Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3868374 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9680 on: April 09, 2018, 02:47:29 PM »
@rros
"I actually said reform takes precedence."

i have heard alot of the use of the word reform, as it is a warm fuzzy word that sounds like it can only be good.  not sure what it realistically means.  to corker, it means killing FnF and giving tbtf banks govt guaranteed mbs.  what else does reform mean...other than returning FnF to well capitalized companies?

removal of implicit guarantee.   addition of a paid-for explicit guarantee (mnuchin's stated preference in front of congress).  competition in some form.  HUD-FHA adjustments.   other things i'm not thinking of.   quite the laundry list, which is why he wants to wait for 2019 legislatively.

I believe mnuchin and phillips when they say they will wait for 2019.  In the mean time, we drift and hope for a brave and moral judge to stand strong and/or some modest 4th amendment which stops or slows the sweep and buys time.

there was some talk about a paid for implicit guarantee...yes, i know this sounds absurd, but a fee for the status of FnF as duopolies subject to utility type regulation.

whenever there is talk of an explicit guarantee, you never hear how much (all mbs? only going forward mbs?), how it would blow debt ceiling etc


Spekulatius

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9681 on: April 09, 2018, 03:14:26 PM »
Quote
so what specifically do you think will happen for the next 5 years -- status quo in conservatorship?  if not, what do you specifically envision happening in a restructuring that torpedo's the minority shareholders from these levels?

I expect nothing to happen, everything remains as it is. as I mentioned before, I donít see a pressing problem. Kicking the can down the road, is common in politics , even more so, if there is no issue with the can. The chances of a lawsuit driving a change are already very slim after 10 years and so many losses.
Life is too short for cheap beer and wine.

Eye4Valu

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9682 on: April 09, 2018, 03:57:00 PM »
Quote
so what specifically do you think will happen for the next 5 years -- status quo in conservatorship?  if not, what do you specifically envision happening in a restructuring that torpedo's the minority shareholders from these levels?

I expect nothing to happen, everything remains as it is. as I mentioned before, I donít see a pressing problem. Kicking the can down the road, is common in politics , even more so, if there is no issue with the can. The chances of a lawsuit driving a change are already very slim after 10 years and so many losses.

My business law professor gave us some valuable advice one day in class. He said that one of the biggest mistakes lawyers make is thinking too much about the last case, and not thinking enough about the next case. What he meant by that is it's important to read dissents and think about the way other judges or courts might interpret the law, and not just rely on the prior ruling. I think that lesson will be applicable here to all that overweight the Lamberth opinion. The 5th Circuit indicated that they were willing to think about the law here.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9683 on: April 09, 2018, 05:36:21 PM »
@rros
"I actually said reform takes precedence."

i have heard alot of the use of the word reform, as it is a warm fuzzy word that sounds like it can only be good.  not sure what it realistically means.  to corker, it means killing FnF and giving tbtf banks govt guaranteed mbs.  what else does reform mean...other than returning FnF to well capitalized companies?

removal of implicit guarantee.   addition of a paid-for explicit guarantee (mnuchin's stated preference in front of congress).  competition in some form.  HUD-FHA adjustments.   other things i'm not thinking of.   quite the laundry list, which is why he wants to wait for 2019 legislatively.

I believe mnuchin and phillips when they say they will wait for 2019.  In the mean time, we drift and hope for a brave and moral judge to stand strong and/or some modest 4th amendment which stops or slows the sweep and buys time.

there was some talk about a paid for implicit guarantee...yes, i know this sounds absurd, but a fee for the status of FnF as duopolies subject to utility type regulation.

whenever there is talk of an explicit guarantee, you never hear how much (all mbs? only going forward mbs?), how it would blow debt ceiling etc

I'm not saying your idea is better or worse than mnuchin's.  but he said in a House hearing earlier this year he prefers an explicit guaranty on the securities, and i'm thinking he's likely thought through the issues you bring up.   in general, he's a direct / blunt guy.   and according to his wife, he's stubborn.  i'm not going to assume he wants something different than what he says on this matter.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9684 on: April 09, 2018, 06:13:28 PM »
Quote
so what specifically do you think will happen for the next 5 years -- status quo in conservatorship?  if not, what do you specifically envision happening in a restructuring that torpedo's the minority shareholders from these levels?

I expect nothing to happen, everything remains as it is. as I mentioned before, I donít see a pressing problem. Kicking the can down the road, is common in politics , even more so, if there is no issue with the can. The chances of a lawsuit driving a change are already very slim after 10 years and so many losses.

ok, fair enough.   it's certainly a possibility.   on the other side, the boss in this situation (if you believe that trump doesn't care much about it) has said on multiple occasions he does not want the status quo conservatorship to continue indefinitely and also that he has, apparently, the power to make that happen administratively if necessary.   once again, i dont want to assume he's lying.  certainly he's not shy about avoiding commentary when it suits his preferences, so i rely on attempting to interpret his actions and words to the best of my ability.   


cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9685 on: April 09, 2018, 07:14:57 PM »
Quote
so what specifically do you think will happen for the next 5 years -- status quo in conservatorship?  if not, what do you specifically envision happening in a restructuring that torpedo's the minority shareholders from these levels?

I expect nothing to happen, everything remains as it is. as I mentioned before, I donít see a pressing problem. Kicking the can down the road, is common in politics , even more so, if there is no issue with the can. The chances of a lawsuit driving a change are already very slim after 10 years and so many losses.

ok, fair enough.   it's certainly a possibility.   on the other side, the boss in this situation (if you believe that trump doesn't care much about it) has said on multiple occasions he does not want the status quo conservatorship to continue indefinitely and also that he has, apparently, the power to make that happen administratively if necessary.   once again, i dont want to assume he's lying.  certainly he's not shy about avoiding commentary when it suits his preferences, so i rely on attempting to interpret his actions and words to the best of my ability.   

optionality is a big GS thing and it means that if you act you lose your options, so dont act until you have to, which means that when you do act you will do so with as much info at that late point as you are ever going to get

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9686 on: April 10, 2018, 03:49:38 AM »
Mnuchin has never said that he wants explicit guarantee. He always said 'if' needed. One video here at 29:15

https://www.c-span.org/video/?428291-1/treasury-secretary-fire-glass-steagall-stance


I brought up earlier that explicit guarantee is dangerous for our country but you all did not think so. Even if it does not happen now, it could.

http://www.scmp.com/news/china/diplomacy-defence/article/2140933/china-should-look-beyond-us-treasuries-real-assets

https://www.bloomberg.com/news/articles/2018-03-23/china-s-ambassador-doesn-t-rule-out-reducing-treasury-purchases

in House testimony earlier this year, I believe he said explicit guaranty on the securities was his preference.

and you are right on his delays.  it has been quite disappointing to me relative to my incorrect (to date) expectations of him.  my best guess is this turned into more of a political football than he could handle and he needs an easier playing field with a new congress and/or a court loss to get what he wants done.

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9687 on: April 10, 2018, 01:57:08 PM »
I thought Preferreds were going to go to par in receivership and liquidation (if not Moelis). So how is averting receivership good for preferreds? Confirmation Bias?  I am missing something?

https://seekingalpha.com/article/4162112-gse-receivership-avoided

Not necessarily. If the senior pref liquidation stays in place, then it will absorb up to $193B of net worth (far more than would actually exist) before junior prefs or commons see anything, so juniors and commons would be zeroed out.

Even if the seniors are declared repaid, the companies have only just passed the 10% moment so their capital levels would still be very low. Enough to give maybe 10-20% of par to junior holders right now, and we are trading at the top end of that range. Receivership benefits noone.

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9688 on: April 11, 2018, 12:30:52 PM »
Another lawsuit was filed today. It looks like it was sent to Sweeney along with a bunch of the other NWS-related cases.

http://www.glenbradford.com/wp-content/uploads/2018/04/18-cv-00529-0001.pdf

I skimmed through the complaint but I can't see any real differences between the arguments made here and in other cases. If that's true wouldn't this case just get lumped in with others? And if so would the only purpose of this lawsuit be to participate in any damages awarded? This suit actually doesn't ask for injunctive relief (suspending or voiding the NWS). Instead it only asks for cold, hard cash (B,C,D,E in the prayer for relief at the end). I wonder how that will affect things?

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #9689 on: April 12, 2018, 10:16:59 AM »
I often wonder if the lawyers for FHFA and the government, who are no doubt smart people and aware of the situation of how the NWS went down, feel proud of themselves for waking up every day with a mission to shaft tens of thousands of Americans based on a technicality of how HERA was written?