Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 4927729 times)

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15940 on: September 18, 2020, 07:33:52 AM »
I listened to parts of Calabria's testimony at HFSC and I get the impression that Calabria knows exactly what the final rule will look like.  I don't expect the % levels to change, I do expect some more credit to be given to CRTs, and I expect the rule's % levels to be phased in over time.  I think Calabria thinks that this phase in will avoid the necessity of raising G fees while still allowing the capital market offerings spread over time to be successful.  the upside to all of this is that I think Calabria could finalize the rule rather quickly if he wants to. 


Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15941 on: September 18, 2020, 07:42:59 AM »
My optimism is starting to wain with speed of things. All it took was to remember the captial rule was supposed to be published for comment by the end of 2019 and here we are ~1 year since Calabria made that comment.

Calabria actually did address this in the hearing. He said the rule was supposed to be out in March and was delayed by the pandemic. In a late February interview he said that the rule would be released "in the coming weeks, months" so while he did cover his bases there, it does sound like he was ready to release it earlier.

To be fair, that is still 3 months after the end of 2019, and the delays are certainly frustrating. At this point, you either trust the administration to get things done in the lame duck period or you don't. And if you don't, it probably isn't worth holding. I think the shares will take a moderate to large short-term dip if Biden wins, but will have a similar-sized rally if Trump wins, so I'm just going to hold through the election.

Edit: this doesn't take into account the lopsidedness of Biden and Trump's respective chances of winning, but if there's anything I learned from the 2016 presidential election it's that I have become very hesitant to ever give a major-party presidential candidate a less than 45% chance of winning no matter what the polls say.
« Last Edit: September 18, 2020, 09:00:05 AM by Midas79 »

Midas79

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15942 on: September 18, 2020, 08:11:37 AM »
I listened to parts of Calabria's testimony at HFSC and I get the impression that Calabria knows exactly what the final rule will look like.  I don't expect the % levels to change, I do expect some more credit to be given to CRTs, and I expect the rule's % levels to be phased in over time.  I think Calabria thinks that this phase in will avoid the necessity of raising G fees while still allowing the capital market offerings spread over time to be successful.  the upside to all of this is that I think Calabria could finalize the rule rather quickly if he wants to.

I sure hope he is doing this on the advice of, rather than in spite of, advice from the financial advisors. I also hope he is in contact with JPM and MS rather than only listening to HL; no disrespect to HL but this has to be a team effort and JPM/MS's experience and clout are invaluable.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15943 on: September 18, 2020, 09:01:41 AM »
I listened to parts of Calabria's testimony at HFSC and I get the impression that Calabria knows exactly what the final rule will look like.  I don't expect the % levels to change, I do expect some more credit to be given to CRTs, and I expect the rule's % levels to be phased in over time.  I think Calabria thinks that this phase in will avoid the necessity of raising G fees while still allowing the capital market offerings spread over time to be successful.  the upside to all of this is that I think Calabria could finalize the rule rather quickly if he wants to.

I sure hope he is doing this on the advice of, rather than in spite of, advice from the financial advisors. I also hope he is in contact with JPM and MS rather than only listening to HL; no disrespect to HL but this has to be a team effort and JPM/MS's experience and clout are invaluable.

HL doesn't practice in the big public capital markets.  they mostly do financial advisory work (with expertise in bankruptcy) and private placements.  so absolutely JPM/MS are the ones to listen to...but I wouldn't be surprised if JPM/MS talks to HL, and then HL talks to Calabria.  no reason to think HL filters anything, but they are there to provide quality control over JPM/MS, so HL is in the position to make sure that JPM/MS advice sounds right before the message gets to Calabria.

Williams406

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15944 on: September 18, 2020, 11:10:37 AM »


My optimism is starting to wain with speed of things. All it took was to remember the captial rule was supposed to be published for comment by the end of 2019 and here we are ~1 year since Calabria made that comment.
[/quote]

Reading Tim Howard's take on Calabria's comments related to the GSE's poor corporate culture is the latest Huh? moment for me with respect to Calabria. The capital rule levels were another. I've wanted to add to my preferred position many times over the past year, but just can't get confident enough to do so. Having the advisers engaged is a big positive, but I'm much less confident in the principal players than I was during the Otting "all in alignment" days. I think the ball gets over the end line here, but it will have been more of a three-yards-and-a-cloud-of-dust grind than it probably had to be. And we aren't there yet.

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15945 on: September 18, 2020, 12:16:38 PM »


My optimism is starting to wain with speed of things. All it took was to remember the captial rule was supposed to be published for comment by the end of 2019 and here we are ~1 year since Calabria made that comment.

Reading Tim Howard's take on Calabria's comments related to the GSE's poor corporate culture is the latest Huh? moment for me with respect to Calabria. The capital rule levels were another. I've wanted to add to my preferred position many times over the past year, but just can't get confident enough to do so. Having the advisers engaged is a big positive, but I'm much less confident in the principal players than I was during the Otting "all in alignment" days. I think the ball gets over the end line here, but it will have been more of a three-yards-and-a-cloud-of-dust grind than it probably had to be. And we aren't there yet.
[/quote]

well said.  I am extraordinarily frustrated with Calabria, and his comment re GSE culture was outrageous, considering his predecessor at FHFA was credibly charged with sexual harassment. however, I come back to collins, and I am reasonably confident of Ps chances on both claims.  even if there is some new numbnuts fhfa director appointed by potus Biden (G*d forbid) a collins win is very good for the junior prefs.
« Last Edit: September 18, 2020, 12:48:50 PM by cherzeca »

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15946 on: September 18, 2020, 12:31:34 PM »
The capital rule delay, assuming the final rule comes out by Halloween, may be orchestrated such that a potential 4th amendment / settlement in the lame duck session looks less 'lame' than if the rule was finalized in May - Mnuchin can say he needed to wait for it.

If Trump wins, I'd expect things to progress slowly but hopefully with higher likelihood of success.  Collins goes to trial, Calabria remains entrenched high on power.  If Tsy wins Collins, then the sr pref is partially monetized and if they lose the courts give Mnuchin the cover he likely covets.

If T loses, it obviously gets dicey.  From what I've read here Calabria can stay in power post Jan-21, perhaps a lot longer, if Mnuchin does the right thing and settles Collins before the admin turnover (which obviously is a big if).   A new legal challenge to Calabria's constitutionality would have to arise which could take years to flow through the system.  This would be a potential scenario consistent with Calabria's testimony, unless I'm mistaken above.   

cherzeca

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15947 on: September 18, 2020, 12:50:49 PM »
the whole question of fhfa director removal is before scotus, likely to be decided in march. so I don't see Calabria going anywhere until then if Biden wins.

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15948 on: September 18, 2020, 01:00:34 PM »
the whole question of fhfa director removal is before scotus, likely to be decided in march. so I don't see Calabria going anywhere until then if Biden wins.

if Mnuchin settles collins wouldn't the fhfa director removal go away also - and so a challenge to his constitutionality would start anew?

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15949 on: September 18, 2020, 03:21:16 PM »
My optimism is starting to wain with speed of things. All it took was to remember the captial rule was supposed to be published for comment by the end of 2019 and here we are ~1 year since Calabria made that comment.

Calabria actually did address this in the hearing. He said the rule was supposed to be out in March and was delayed by the pandemic. In a late February interview he said that the rule would be released "in the coming weeks, months" so while he did cover his bases there, it does sound like he was ready to release it earlier.

To be fair, that is still 3 months after the end of 2019, and the delays are certainly frustrating. At this point, you either trust the administration to get things done in the lame duck period or you don't. And if you don't, it probably isn't worth holding. I think the shares will take a moderate to large short-term dip if Biden wins, but will have a similar-sized rally if Trump wins, so I'm just going to hold through the election.

Edit: this doesn't take into account the lopsidedness of Biden and Trump's respective chances of winning, but if there's anything I learned from the 2016 presidential election it's that I have become very hesitant to ever give a major-party presidential candidate a less than 45% chance of winning no matter what the polls say.

I should clarify that my optimism decreasing is more so in the speed of things happening, not so much the end game. I think at the end of this jr preferred gets par and Iím stubborn enough to hold till the end. Maybe its the 7 years of waiting since I started accumulating a position wearing on me.  :o

Its hard to figure out if Calabria is pandering to these ignorant bought for politician with their questions or really means what he says. Thatís exactly why a timeline some have discussed with unilateral (non election determined) action by the end of the year is becoming more doubtful. Calabria said he would begin discussions with Mnuchin about the NWS in May of 2019. There was the Sept 2019 amendment but the Treasurys liquidation preference was increased along with capital retention. That being said Calabria and Mnuchin have been discussing an amendment for 16 months! Sheesh.

In prepared speeches we have been told the time to build capital is now probably 6 times. We have been told the time to act is now 3-4 times. A bright spot was the firm capital rule comment period timeline. Maybe its just from being bludgeoned into submission by disappointment and missed guidelines for a year and a half (4 years including mnuchins comments day after election) but I donít see a reason to be optimistic yet timeline wise. If Trump wins and the case is argued in front of the SC is there not an expectation that this will not come down to the days before a ruling if at all for a settlement? If we remember the en banc decision conveniently came the day after the treasury plan after being delayed for months. Maybe its coincidence and of no significance or maybe there is a lot of higher level stuff going on that "they" will take down to the wire that us peons are not privy too.

That being said when this is all said and done count me out on the next heavily government involved investment. The discount that the preferred may have traded with at any point in time due to government involvement, delay, court etc etc FWIW is/was highly appropriate and warranted.
« Last Edit: September 18, 2020, 03:23:20 PM by orthopa »