FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[SnarkyPuppy]

Makes sense-thx

[typicalvalue]

Mediation Cancelled @ Michael Rop, et al v. FHFA. Not sure if it means something alone, but at this point every leaf falling off the tree could be a clue.

[orthopa]

Mediation Cancelled @ Michael Rop, et al v. FHFA. Not sure if it means something alone, but at this point every leaf falling off the tree could be a clue.

 

So meaning that the case will continue forward? Not sure how this means anything if at all. Preferred trading up today on OK volume. My read was speculation on capital rule timing then the mediation cancellation.

[DocSnowball]

Mediation Cancelled @ Michael Rop, et al v. FHFA. Not sure if it means something alone, but at this point every leaf falling off the tree could be a clue.

 

So meaning that the case will continue forward? Not sure how this means anything if at all. Preferred trading up today on OK volume. My read was speculation on capital rule timing then the mediation cancellation.

 

Isn't the short term price movement just related to news flow about next steps, esp looking back over all these many years? Nothing has materially happened all this time for it to be considered true "insider trading" based on material information. The times there has been major price movement up or down has been either public statements about release from conservatorship or court verdicts.

[Luke 532]

The FHFA’s final capital rule for Fannie and Freddie is out. Maintains 4 percent requirement

[orthopa]

Mediation Cancelled @ Michael Rop, et al v. FHFA. Not sure if it means something alone, but at this point every leaf falling off the tree could be a clue.

 

So meaning that the case will continue forward? Not sure how this means anything if at all. Preferred trading up today on OK volume. My read was speculation on capital rule timing then the mediation cancellation.

 

Isn't the short term price movement just related to news flow about next steps, esp looking back over all these many years? Nothing has materially happened all this time for it to be considered true "insider trading" based on material information. The times there has been major price movement up or down has been either public statements about release from conservatorship or court verdicts.

 

Yes major movements after public statements mostly. Could obviously be random and nothing capital rule is next so maybe some speculation on the release of that.

[orthopa]

The FHFA’s final capital rule for Fannie and Freddie is out. Maintains 4 percent requirement

 

There we go it was that!

 

[Midas79]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

[Luke 532]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

Very nice!

 

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

[orthopa]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

any link to the piece?

[orthopa]

I think you have a good point about the money.  There is a gold rush in mortgage finance right now across originators, brokers, the whole industry.  Brickman could be making a lot more money than his current paycheck.  He could get involved w/ a finance SPAC.  There must be a dozen more lucrative options.

 

Which leads to the facts... do the pay limitations fall off upon a c-ship exit?  Or are they legislatively set in stone forever?

 

As an aside, WSJ is a marquis paper of the highest journalist standards.  Disagree w/ any idea that their reporting isn't well sourced.

 

Ackerman is a hack, as was Joe Light before him

 

Based on Ackermans and Gaspirinos reporting both were way off on latest developments.

[typicalvalue]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

Very nice!

 

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

 

You were right on the rule timing Luke, congrats.

[COBFInfinity]

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

 

Current feelings: https://memepedia.ru/wp-content/uploads/2019/06/dont-give-me-hope-meme-3-768x409.jpg

 

[Guest cherzeca]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

Very nice!

 

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

 

curious how this will play out, specifically what voice Ps have in this.  I would think Ps would have a place at the negotiating table, as why would T/FHFA amend PSPA and leave Collins outstanding?  I have read some rumoring that FHFA/T may just amend as they see fit, and let Collins continue....which would be a big time amateur hour by FHFA/T

[onyx1]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

Very nice!

 

https://twitter.com/hannahdlang/status/1329171755425013769

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

 

curious how this will play out, specifically what voice Ps have in this.  I would think Ps would have a place at the negotiating table, as why would T/FHFA amend PSPA and leave Collins outstanding?  I have read some rumoring that FHFA/T may just amend as they see it, and let Collins continue....which would be a big time amateur hour by FHFA/T

 

 

Is a two-party agreement required to drop Collins, or is it at the option of either party?

[Guest cherzeca]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

Very nice!

 

https://twitter.com/hannahdlang/status/1329171755425013769

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

 

curious how this will play out, specifically what voice Ps have in this.  I would think Ps would have a place at the negotiating table, as why would T/FHFA amend PSPA and leave Collins outstanding?  I have read some rumoring that FHFA/T may just amend as they see it, and let Collins continue....which would be a big time amateur hour by FHFA/T

 

 

Is a two-party agreement required to drop Collins, or is it at the option of either party?

 

if I were T I would tell fhfa that I would want Ps dropping collins as a condition of the 4thA.  so Ps dont sign 4thA, but they have to drop collins in order to bring T's pen to paper

[onyx1]

From Joe Light's Bloomberg piece:

 

The FHFA has also begun a push in earnest to amend Fannie’s and Freddie’s bailout agreements with the Treasury Department. A different senior FHFA official said the agency and Treasury Department are actively negotiating an amendment, which the FHFA wants to finalize this year.

 

The stars appear to be aligning...

 

Very nice!

 

https://twitter.com/hannahdlang/status/1329171755425013769

Per FHFA officials, the move to finalize the capital requirement tees up FHFA and Treasury making amendments to the PSPAs to end the net worth sweep sometime before the end of this year, which would allow the GSEs to retain all of their earnings. (Current cap is $45 bil)

 

curious how this will play out, specifically what voice Ps have in this.  I would think Ps would have a place at the negotiating table, as why would T/FHFA amend PSPA and leave Collins outstanding?  I have read some rumoring that FHFA/T may just amend as they see it, and let Collins continue....which would be a big time amateur hour by FHFA/T

 

 

Is a two-party agreement required to drop Collins, or is it at the option of either party?

 

if I were T I would tell fhfa that I would want Ps dropping collins as a condition of the 4thA.  so Ps dont sign 4thA, but they have to drop collins in order to bring T's pen to paper

 

Thanks, I understand why Cherzeca-UST would demand Ps drop Collins.  I also understand the self preservation argument that Ps will drop it on their own or face a failed recap.

 

What would a Cherzeca-UST demand of the Lamberth P's?

[Luke 532]

You were right on the rule timing Luke, congrats.

 

Thanks, I appreciate it!  But my source should get all the credit. 

[SnarkyPuppy]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par. 

[typicalvalue]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par.

 

Market seems it has given up on this trade. Its the only explanation I see to pfds trading significaly below 2019 highs. It will be a slow recognizion

[Guest cherzeca]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par.

 

Market seems it has given up on this trade. Its the only explanation I see to pfds trading significaly below 2019 highs. It will be a slow recognizion

 

my only thought re current market valuation is that politics have reintroduced risk in the trade that wasn't front and center in last year or so. before election, it was a question of whether fhfa/T could get act together. now it is whether they can do so before getting the boot.  just like typical bureaucrats, C/Mn won't do anything until they are forced to

[DocSnowball]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par.

 

Where do you see the explicit reference in the rule to a consent decree? Thanks in advance for your response!

[DocSnowball]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par.

 

Where do you see the explicit reference in the rule to a consent decree? Thanks in advance for your response!

 

I think I see it searching for consent order - page 22 and pages 140-145:

 

"The final rule provides a transition period to permit each Enterprise to develop the internal models required by the final rule. Specifically, the advanced approaches requirements generally will apply to an Enterprise on the later of January 1, 2025 and any later compliance date specific to those requirements provided in a consent order or other transition order applicable to the Enterprise. During the transition period, each Enterprise’s market risk capital requirement will be equal to its measure for spread risk, determined as contemplated by the proposed rule’s standardized approach."

 

Sounds positive but not enough for me to increase position size from 5%. Didn't we know this already?

[SnarkyPuppy]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par.

 

Where do you see the explicit reference in the rule to a consent decree? Thanks in advance for your response!

 

I think I see it searching for consent order - page 22 and pages 140-145:

 

"The final rule provides a transition period to permit each Enterprise to develop the internal models required by the final rule. Specifically, the advanced approaches requirements generally will apply to an Enterprise on the later of January 1, 2025 and any later compliance date specific to those requirements provided in a consent order or other transition order applicable to the Enterprise. During the transition period, each Enterprise’s market risk capital requirement will be equal to its measure for spread risk, determined as contemplated by the proposed rule’s standardized approach."

 

Sounds positive but not enough for me to increase position size from 5%. Didn't we know this already?

 

I believe the only acknowledgement previously was Calabria's verbal statements.  I am not advising you on your position size lol

[COBFInfinity]

So you have a significant unknown (timing of capital plan) that has become known.  You have explicit references in the rule to a consent decree which will make the post inauguration transition concrete.  And you have a Bloomberg article (generally anti-shareholder publication) explicitly discussing active negotiations with respect to the PSPA amendment, which is no surprise to those following closely who have an ability to read. 

 

And then you have the preferreds trading at ~30-35% of Par.

 

Market seems it has given up on this trade. Its the only explanation I see to pfds trading significaly below 2019 highs. It will be a slow recognizion

 

Simply put, the junior preferred isn't worth much unless the senior preferred is written down. We've been led to believe that will happen, but until it does the JPS probably won't go much higher. But if the senior preferred is written down, I think Mr. Market's recognition will be very rapid.