Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3718080 times)

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10370 on: August 17, 2018, 04:17:50 AM »
Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.


Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10371 on: August 17, 2018, 06:27:18 AM »
Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.

Good point. If I understand (relevant part of) the SCOTUS Lucia case correctly, plaintiffs have the right to expect some sort of remedy on top of the courts just fixing the agency's structure to make it consitutional. If All American's desires are taken into account, hopefully Collins's wish for the NWS to be unwound is as well.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10372 on: August 17, 2018, 07:24:23 AM »
I admire the board's residual hope that the courts will deliver for the minority shareholders but I don't see it happening.   Perhaps there's some small chance that the claims court rules it was a taking (a long time from now, including appeals) but the preferred shares were trading below $2 when the NWS was implemented and so the payout would likely be modest. 

Imo, in the end after all appeals / deals / etc..., no investor windfalls will be allowed by the collective government apparatus, especially given the hedge fund narrative.  The market is saying that loud and clear (and this is not an under-researched / inefficient investment among the smart hf community). 

At this point, I believe we're betting on the powers that be coming together offering a fair compromise where all parties get some but not near all of what they believe is fair.  In that hoped-for scenario, the warrants would almost certainly stand (rather than some random subjective sr pref conversion like Tim Rood suggests) and jr preferred would be either surrendered via voluntary tender or converted to common around 50-75pct of par, while the sr pref would be retired in line with the full original 10pct interest + principal payment conclusion.   The warrants can build the wall as Trump's backup plan if Congress doesn't fund it.

Good luck to everyone.  This scandal has been a disappointing yet mostly unnoticed blemish on our country and I truly hope that the current administration sees this as a real priority to quickly fix starting in about 3-5 months.  Thousands of Americans are counting on them to do the right thing. 

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10373 on: August 17, 2018, 07:36:12 AM »
I think you are pretty spot on at this point. Owning the GSEs today is a bet that the admin will resolve the situation, not that we will win in court. What's interesting about the litigation is as you highlighted, no one gives it any weight these days and assigning close to zero probability for any favorable result (just look at the last 3 court cases we lost, almost zero price reaction). Meaning we may wake up one morning to a nice surprise (as low as a probability that may be...). There is also no denying that we are beginning to see a shift in the type of questioning the judges are beginning to ask the defendants (see Collins and Saxton). For example, when has a judge in oral argument blatantly concluded that this was a nationalization? That's not to lose focus of the purpose of the litigation. It's to let the government know we aren't going anywhere, and if we win one of these cases, lets do what's best for everyone and settle with a recap release that's beneficial to all parties involved (the government, the shareholders, and most importantly the American people/tax payers).

"So you're telling me there's a chance!"


I admire the board's residual hope that the courts will deliver for the minority shareholders but I don't see it happening.   Perhaps there's some small chance that the claims court rules it was a taking (a long time from now, including appeals) but the preferred shares were trading below $2 when the NWS was implemented and so the payout would likely be modest. 

Imo, in the end after all appeals / deals / etc..., no investor windfalls will be allowed by the collective government apparatus, especially given the hedge fund narrative.  The market is saying that loud and clear (and this is not an under-researched / inefficient investment among the smart hf community). 

At this point, I believe we're betting on the powers that be coming together offering a fair compromise where all parties get some but not near all of what they believe is fair.  In that hoped-for scenario, the warrants would almost certainly stand (rather than some random subjective sr pref conversion like Tim Rood suggests) and jr preferred would be either surrendered via voluntary tender or converted to common around 50-75pct of par, while the sr pref would be retired in line with the full original 10pct interest + principal payment conclusion.   The warrants can build the wall as Trump's backup plan if Congress doesn't fund it.

Good luck to everyone.  This scandal has been a disappointing yet mostly unnoticed blemish on our country and I truly hope that the current administration sees this as a real priority to quickly fix starting in about 3-5 months.  Thousands of Americans are counting on them to do the right thing.

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10374 on: August 17, 2018, 07:40:49 AM »
I admire the board's residual hope that the courts will deliver for the minority shareholders but I don't see it happening.   Perhaps there's some small chance that the claims court rules it was a taking (a long time from now, including appeals) but the preferred shares were trading below $2 when the NWS was implemented and so the payout would likely be modest. 

Imo, in the end after all appeals / deals / etc..., no investor windfalls will be allowed by the collective government apparatus, especially given the hedge fund narrative.  The market is saying that loud and clear (and this is not an under-researched / inefficient investment among the smart hf community). 

At this point, I believe we're betting on the powers that be coming together offering a fair compromise where all parties get some but not near all of what they believe is fair.  In that hoped-for scenario, the warrants would almost certainly stand (rather than some random subjective sr pref conversion like Tim Rood suggests) and jr preferred would be either surrendered via voluntary tender or converted to common around 50-75pct of par, while the sr pref would be retired in line with the full original 10pct interest + principal payment conclusion.   The warrants can build the wall as Trump's backup plan if Congress doesn't fund it.

Good luck to everyone.  This scandal has been a disappointing yet mostly unnoticed blemish on our country and I truly hope that the current administration sees this as a real priority to quickly fix starting in about 3-5 months.  Thousands of Americans are counting on them to do the right thing.
The public comment period set by FHFA has a November 16th deadline. If the first action to take place -as per Moelis- is for Watt to request the companies to work on a recapitalization program, your hope of a 3 to 5 months resolution falls squarely within this time frame as Watt may not announce anything immediately after the deadline.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10375 on: August 17, 2018, 10:32:52 AM »
Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.

while I am sure all American is making statutory claims as well in district court, the procedural posture of case is interlocutory appeal, so the statutory claims have not been heard in district court, so this is not a case like PHH where the relief sought could be granted by means other than the constitutional claim.  so AA has to be seeking the same relief as collins

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10376 on: August 17, 2018, 10:33:52 AM »
Do you know what remedy the All American case is seeking exactly? Is it similar to undoing a previous action while under a unconstitutional regime like the plaintiffs want with the NWS? If so that is indeed positive, assuming the 5th circuit takes up the issue.

Good point. If I understand (relevant part of) the SCOTUS Lucia case correctly, plaintiffs have the right to expect some sort of remedy on top of the courts just fixing the agency's structure to make it consitutional. If All American's desires are taken into account, hopefully Collins's wish for the NWS to be unwound is as well.

this is what Lucia says.  even intimated in prior scotus cases.  we shall see

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10377 on: August 17, 2018, 12:52:19 PM »
http://www.glenbradford.com/wp-content/uploads/2018/08/18-01226-0001.pdf

So Perry Capital now seeks compensation and brings up the nationalization issue. On behalf of the funds he represents. Depending on what/how Saxton's court rules this may move forward? And if so, what happens to us that are not represented by Perry as investment manager? What recourse do we have? File a lawsuit?

Quote
PRAYER FOR RELIEF WHEREFORE,

Plaintiff seeks a judgment as follows:

A. Awarding Plaintiff just compensation under the Fifth Amendment for the government’s taking of its property;
B. Awarding Fannie and Freddie just compensation under the Fifth Amendment for the government’s taking of their property;
C. Awarding Plaintiff damages for the government’s illegal exaction of its stock;
D. Awarding Fannie and Freddie damages for the government’s illegal exaction of their net worth;
E. Awarding Plaintiff damages for the government’s breach of fiduciary duty;
F. Awarding Fannie and Freddie damages for the government’s breach of fiduciary duty;
G. Awarding Plaintiff damages for the government’s breach of implied-in-fact contract;
H. Awarding Fannie and Freddie damages for the government’s breach of implied in-fact contract;
I. Awarding Plaintiff pre-judgment and post-judgment interest;
J. Awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees, costs and expenses; and
K. Granting such other and further relief as the Court deems just and proper.

Interesting everybody is turning towards the nationalization theme.

P.S. I have the stock certificates from 2010 for all my preferred shares. Is there such a thing as calling counsel and asking to join?
« Last Edit: August 18, 2018, 08:11:34 AM by rros »

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10378 on: August 19, 2018, 08:45:42 AM »
this is total speculation, and I don't even know what the upshot of it might be, but notice that we have two young-ish former state Supreme Court judges, willett and stas, each of whom have been recently appointed to federal circuits and been prominently mentioned as future scotus nominees.

willett has come out in collins with a tour de force dissent on the APA claim (NWS outside conservator's authority).  next up is stas in saxton.

now, understanding that from a "realist" point of view, judges are indeed concerned with their future prospects and renown, one wonders whether stas will follow willett's path and write a strident opinion or just go along with his panel's trend.

will willett's dissent encourage stas to "hold serve" and if so what would be the result?

believe me, judges are aware of their press clippings and willett and stas clearly form a cohort of two. if and how that affects stas with respect to his consideration of the APA claim is something unknowable, but I don't doubt that stas has considered it when he reads willett's dissent.

allnatural

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10379 on: August 19, 2018, 03:50:59 PM »
Although i'm holding out hope, I'm not sure Judge Stras is our man in Saxton. He was the one who thought NWS was a nationalization and that plaintiffs best argument was that FHFA was at the will of the Treasury. He didn't appear to bite on APA violation as he seemed to conclude that a conservator under HERA is a different beast than common law conservatorship, and was the one who pointed out that shall was used in other parts of HERA, so why not here. Unless Willet's dissent is enough to persuade him, his mind might already be made up on APA.

I thought Judge Benton was better for us as he highlighted multiple times that the Cedarminn case was plaintiffs best argument and the defendants really had no response to him. Judge Kelly is the wild card I believe. She kept probing at what the outer-limits of the FHFA's powers was, and is there no situation where courts may question the business judgment of the FHFA? But she was appointed by Obama in 2013 and we know how politically driven our justice system is.
« Last Edit: August 19, 2018, 03:56:59 PM by allnatural »