get the cases settled without Treasury having to send out 12 figures worth of cash, but I don't think a court would have mandated that because I don't think the paydown clauses were ever challenged by the plaintiffs.

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13817 on: September 18, 2019, 04:59:34 PM »
Admin is pursuing a recap release and as junior pfd holder we are sitting pretty. I expect a settlement in conjunction with the PSPA amendment in the next 3-6 months. Don't overthink it at this stage :)

+1
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TwoCitiesCapital

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13818 on: September 18, 2019, 05:27:15 PM »
are we in orthopa land where there is an effective floor for the juniors and we should back up the truck?

You'd think. Yet the preferreds fall every day. Just rotation to commons?

Im honestly perplexed to a degree also.  Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling.

Personally I was disappointed that even if NWS ends, the capital retained will simply be added to the senior liquidation preference. In essence, all 100% still flows to the Treasury likely for the next couple of years. This combined with the capital raise plans being deferred to after the election is disappointing. I had loaded up my position to 20% of portfolio after Calabria's statements in the early summer about capital building and shareholders getting some conversion, but after this information have cut it down to 5% again. Surprised no one else is bothered about continued usurping of profits despite the court ruling.

It's not ideal, but also can't last. Common shareholder's are NEVER going to give company new money if retained earnings simply increase government's ownership. So we know this will be ended before a capital raise.

Secondly, we know that litigation needs to be settled - which it won't be - if the Treasury keeps all $ past the 10% moment AND continues to usurp the value of all future retained earnings.

This won't stand - how it gets nullified/reversed is uncertain - but it will be nullified/reversed if we're to do a successful capital raise and we know that is the administration's goal.

This is definitely a situation where I'd say uncertainty =/= risk.
« Last Edit: September 18, 2019, 08:15:01 PM by TwoCitiesCapital »

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13819 on: September 18, 2019, 06:21:10 PM »
You probably don't do this unless you like where this situation is headed and you know your preferred shares are going through the roof... OR you're scared that your investment will tank if Trump isn't re-elected.
https://pagesix.com/2019/09/17/hedge-funder-john-paulson-to-hold-2800-per-ticket-trump-fundraiser/?utm_source=twitter_sitebuttons&utm_medium=site%20buttons&utm_campaign=site%20buttons
Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM