Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 4466973 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15860 on: August 13, 2020, 03:30:55 PM »
As said in earlier comments, is this refi fee sticky?  With rates low and expected to remain low thanks to uncle fed, this fee can generate a lot of revs that should fall directly to the bottom line if it persists and if everyone with a mortgage originated over a few years ago refis. This can be nice “window dressing” for cap raising.


cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15861 on: August 16, 2020, 09:21:37 AM »
If you are into magical thinking maybe someone in WH now tells Calabria to lighten cap targets so as to avoid need to reach for revenue

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15862 on: August 17, 2020, 01:41:46 PM »
“Is this not the same person who gets free lunch from large banks? Did he not ask for high G fees to push out Fannie Mae and Freddie Mac out of the market ? ”
https://www.housingwire.com/articles/pulse-the-fhfa-does-it-again-when-will-we-fight-back/

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15863 on: August 17, 2020, 01:42:58 PM »
“Drop the capital ratio NOW to what Mayopoulos says. Calabria does not need anyone’s permission”

emily

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15864 on: August 17, 2020, 01:43:30 PM »
“Treasury and FHFA do not need congress or anyone’s permission to get rid of illegal PSPA  and NWS. Do it now”

Jcmeg35

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15865 on: August 18, 2020, 01:55:05 PM »
Apparently the CBOE came out with a report today on the GSEs "Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions"
https://www.cbo.gov/publication/56496

I have yet to read it and assesment. Initial thought is clearly a + to see more governement agencies putting out reports on recap. Hard to think this work would be put in if wasn't a high likelyhood of it happening.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15866 on: August 18, 2020, 02:45:45 PM »
Apparently the CBOE came out with a report today on the GSEs "Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions"
https://www.cbo.gov/publication/56496

I have yet to read it and assesment. Initial thought is clearly a + to see more governement agencies putting out reports on recap. Hard to think this work would be put in if wasn't a high likelyhood of it happening.

just adds to the inertial movement forward, with CBOE acknowledging admin plan etc, though I have to say I couldn't read past the first few pages...your tax dollars at work

DocSnowball

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15867 on: August 18, 2020, 05:58:07 PM »
Apparently the CBOE came out with a report today on the GSEs "Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions"
https://www.cbo.gov/publication/56496

I have yet to read it and assesment. Initial thought is clearly a + to see more governement agencies putting out reports on recap. Hard to think this work would be put in if wasn't a high likelyhood of it happening.

Lots of speculation on pages 13-14, quite positive for Junior preferred IMHO:

Quote
Redemption of Shareholders’ Claims in CBO’s Model
CBO’s model incorporates the judgment that in scenar- ios in which the GSEs’ common-stock sale did not raise enough funds to redeem the full face value of both the senior preferred and junior preferred shares, the Treasury would take a reduction (known as a haircut) in the value of its senior preferred stake before requiring junior pre- ferred shareholders to do so.30 That outcome would be inconsistent with the priority of interest between junior and senior preferred shares. But it recognizes that chang- ing the GSEs’ commitments to junior preferred share- holders would be difficult outside a receivership scenario, in which the Treasury, as owner of the senior preferred shares, also owned the GSEs’ common stock (through its warrants).
Junior preferred shareholders are in line to receive the dividends associated with their shares before holders of new or existing common shares. Thus, they might refuse to allow the GSEs to retire their claims on the GSEs’ assets and income at less than the face value of their shares in the lead-up to a sale of new common stock. That refusal would reduce the value of the new common shares, making recapitalization more difficult. Even though the Treasury’s preferred shares have seniority over the preconservatorship preferred shares owned by inves- tors, the Treasury would have an incentive to make an arrangement that took into account its ownership stake in the GSEs’ common stock.
Alternatives to the approach used in CBO’s model— such as having holders of junior preferred shares take reductions before the Treasury, or reducing both classes of preferred shares equally—would increase the pro- ceeds received by the Treasury. However, those alterna- tives would not have a large effect on the results of this analysis, CBO estimates.
If FHFA put the GSEs in receivership, it might be able to transfer some of their assets and liabilities to a new corporation to which no existing shareholders had a claim. The new corporation could then sell common stock and use the proceeds to capitalize itself and to reimburse shareholders in the old GSEs according to the priority of their claims. That priority order would require senior preferred stock to be redeemed before any junior preferred or common stock.
If, however, the Treasury wanted to raise capital through the sale of new common shares without resorting to receivership for the GSEs, the claims of junior preferred shareholders would have to be addressed. In this analysis, those shareholders are paid the full $35 billion face value of their shares from the proceeds of the common-stock sale, if possible, thus retiring their claims on the assets and income of the recapitalized GSEs. In addition, if possible, the Treasury liquidates its senior preferred shares and its warrants for common shares at the time of the common-stock sale. (Previously, when the Treasury provided financial commitments to private firms during the financial crisis, it exited from those commitments in multiple stages.31 A staged exit might work with the GSEs, but for simplicity, CBO’s recapitalization scenar- ios do not incorporate that approach.)

undervalued

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15868 on: August 23, 2020, 09:18:26 PM »
For those of you who are still invested, how much of your portfolio are you betting on FNMA/FMCC related securities? Have you become more convinced of the end game will be positive or becoming negative?
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15869 on: August 24, 2020, 11:29:28 AM »
For those of you who are still invested, how much of your portfolio are you betting on FNMA/FMCC related securities? Have you become more convinced of the end game will be positive or becoming negative?

20% position which is higher-end for me.  Was higher but has come down due to changes in my portfolio unrelated to the GSEs.  Higher conviction - Craig Phillips literally has spelled out what is going to happen.  Biggest risk IMO is miscalculating path dependency in a Biden win.