Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3862262 times)

hardincap

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13970 on: October 07, 2019, 08:06:24 PM »
@cherzeca your points are valid. i agree the dynamics have shifted powerfully, and sudden shifts like this tend to be under appreciated. 

maybe im suffering from gse fatigue, but i think at 50% par, I get better "return on time invested" elsewhere, esp given that the gses were always far outside my CoC. that time invested doesnt have to turn into a buy decision in a month or a year, but i know it will eventually pay off. opportunity cost of owning the prefs to me is time i could otherwise use to find the next 10-100 bagger. id be fooling myself if i said i can keep the gses and forget about them for the next year, given how quickly things can change.

Quote
but to find "mispricing" you have to find a situation where you can reasonably expect the market will agree with me...later.  this involves higher risk

not necessarily risk: the correct way to invest is to put in the work and earn "secrets" that can translate into an edge in the markets


investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13971 on: October 08, 2019, 09:01:16 AM »
45pct of par after the good recent news -- wow, I guess rather than feel frustrated I should feel grateful about where the security prices would be otherwise.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13972 on: October 08, 2019, 09:43:10 AM »
45pct of par after the good recent news -- wow, I guess rather than feel frustrated I should feel grateful about where the security prices would be otherwise.

I think this gets to the notion of "speculation" that @hardincap and I were discussing just above.  for many institutional investors speculation is a dirty word.  of course many HFs are willing to seek these out, but for the vast majority of potential investors the GSEs will only become investable when much of the speculation has been wrung out, assuming as I do that it will be wrung out.  I think the movement of the GSEs from speculation to investment has been taking far longer than I expected, which again is nothing other than a warning sign for most investors, but it seems to be gaining pace lately.  but here is my point: I expect the actual transition to investment will be a tipping point-like event, a phase change rather than a straight line progression from where we still are (speculation) to investment.  no-one can predict what (and more importantly when) would precipitate that phase change (though I have my thoughts), which again is why a lot of investors are still staying away...leading imo to excessively discounted % of par

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13973 on: October 09, 2019, 07:30:42 AM »
ď These analysts are pests in the society who upgrade after the fact to save their face
https://www.streetinsider.com/Analyst+Comments/UPDATE%3A+Keefe%2C+Bruyette+%26+Woods+Upgrades+Fannie+Mae+%28FNMA%29+to+Market+Perform/15993937.html
There is another one who who boveís to wall street and manipulatesĒ

Spekulatius

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13974 on: October 09, 2019, 06:01:13 PM »
These two companies already have publicly available and audited financial statements. The timing to raise capital is excellent and these are large, public for decades, proven and profitable enterprises unlike momo garbage such as WeWork.

Once a large and reputable investment banker is selected, it won't take very long to get pieces into place as they are incentivized to get it done so they get paid.

Think about the Saudi Aramco IPO. It was first thought about around 4 years ago. They had no public financial statements, never been audited, never had an outside engineering firm to audit their reserves or a requirement to be public, didn't know on which exchange to list, IPO delayed due to a large petrochemical acquisition, IPO likely delayed due to poor market conditions for oil and corresponding valuation, government interference as this is their bread and butter, and on and on. Yet, they should be public in their own market by the end of this year.

Plus for preferred holders, you won't have to wait 4 years (which I see as excessive anyway based on above) to know your fate as a resolution should be a pre-condition to start the IPO process.

Cardboard

FWIW, there is still a GSE trading in the public markets, which may serve as a reference - Farmers Mac:
https://finance.yahoo.com/quote/AGM?p=AGM

The valuation is pretty undemanding.
Life is too short for cheap beer and wine.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13975 on: October 10, 2019, 08:38:53 AM »
@spek

farmer's Mac shows a current pe of about 8.5x. moelis used a range based upon other financial institutions:  https://gsesafetyandsoundness.com/wp-content/uploads/2018/11/Blueprint-for-Restoring-Safety-and-Soundness-to-the-GSEs-Final.pdf. p.27
« Last Edit: October 10, 2019, 09:32:22 AM by cherzeca »

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13976 on: October 10, 2019, 02:36:31 PM »
Live event going on now at GMU (Fairfax, VA... about an hour outside of Washington, DC).

https://twitter.com/ACGAnalytics/status/1182408443967221760
In discussion at @MasonLEC, @FHFA Director @MarkCalabria publicly indicated #GSEs could leave conservatorship before hitting top capital threshold and operate under consent decree.
"You spoke a word and life began, told oceans where to start and where to end. You set in motion time and space, still You come and You call to me by name."  Stars by Skillet. Listen here: https://www.youtube.com/watch?v=TbLJyjfyACM

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13977 on: October 10, 2019, 03:17:58 PM »
Live event going on now at GMU (Fairfax, VA... about an hour outside of Washington, DC).

https://twitter.com/ACGAnalytics/status/1182408443967221760
In discussion at @MasonLEC, @FHFA Director @MarkCalabria publicly indicated #GSEs could leave conservatorship before hitting top capital threshold and operate under consent decree.

this is smart and reassuring. 

Spekulatius

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13978 on: October 10, 2019, 03:36:43 PM »
@spek

farmer's Mac shows a current pe of about 8.5x. moelis used a range based upon other financial institutions:  https://gsesafetyandsoundness.com/wp-content/uploads/2018/11/Blueprint-for-Restoring-Safety-and-Soundness-to-the-GSEs-Final.pdf. p.27

Farmers Mac isnít really the same business model, itís income mostly comes from the net interest margin, while the GSE would be 2/3 fees and 1/3 interest income (roughly)

The GSE would have a more stable income stream, specially in a low interest rate environment. AGM stock only took off after interest rates came off from zero.
Life is too short for cheap beer and wine.

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #13979 on: October 10, 2019, 03:44:48 PM »
Calabria hopes to have adviser in place by November. Attached...
"You spoke a word and life began, told oceans where to start and where to end. You set in motion time and space, still You come and You call to me by name."  Stars by Skillet. Listen here: https://www.youtube.com/watch?v=TbLJyjfyACM