Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 4974343 times)

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16750 on: January 14, 2021, 08:28:17 AM »
Looks like after close is the time per Gasparino. 2 weeks ago we were told there wouldn't be a PSPA agreement and not enough time to get anything done before Biden gets in. Now we are told there is a plan (surprise!) but its a pathway out of conservatorship that will not benefit common/preferred shareholders whatever that means.  As of yesterday treatment of the Sr Preferred up for debate at the WH but per Gasparino to not expect much. Honestly sounds like no one knows anything concrete but we will all find out soon enough.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation.

My best gin waiting in the fridge in case we have a happy ending LOL

I suppose Mnuchin's pathway is to simply raise the retained earnings cap by another letter agreement.  all hat no cattle for that putz.

three or so months to wait for SCOTUS. I think we get good news on APA claim (and maybe const claim, though justices were squirming around on that). APA claim would go to summary judgment motion hopefully by summer, but god knows when decided by fed d ct

cherzeca how does mnuchins comments that if SCOTUS rules for gov it would be easier to raise 3rd party capital? Rules for gov outright? NWS illegal but no damages? Whats your read on that?


investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16751 on: January 14, 2021, 08:37:30 AM »
Looks like after close is the time per Gasparino. 2 weeks ago we were told there wouldn't be a PSPA agreement and not enough time to get anything done before Biden gets in. Now we are told there is a plan (surprise!) but its a pathway out of conservatorship that will not benefit common/preferred shareholders whatever that means.  As of yesterday treatment of the Sr Preferred up for debate at the WH but per Gasparino to not expect much. Honestly sounds like no one knows anything concrete but we will all find out soon enough.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation.

My best gin waiting in the fridge in case we have a happy ending LOL

I suppose Mnuchin's pathway is to simply raise the retained earnings cap by another letter agreement.  all hat no cattle for that putz.

three or so months to wait for SCOTUS. I think we get good news on APA claim (and maybe const claim, though justices were squirming around on that). APA claim would go to summary judgment motion hopefully by summer, but god knows when decided by fed d ct

cherzeca how does mnuchins comments that if SCOTUS rules for gov it would be easier to raise 3rd party capital? Rules for gov outright? NWS illegal but no damages? Whats your read on that?

He merely said it simplifies things.

COBFInfinity

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16752 on: January 14, 2021, 08:40:31 AM »
Looks like after close is the time per Gasparino. 2 weeks ago we were told there wouldn't be a PSPA agreement and not enough time to get anything done before Biden gets in. Now we are told there is a plan (surprise!) but its a pathway out of conservatorship that will not benefit common/preferred shareholders whatever that means.  As of yesterday treatment of the Sr Preferred up for debate at the WH but per Gasparino to not expect much. Honestly sounds like no one knows anything concrete but we will all find out soon enough.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation.

My best gin waiting in the fridge in case we have a happy ending LOL

I suppose Mnuchin's pathway is to simply raise the retained earnings cap by another letter agreement.  all hat no cattle for that putz.

three or so months to wait for SCOTUS. I think we get good news on APA claim (and maybe const claim, though justices were squirming around on that). APA claim would go to summary judgment motion hopefully by summer, but god knows when decided by fed d ct

cherzeca how does mnuchins comments that if SCOTUS rules for gov it would be easier to raise 3rd party capital? Rules for gov outright? NWS illegal but no damages? Whats your read on that?

He merely said it simplifies things.

As in, he expects all plaintiffs will throw in the towel on all lawsuits.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16753 on: January 14, 2021, 08:45:19 AM »
Looks like after close is the time per Gasparino. 2 weeks ago we were told there wouldn't be a PSPA agreement and not enough time to get anything done before Biden gets in. Now we are told there is a plan (surprise!) but its a pathway out of conservatorship that will not benefit common/preferred shareholders whatever that means.  As of yesterday treatment of the Sr Preferred up for debate at the WH but per Gasparino to not expect much. Honestly sounds like no one knows anything concrete but we will all find out soon enough.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation.

My best gin waiting in the fridge in case we have a happy ending LOL

I suppose Mnuchin's pathway is to simply raise the retained earnings cap by another letter agreement.  all hat no cattle for that putz.

three or so months to wait for SCOTUS. I think we get good news on APA claim (and maybe const claim, though justices were squirming around on that). APA claim would go to summary judgment motion hopefully by summer, but god knows when decided by fed d ct

cherzeca how does mnuchins comments that if SCOTUS rules for gov it would be easier to raise 3rd party capital? Rules for gov outright? NWS illegal but no damages? Whats your read on that?

He merely said it simplifies things.

As in, he expects all plaintiffs will throw in the towel on all lawsuits.

no, why we would we trade in lamberth?  It's $40 potential.   Ideally we'd settle that at some point in future for some value.   Like an earlier conversion to common or even better some ratio of paydowns as capital is built -- half sr pref half jr pref.

COBFInfinity

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16754 on: January 14, 2021, 08:52:47 AM »
Looks like after close is the time per Gasparino. 2 weeks ago we were told there wouldn't be a PSPA agreement and not enough time to get anything done before Biden gets in. Now we are told there is a plan (surprise!) but its a pathway out of conservatorship that will not benefit common/preferred shareholders whatever that means.  As of yesterday treatment of the Sr Preferred up for debate at the WH but per Gasparino to not expect much. Honestly sounds like no one knows anything concrete but we will all find out soon enough.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation.

My best gin waiting in the fridge in case we have a happy ending LOL

I suppose Mnuchin's pathway is to simply raise the retained earnings cap by another letter agreement.  all hat no cattle for that putz.

three or so months to wait for SCOTUS. I think we get good news on APA claim (and maybe const claim, though justices were squirming around on that). APA claim would go to summary judgment motion hopefully by summer, but god knows when decided by fed d ct

cherzeca how does mnuchins comments that if SCOTUS rules for gov it would be easier to raise 3rd party capital? Rules for gov outright? NWS illegal but no damages? Whats your read on that?

He merely said it simplifies things.

As in, he expects all plaintiffs will throw in the towel on all lawsuits.

no, why we would we trade in lamberth?  It's $40 potential.   Ideally we'd settle that at some point in future for some value.   Like an earlier conversion to common or even better some ratio of paydowns as capital is built -- half sr pref half jr pref.

Because plaintiffs have the weak hand. The upcoming Treasury is never going to settle on fair terms, preferring to just let the lawsuits play out over many more years. Depending on what the PSPA amendment consists of (i.e., whether it would allow for a capital raise if not for the lawsuits), I actually think there's a possibility that preferred shareholder plaintiffs will be incentivized to drop all lawsuits quickly in order to allow for a recap to occur. That would be bad for common shareholders, but preferreds likely get paid off much faster in that scenario. But again, it will all depend on the details in the agreement...

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16755 on: January 14, 2021, 09:05:20 AM »
In a going concern (i.e. non receivership) scenario, is the amount needed to "retire" the Sr pref the $194bn currently on b/s or the higher liquidation preference (220bn+) which still builds under the letter agreements?     the bloomberg article cited the latter but I view it as the former (outside of receivership).  If I'm correct then the letter agreements are not an accounting gimmick but rather actual capital raised, once again assuming they are going concerns.

WB_fan82

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16756 on: January 14, 2021, 09:39:08 AM »
The liquidation preference isn't just an academic thing in receivership.  It's the same as increasing the principal outstanding on a loan. 

If the div was amended back to some fixed rate, it would be applied to the liquidation preference.

The letter agreements are not currently raising "actual capital" from the viewpoint of any junior equity holders.  That's why the common has done nothing as the GSEs have "retained" $20B.

I predicted the NWS stays in place but they go non-cumulative.  That would truly raise capital (And also get rid of this blockade of external capital) over time.

SnarkyPuppy

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16757 on: January 14, 2021, 09:51:54 AM »
The liquidation preference isn't just an academic thing in receivership.  It's the same as increasing the principal outstanding on a loan. 

If the div was amended back to some fixed rate, it would be applied to the liquidation preference.

The letter agreements are not currently raising "actual capital" from the viewpoint of any junior equity holders.  That's why the common has done nothing as the GSEs have "retained" $20B.

I predicted the NWS stays in place but they go non-cumulative.  That would truly raise capital (And also get rid of this blockade of external capital) over time.

I actually think the current rumored reporting is consistent with a lot of what you have been predicting.  We'll see.  Mnuchin probably browses this thread and is stealing your idea - hence the last minute change.  Mnuchin = emily?

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16758 on: January 14, 2021, 09:52:40 AM »
Looks like after close is the time per Gasparino. 2 weeks ago we were told there wouldn't be a PSPA agreement and not enough time to get anything done before Biden gets in. Now we are told there is a plan (surprise!) but its a pathway out of conservatorship that will not benefit common/preferred shareholders whatever that means.  As of yesterday treatment of the Sr Preferred up for debate at the WH but per Gasparino to not expect much. Honestly sounds like no one knows anything concrete but we will all find out soon enough.

+1 and if there is a pathway out of conservatorship how on earth SPdfs are not dealt? I think we are just getting nuked with pieces of misinformation.

My best gin waiting in the fridge in case we have a happy ending LOL

I suppose Mnuchin's pathway is to simply raise the retained earnings cap by another letter agreement.  all hat no cattle for that putz.

three or so months to wait for SCOTUS. I think we get good news on APA claim (and maybe const claim, though justices were squirming around on that). APA claim would go to summary judgment motion hopefully by summer, but god knows when decided by fed d ct

cherzeca how does mnuchins comments that if SCOTUS rules for gov it would be easier to raise 3rd party capital? Rules for gov outright? NWS illegal but no damages? Whats your read on that?

ending litigation, in his warped mind, makes it easier to raise money. he assumes that trashing existing shareholders is no impediment to finding new shareholders

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #16759 on: January 14, 2021, 10:13:52 AM »
The liquidation preference isn't just an academic thing in receivership.  It's the same as increasing the principal outstanding on a loan. 

If the div was amended back to some fixed rate, it would be applied to the liquidation preference.

The letter agreements are not currently raising "actual capital" from the viewpoint of any junior equity holders.  That's why the common has done nothing as the GSEs have "retained" $20B.

I predicted the NWS stays in place but they go non-cumulative.  That would truly raise capital (And also get rid of this blockade of external capital) over time.

Do you have any links to support the view that div would be based on liq preference?   I'm not saying you're wrong just that your view is inconsistent with what I've read.  They also use the book amount not liq pref in the core capital analysis in 10k's. 

edit: regarding common not appreciating, it could be due to expected dilution with anywhere from 100-300bn needing to be raised.
« Last Edit: January 14, 2021, 10:17:19 AM by investorG »