Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3668067 times)

Luke 5:32

  • Hero Member
  • *****
  • Posts: 2627
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12570 on: May 30, 2019, 12:39:42 PM »
https://twitter.com/CGasparino/status/1134179974485880832
SCOOP: Trump Admin creates timetable to release @FannieMae @FreddieMac from government control; @MarkCalabria seeking reform agreement w Treasury summer's end cease “net-worth sweep” by year's end, poss recap thru massive public offering in 2020 more NOW @FoxBusiness $FNMA $FMCC

How is this a "SCOOP"?  This has all previously been publicly stated by Calabria.

Agreed, it's not a "scoop" but Gasparino has a need to feel like he is the first to discover stuff.  I posted simply as further confirmation that a plan is coming along.  Now, if the timetable is indeed cemented then that would be a scoop.
"I wait for You and my soul finds rest. In my selfishness, You show me grace..." My Hope Is In You by Aaron Shust https://www.youtube.com/watch?v=ugD0i5Y3cw8


allnatural

  • Sr. Member
  • ****
  • Posts: 268
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12571 on: May 30, 2019, 12:42:48 PM »
Someone must have sent him Calabrias transcripts from the last 2 weeks and he is repeating it as a scoop

rros

  • Hero Member
  • *****
  • Posts: 991
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12572 on: May 30, 2019, 01:01:13 PM »
So I think we are still in the phase of announcing the announcements anticipating when the real announcement will come. So a sell off.

Does this mean sweeping till December? Anybody feels they too are moving the goalpost? What if the market breaks? 2020 recession for the largest IPO? No rush, friends. But not a problem either... Fannie and Freddie (and the sweep) are going nowhere.
« Last Edit: May 30, 2019, 01:10:35 PM by rros »

cherzeca

  • Hero Member
  • *****
  • Posts: 2405
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12573 on: May 30, 2019, 01:46:52 PM »
fnmas fell out of bed late today on light volume.  wonder what's up?

edit:  maybe someone read gaspo's SCOOPS and didn't like timing.  seems slow, and seems to me that we are all waiting for calabria to come up with a capital rule
« Last Edit: May 30, 2019, 02:00:22 PM by cherzeca »

Midas79

  • Hero Member
  • *****
  • Posts: 542
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12574 on: May 30, 2019, 02:43:20 PM »
well, the recap will be VERY hard to execute due to its sheer size.  especially if treasury doesn't want to do a laydown on some of its warrants.

I've been thinking that there may be a pricing game that will go on with the common.  seems to me the common will appreciate first because i) the treasury plan is announced without numbers, and common likes what it sees, and/or ii) Collin en banc is favorable.  this within next 4 weeks.

then eventually the bankers get involved and flesh out what the offering will look like, and the common doesn't like what it sees.  and common goes down, which is fine with bankers since as @IG has mentioned, bankers will want a low selling price target.

of course if things get accelerated then this window for the common to have gone up before it goes down can become quite small, but I dont know how the bankers can do their thing before fhfa finalizes the capital rule, and that should take awhile because calabria is too busy giving interviews.

so the common for a trade...no?

To me buying commons now for this reason feels like an attempt to time the market. I avoid that whenever possible because I have no reason to believe I have an edge there. The premise seems to be that you are predicting a dip in the pref-to-common ratio and then a rebound. I think I'd be willing to try this with ~5% of my GSE allocation, but no more. It could very well go the other way: we get Calabria's capital rule before the en banc decision.

orthopa

  • Hero Member
  • *****
  • Posts: 801
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12575 on: May 30, 2019, 02:51:00 PM »
fnmas fell out of bed late today on light volume.  wonder what's up?

edit:  maybe someone read gaspo's SCOOPS and didn't like timing.  seems slow, and seems to me that we are all waiting for calabria to come up with a capital rule

thats my immediate thought. You have those in it for a quick surprise and hearing 6 months may have turned the fast money off. After his tweet we know no more then we did beforehand. Sounds like he just caught up! ::)

beaufort

  • Full Member
  • ***
  • Posts: 102
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12576 on: May 30, 2019, 03:16:15 PM »
@cherzeca
Dang, I think South Carolina is my spiritual home.  The manifestation is I had chicken and bbq ribs for lunch today.  Incidentally, beaufort is also an excellent cheese in the gruyere style, but from the French alps. 

5th circuit Appeal

Does anybody have a memory on how fast common/prefs started to move before Lamberth/DC appellate decisions?  Was it days or hours before the decisions were released?








cherzeca

  • Hero Member
  • *****
  • Posts: 2405
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12577 on: May 30, 2019, 03:16:35 PM »
hot off the wsj press:

WASHINGTON—Trump administration officials are putting the finishing touches on a plan to return mortgage-finance giants Fannie Mae and Freddie Mac to private-shareholder ownership, people familiar with the matter said.

The proposal, coming more than a decade after the government seized the firms to save them from collapse, would seek to put the companies on sounder financial footing and then release them from government control, if Congress doesn’t enact a more fundamental overhaul, these people said.

The plan is being developed by the Treasury Department in consultation with a regulator of the companies, the Federal Housing Finance Agency. It could change as it advances through the Trump administration, works its way through the White House and ultimately is submitted to the president for his approval as early as June, the people said.

The proposal is expected to include a version of what has been called “recap and release,” which would ensure the firms have adequate capital to absorb loan losses in a future housing slump and thus avoid needing another taxpayer-backed bailout.

If carried out, the companies could return to a status similar to how they operated prior to the financial crisis. Administration officials would like Congress to act on a more sweeping remake of housing finance.

Former officials of the companies and housing experts say the moves could be daunting. Shoring up Fannie and Freddie’s finances could entail raising more than $125 billion for the firms, the companies’ regulator has estimated—in part by selling new shares in an initial public offering. In comparison, the largest initial public stock offering ever was $25 billion for Alibaba Group Holding in 2014.

Fannie and Freddie are central players in the mortgage market, buying mortgages from lenders and packaging them for issuance as securities.

The companies got into trouble before the crisis by taking on more risk without having to hold more capital. They amassed huge investment portfolios to profit from the difference between their lower cost of capital—a benefit of an implied federal guarantee because Congress created the firms—and the rates they could earn on mortgages.

The government seized the companies through a process known as conservatorship in 2008, during the George W. Bush administration, and agreed to inject vast sums to support some $5 trillion in debt securities issued by the companies.

As part of the draft plan to return the companies to private hands, an existing Treasury backstop for the companies could remain in place. But the firms could begin paying a periodic “commitment” fee for the federal guarantee, the people said.

***

of course it isn't a guarantee, but rather a line of credit, but these WSJ guys are just above gaspo on the idiot chart
« Last Edit: May 30, 2019, 03:25:46 PM by cherzeca »

cherzeca

  • Hero Member
  • *****
  • Posts: 2405
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12578 on: May 30, 2019, 03:18:10 PM »
@beaufort

love gruyere, raclette and fondue.  will look for the name next time

if I recall correctly, trading on Lamberth began a few days before opinion released
« Last Edit: May 30, 2019, 03:24:42 PM by cherzeca »

Jcmeg35

  • Newbie
  • *
  • Posts: 47
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #12579 on: May 30, 2019, 03:20:13 PM »
hot off the wsj press:

WASHINGTON—Trump administration officials are putting the finishing touches on a plan to return mortgage-finance giants Fannie Mae and Freddie Mac to private-shareholder ownership, people familiar with the matter said.

The proposal, coming more than a decade after the government seized the firms to save them from collapse, would seek to put the companies on sounder financial footing and then release them from government control, if Congress doesn’t enact a more fundamental overhaul, these people said.

The plan is being developed by the Treasury Department in consultation with a regulator of the companies, the Federal Housing Finance Agency. It could change as it advances through the Trump administration, works its way through the White House and ultimately is submitted to the president for his approval as early as June, the people said.

The proposal is expected to include a version of what has been called “recap and release,” which would ensure the firms have adequate capital to absorb loan losses in a future housing slump and thus avoid needing another taxpayer-backed bailout.

If carried out, the companies could return to a status similar to how they operated prior to the financial crisis. Administration officials would like Congress to act on a more sweeping remake of housing finance.

Former officials of the companies and housing experts say the moves could be daunting. Shoring up Fannie and Freddie’s finances could entail raising more than $125 billion for the firms, the companies’ regulator has estimated—in part by selling new shares in an initial public offering. In comparison, the largest initial public stock offering ever was $25 billion for Alibaba Group Holding in 2014.

Fannie and Freddie are central players in the mortgage market, buying mortgages from lenders and packaging them for issuance as securities.

The companies got into trouble before the crisis by taking on more risk without having to hold more capital. They amassed huge investment portfolios to profit from the difference between their lower cost of capital—a benefit of an implied federal guarantee because Congress created the firms—and the rates they could earn on mortgages.

The government seized the companies through a process known as conservatorship in 2008, during the George W. Bush administration, and agreed to inject vast sums to support some $5 trillion in debt securities issued by the companies.

As part of the draft plan to return the companies to private hands, an existing Treasury backstop for the companies could remain in place. But the firms could begin paying a periodic “commitment” fee for the federal guarantee, the people said.

@chereza - was just about to post myself.

While most of this is regurgitating what we already know. I found the "entail raising more than $125 Million" & "As part of the draft plan to return the companies to private hands, an existing Treasury backstop for the companies could remain in place. But the firms could begin paying a periodic “commitment” fee for the federal guarantee, the people said." very interesting new tidbits that I am sure are intentionally being floated by Admin now.