investorG Posted February 24, 2017 Share Posted February 24, 2017 if we are lucky to get that far, this would be one of the most scrutinized negotiations of all time because the value is so high. court cases and the 12k documents are wild cards --- as many here including me have learned the hard way -- but it's far higher odds than not that there would be 'balance' in the negotiations when dividing up equity value between govt, preferreds, and common, once again, IF we are lucky to get that far and sr preferred gets retired. in fact, with this president's temperament, greed could cause him to flip against a side. good luck everyone! Link to comment Share on other sites More sharing options...
investorG Posted February 24, 2017 Share Posted February 24, 2017 But these are $0 strike warrants. Most anti-dilution provisions will reduce the strike or allow for participation in any new equity raise. When you have a $0 strike with no limits on the increase in warrant issuance in front of any equity raise, it makes the equity totally uninvestable. I don't think I've ever seen that before. It's such a great deal for the warrant holders that I can't imagine why they would amend the terms. because they need to raise 75-100bn of equity and preferred only gets 20bn = big hole. therefore, it's essential to clarify the terms which is the likely scenario. the lack of respect for mnuchin and cohn's deal expertise is surprising to me -- these guys are animals to have climbed to the top at GS. Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted February 24, 2017 Share Posted February 24, 2017 But these are $0 strike warrants. Most anti-dilution provisions will reduce the strike or allow for participation in any new equity raise. When you have a $0 strike with no limits on the increase in warrant issuance in front of any equity raise, it makes the equity totally uninvestable. I don't think I've ever seen that before. It's such a great deal for the warrant holders that I can't imagine why they would amend the terms. because they need to raise 75-100bn of equity and preferred only gets 20bn = big hole. therefore, it's essential to clarify the terms which is the likely scenario. the lack of respect for mnuchin and cohn's deal expertise is surprising to me -- these guys are animals to have climbed to the top at GS. Quite the opposite. Their expertise and ability to creatively arrive at a solution that I am not capable of thinking of that a) benefits taxpayers b) helps his buddies c) screws me is exactly why I'm considering selling. Link to comment Share on other sites More sharing options...
investorG Posted February 24, 2017 Share Posted February 24, 2017 But these are $0 strike warrants. Most anti-dilution provisions will reduce the strike or allow for participation in any new equity raise. When you have a $0 strike with no limits on the increase in warrant issuance in front of any equity raise, it makes the equity totally uninvestable. I don't think I've ever seen that before. It's such a great deal for the warrant holders that I can't imagine why they would amend the terms. because they need to raise 75-100bn of equity and preferred only gets 20bn = big hole. therefore, it's essential to clarify the terms which is the likely scenario. the lack of respect for mnuchin and cohn's deal expertise is surprising to me -- these guys are animals to have climbed to the top at GS. Quite the opposite. Their expertise and ability to creatively arrive at a solution that I am not capable of thinking of that a) benefits taxpayers b) helps his buddies c) screws me is exactly why I'm considering selling. right --- if you think his goal is to screw common, then getting out makes sense. I just strongly disagree that's his motive. when there is combined 150bn+ of equity value and currently the combined common and preferred shares are worth $5bn and $10bn respectively, I am betting there is excellent room for both of those #'s to move higher and STILL give the taxpayer and new equity entrants a piece as well = balance in a highly scrutinized transaction. if the share prices were higher then my view is more dangerous. but the valuations are so low. Link to comment Share on other sites More sharing options...
rros Posted February 24, 2017 Share Posted February 24, 2017 But these are $0 strike warrants. Most anti-dilution provisions will reduce the strike or allow for participation in any new equity raise. When you have a $0 strike with no limits on the increase in warrant issuance in front of any equity raise, it makes the equity totally uninvestable. I don't think I've ever seen that before. It's such a great deal for the warrant holders that I can't imagine why they would amend the terms. because they need to raise 75-100bn of equity and preferred only gets 20bn = big hole. therefore, it's essential to clarify the terms which is the likely scenario. the lack of respect for mnuchin and cohn's deal expertise is surprising to me -- these guys are animals to have climbed to the top at GS. Quite the opposite. Their expertise and ability to creatively arrive at a solution that I am not capable of thinking of that a) benefits taxpayers b) helps his buddies c) screws me is exactly why I'm considering selling. right --- if you think his goal is to screw common, then getting out makes sense. I just strongly disagree that's his motive. when there is combined 150bn+ of equity value and currently the combined common and preferred shares are worth $5bn and $10bn respectively, I am betting there is excellent room for both of those #'s to move higher and STILL give the taxpayer and new equity entrants a piece as well = balance in a highly scrutinized transaction. if the share prices were higher then my view is more dangerous. but the valuations are so low. This is possible with Jrs. taking a cut and the government offering a decent strike price that leaves room for the final count of common shares to still run. Only way to get some money back to the taxpayer. Link to comment Share on other sites More sharing options...
investorG Posted February 24, 2017 Share Posted February 24, 2017 Being new to the story... Why is almost everyone assuming that the preferreds have to be converted into common shares? Do they have to be redeemed or they all are perpetual? If they were simply left outstanding, we are looking at an annual payment of roughly $1 billion/year for Fannie which they obviously can cover. Regarding new capital, both companies obviously don't need any since the government with their Sweep takes everything home and they come back the year after taking again a similar sum with them making the same amount of profits. While I understand that they will need a cushion for leaner years, how much would that be considering that they would build that back relatively quickly without the NWS and their operations being more tightly regulated as they are now. Is Bassel or other applying to them? Cardboard FNMA would need at least 75bn of equity on a 3trn balance sheet. they would start from 0 (or actually negative on a tangible equity ratio which doesnt include the DTA). so sending capital out (preferred dividends) would be bad and raising common equity faster (preferred conversion) would be good. i don't think they can force a conversion but if they said no dividends on preferreds for many years, then the voluntary portion might become popular quickly. the one risk to my view is that they would recap with preferred rather than common, which i doubt, but in that case the preferred divs would need to be turned on (rather than any exchange) and/or the legacy preferred called in when appropriate @ par. Link to comment Share on other sites More sharing options...
investorG Posted February 24, 2017 Share Posted February 24, 2017 This is possible with Jrs. taking a cut and the government offering a decent strike price that leaves room for the final count of common shares to still run. Only way to get some money back to the taxpayer. imo there is room for the taxpayer to make out well and not have the juniors take a cut. after all the dilution analysis is circular such that if we are fortunate to have a plan come together, the shares could rally and the new equity raised would add fewer shares than currently feared. i personally doubt the admin wants to squeeze every last dollar out for the taxpayer while overly-penalizing shareholders who they respect --- in a land of 20trn debt, 500bn deficits, and 70bn of cumulative GSE taxpayer net profits --- would the admin rather squeeze out 100bn of incremental profits vs 80bn and fairly sharing some with the shareholders? Link to comment Share on other sites More sharing options...
rros Posted February 24, 2017 Share Posted February 24, 2017 Being new to the story... Why is almost everyone assuming that the preferreds have to be converted into common shares? Do they have to be redeemed or they all are perpetual? If they were simply left outstanding, we are looking at an annual payment of roughly $1 billion/year for Fannie which they obviously can cover. Regarding new capital, both companies obviously don't need any since the government with their Sweep takes everything home and they come back the year after taking again a similar sum with them making the same amount of profits. While I understand that they will need a cushion for leaner years, how much would that be considering that they would build that back relatively quickly without the NWS and their operations being more tightly regulated as they are now. Is Bassel or other applying to them? Cardboard They are not perpetual. Leaving them alone will be the easiest. But politically controversial. I believe the conservator can only terminate the conservatorship once it deems the companies fully capitalized. Link to comment Share on other sites More sharing options...
asterisk Posted February 24, 2017 Share Posted February 24, 2017 I apologize if they had been discussed before. Has anyone looked at or even knows how much preferred each hedge fund owns? Thank you! Link to comment Share on other sites More sharing options...
BeerBBQ Posted February 24, 2017 Share Posted February 24, 2017 fairholme owns about 20% of series S (fannie) and maybe 5-10% of other series (I think). Not sure about others... Link to comment Share on other sites More sharing options...
asterisk Posted February 24, 2017 Share Posted February 24, 2017 fairholme owns about 20% of series S (fannie) and maybe 5-10% of other series (I think). Not sure about others... Thank you. Link to comment Share on other sites More sharing options...
HalfMeasure Posted February 24, 2017 Share Posted February 24, 2017 Being new to the story... Why is almost everyone assuming that the preferreds have to be converted into common shares? Do they have to be redeemed or they all are perpetual? If they were simply left outstanding, we are looking at an annual payment of roughly $1 billion/year for Fannie which they obviously can cover. Regarding new capital, both companies obviously don't need any since the government with their Sweep takes everything home and they come back the year after taking again a similar sum with them making the same amount of profits. While I understand that they will need a cushion for leaner years, how much would that be considering that they would build that back relatively quickly without the NWS and their operations being more tightly regulated as they are now. Is Bassel or other applying to them? Cardboard FNMA would need at least 75bn of equity on a 3trn balance sheet. they would start from 0 (or actually negative on a tangible equity ratio which doesnt include the DTA). so sending capital out (preferred dividends) would be bad and raising common equity faster (preferred conversion) would be good. i don't think they can force a conversion but if they said no dividends on preferreds for many years, then the voluntary portion might become popular quickly. the one risk to my view is that they would recap with preferred rather than common, which i doubt, but in that case the preferred divs would need to be turned on (rather than any exchange) and/or the legacy preferred called in when appropriate @ par. I would imagine that capital requirements could be staged, i.e. instead of requiring 250bps of capital immediately, they could raise equity to get to 150bps and then force the companies to retain earnings until they reach 250bps (should take roughly 3 years). Link to comment Share on other sites More sharing options...
stevevri Posted February 24, 2017 Share Posted February 24, 2017 http://www.glenbradford.com/wp-content/uploads/2017/02/14-5243-1662092.pdf Does anyone know what this one means? Is the court considering an en banc review? Link to comment Share on other sites More sharing options...
undervalued Posted February 24, 2017 Share Posted February 24, 2017 Since no one posted this video yesterday of Mnuchin talking about housing reform specificly.. Here it is.. http://finance.yahoo.com/video/steven-mnuchin-housing-reform-priority-140034730.html?soc_src=social-sh&soc_trk=tw Link to comment Share on other sites More sharing options...
asterisk Posted February 24, 2017 Share Posted February 24, 2017 Since no one posted this video yesterday of Mnuchin talking about housing reform specificly.. Here it is.. http://finance.yahoo.com/video/steven-mnuchin-housing-reform-priority-140034730.html?soc_src=social-sh&soc_trk=tw So from now till the end of 2017 there should be a plan proposed. Link to comment Share on other sites More sharing options...
investorG Posted February 25, 2017 Share Posted February 25, 2017 hopefully someone will point out that i'm wrong but the filing in the sweeney court today suggests both that a) sessions led DOJ is still resisting releasing the 11k documents and b) the timing outline in sum suggests 1-2 years at least before a final ruling? Link to comment Share on other sites More sharing options...
Cardboard Posted February 25, 2017 Share Posted February 25, 2017 So Fannie Mae would need $75 billion of fresh, new capital? And what will they do with it? They don't need it today and send billions each year to Treasury. Cardboard Link to comment Share on other sites More sharing options...
onyx1 Posted February 25, 2017 Share Posted February 25, 2017 So Fannie Mae would need $75 billion of fresh, new capital? And what will they do with it? They don't need it today and send billions each year to Treasury. Cardboard Like any insurer, the GSEs need capital to absorb losses on the mortgages backing the $5 trillion in MBS they have guaranteed. They do need it today. Each quarter, the UST irresponsibly confiscates virtually all of their equity leaving them with no capital cushion. Link to comment Share on other sites More sharing options...
Desert_Rat Posted February 25, 2017 Share Posted February 25, 2017 I apologize if they had been discussed before. Has anyone looked at or even knows how much preferred each hedge fund owns? Thank you! If you consider how the preferred's trade - not much, you may agree with my assumption that 75% of them are owned by hedgies and banks which never dumped them. That and the fact the govt won't ultimately settle for theft has always been my interest in them. Link to comment Share on other sites More sharing options...
Desert_Rat Posted February 25, 2017 Share Posted February 25, 2017 hopefully someone will point out that i'm wrong but the filing in the sweeney court today suggests both that a) sessions led DOJ is still resisting releasing the 11k documents and b) the timing outline in sum suggests 1-2 years at least before a final ruling? I don't know anything about this but I'll say that I'm not surprised, if true. Sessions now works for the federal government, in support of its people, and those on this site who believe there's some handshake agreement in place to honor billion dollar investments made by associates or friends of those now in control should consider the implication of that. If I believed this were true I'd probably sell because you can't bank on unscrupulous. Link to comment Share on other sites More sharing options...
Mephistopheles Posted February 25, 2017 Share Posted February 25, 2017 Didn't Sessions just get the gig? He might not even have made it to these cases yet Link to comment Share on other sites More sharing options...
Sunrider Posted February 25, 2017 Share Posted February 25, 2017 I think this just means that the court either has received a request for a rehearing or en-banc hearing or it expects such to come. Chris/Merkhet? C. http://www.glenbradford.com/wp-content/uploads/2017/02/14-5243-1662092.pdf Does anyone know what this one means? Is the court considering an en banc review? Link to comment Share on other sites More sharing options...
Flynnstone5 Posted February 25, 2017 Share Posted February 25, 2017 hopefully someone will point out that i'm wrong but the filing in the sweeney court today suggests both that a) sessions led DOJ is still resisting releasing the 11k documents and b) the timing outline in sum suggests 1-2 years at least before a final ruling? I don't think you're wrong. The constant delays with this case are nothing short of incredible and does put the timeline way out there. Love to hear what the legal guys here make of Sessions - he would certainly be aware of this case and variables by now simply through his relationship with Cooper, no? Link to comment Share on other sites More sharing options...
investorG Posted February 25, 2017 Share Posted February 25, 2017 hopefully someone will point out that i'm wrong but the filing in the sweeney court today suggests both that a) sessions led DOJ is still resisting releasing the 11k documents and b) the timing outline in sum suggests 1-2 years at least before a final ruling? I don't think you're wrong. The constant delays with this case are nothing short of incredible and does put the timeline way out there. Love to hear what the legal guys here make of Sessions - he would certainly be aware of this case and variables by now simply through his relationship with Cooper, no? the only possible positive i can see from this is that now the plaintiffs believe a political solution is their best chance for success. and since the real debate on that is pushed out til later this year or 1h 2018 --- when mnuchin has leverage in terms of retiring the senior preferred on his own ---- that they want to keep the court cases alive as long as possible to have some additional leverage rather than risk having them all dismissed this year. Link to comment Share on other sites More sharing options...
muscleman Posted February 25, 2017 Share Posted February 25, 2017 I think this just means that the court either has received a request for a rehearing or en-banc hearing or it expects such to come. Chris/Merkhet? C. http://www.glenbradford.com/wp-content/uploads/2017/02/14-5243-1662092.pdf Does anyone know what this one means? Is the court considering an en banc review? Not sure why en banc is a good strategy. The whole appeals panel has 17 D and 4 R. Do you expect them to rule in plantiffs favor? Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now