Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 4622862 times)

orthopa

  • Hero Member
  • *****
  • Posts: 1335
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15970 on: September 19, 2020, 08:46:00 AM »
what happens if SCOTUS decides Collins with 8 justices and they split 4-4?

https://twitter.com/RuleofLawGuy1/status/1307316780302557184?s=20

Thanks cherzeca.

The logic would then follow that if RBG was a vote against Ps then any trump nominee should be a vote for. Senate would essentially be voting in someone who would on paper go against the own administration/Treasury/Mnuchin in this case.

Double the reason to try to move to a settlement. Maybe/hopefully this was the plan anway and none of this matters although its quite ironic.


Luke 5:32

  • Hero Member
  • *****
  • Posts: 2895
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15971 on: September 19, 2020, 10:57:10 AM »
what happens if SCOTUS decides Collins with 8 justices and they split 4-4?

https://twitter.com/RuleofLawGuy1/status/1307316780302557184?s=20

This is beautiful.
The Atheist Delusion, watch here: https://www.youtube.com/watch?v=ChWiZ3iXWwM

orthopa

  • Hero Member
  • *****
  • Posts: 1335
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15972 on: September 22, 2020, 10:36:17 AM »
https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA_StrategicPlan_9222020.pdf

Not a lot of meat for shareholders but pretty clear cut FHFA is going to end the conservatorship. Attention is paid to the fact 2021 is the start of the framework for ending the conservatorship. Unlikely a consent decree is enacted before the end of 2020 but even so still time before inauguration and if/when Calabria forced to leave.

Luke 5:32

  • Hero Member
  • *****
  • Posts: 2895
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15973 on: September 24, 2020, 07:32:34 AM »
https://twitter.com/ACGAnalytics/status/1309135699900276740

https://files.acg-analytics.com/wl/?id=shIIixOKejR2zEc8DlZsZiDRgmhHAutt

80%+ chance PSPA by inauguration day (if Trump loses)*

95% chance of SCOTUS unwinding NWS (obviously, if no settlement prior to their decision)

This equates to a 1% chance that neither happen: (1 - 0.95) x (1 - 0.20) = 0.01.  Or, in other words, a 99% chance we either (A) win SCOTUS or (B) PSPA by inauguration.

*Note: the 80% PSPA chance was from a few months ago during a call ACG opened to public, but they confirmed this week when I asked that % still valid.

In other words, my take-away, pricing of junior prefs represent a severe discount in the market that doesn't represent what is actually happening behind the scenes.
« Last Edit: September 24, 2020, 07:39:01 AM by Luke 5:32 »
The Atheist Delusion, watch here: https://www.youtube.com/watch?v=ChWiZ3iXWwM

SnarkyPuppy

  • Hero Member
  • *****
  • Posts: 905
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15974 on: September 24, 2020, 01:00:38 PM »
Sometimes the simple explanation is the best explanation. 

At this point in the history of these companies, who the hell else would be buying these shares? 

-You either have purchased or passed on the story by now. 
-There are no natural incremental buyers who care. 
-Combine this with Mike Green's thesis on passive flows taking from discretionary managers & the fact that these trade OTC and are excluded from ETFs/indexes.
-Add in perceived legal risk / election risk / timing risk / political risk.

The discount seems understandable if you aren't one of the few psychopaths who have followed this for years.   

Luke 5:32

  • Hero Member
  • *****
  • Posts: 2895
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15975 on: September 24, 2020, 05:31:50 PM »
The discount seems understandable if you aren't one of the few psychopaths who have followed this for years.

LOL, I agree.  I made a similar point to somebody earlier today.  I understand why they trade where they do, but those prices don't represent the actual risk/reward in the trade.  Big difference.
The Atheist Delusion, watch here: https://www.youtube.com/watch?v=ChWiZ3iXWwM

cherzeca

  • Hero Member
  • *****
  • Posts: 3576
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15976 on: September 24, 2020, 05:54:12 PM »
The discount seems understandable if you aren't one of the few psychopaths who have followed this for years.

LOL, I agree.  I made a similar point to somebody earlier today.  I understand why they trade where they do, but those prices don't represent the actual risk/reward in the trade.  Big difference.

GSEs are in a lot of "too hard" piles.  that creates opportunity/risk

orthopa

  • Hero Member
  • *****
  • Posts: 1335
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15977 on: September 25, 2020, 05:04:41 AM »
https://twitter.com/ACGAnalytics/status/1309135699900276740

https://files.acg-analytics.com/wl/?id=shIIixOKejR2zEc8DlZsZiDRgmhHAutt

80%+ chance PSPA by inauguration day (if Trump loses)*

95% chance of SCOTUS unwinding NWS (obviously, if no settlement prior to their decision)

This equates to a 1% chance that neither happen: (1 - 0.95) x (1 - 0.20) = 0.01.  Or, in other words, a 99% chance we either (A) win SCOTUS or (B) PSPA by inauguration.

*Note: the 80% PSPA chance was from a few months ago during a call ACG opened to public, but they confirmed this week when I asked that % still valid.

In other words, my take-away, pricing of junior prefs represent a severe discount in the market that doesn't represent what is actually happening behind the scenes.

Open question for the floor. Why isnt there a 100% chance the PSPA isnt done by inauguration day? If Trump is out, Mnuchin is out and Im not so sure I want a Biden appointed Treasury Secretary or underling negotiating with Calabria. Secondly if Trump loses what do either Calabria as an independent regular or lame duck Mnuchin have to lose negotiating the PSPA in the weeks after the election.

I cant think of a more common sense assumption regarding the PSPA if Trump loses and why that chance isnt 100%. Unless they want to dump the chance of a SC loss on a new administration.

Luke 5:32

  • Hero Member
  • *****
  • Posts: 2895
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15978 on: September 25, 2020, 07:38:42 AM »

Open question for the floor. Why isnt there a 100% chance the PSPA isnt done by inauguration day?

I have reason to believe she is actually much more confident than her publicly stated 80% chance, but I'm not at liberty to discuss details of that belief here in this forum.
The Atheist Delusion, watch here: https://www.youtube.com/watch?v=ChWiZ3iXWwM

cherzeca

  • Hero Member
  • *****
  • Posts: 3576
Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #15979 on: September 25, 2020, 08:13:21 AM »
here's how I think about it.  right now, govt's litigation strategy is 180 degrees opposite of its policy position.  continuing to litigate makes no sense if you want to implement policy of recapping GSEs. now, adopting that strategy took a lot of fortitude because many in congress oppose, but the administration held firm, and those opposing in congress have largely moved on to other sound bite opportunities.  but why continue to litigate if it is at odds with policy, now that congress is off the GSEs?

so the reason must be govt wants some form of political cover, together with the Goldman Sachs theory that you don't act until you have to, because different and better options may arise. Mnuchin was born and bred at Goldman.

now, what happens if Biden wins? my guess is that the wait for political cover will be over...in essence, letting Biden appoint Ds to DOJ/FHFA and have Parrott back holding the housing reins is political cover enough for Mnuchin/Calabria to act before inauguration to prevent this.  this is DC actor speculation, which ACG should know better than I do, but that is how this scenario makes sense to me.
« Last Edit: September 25, 2020, 11:19:04 AM by cherzeca »