Jump to content

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


twacowfca

Recommended Posts

Is there even a chance for them to place it in receivership? The companies are making so much money. The job market is at its highest. The companies will be making even more money as interest rates go up. What would be the basis for them to even consider it?

 

Political ill-will. Politics has nothing to do with good outcomes, logic, or solutions. It has everything to do with getting your way and/or making sure your opponent suffers.

 

Self interest. The NWS is immensely profitable for the government right now, why give it up? Mnuchin works for the government now and Trump, who will need every penny he can get hold of for his projects? Why give away the goose who lays golden eggs now every 6 month? I would expect the governement trying to dump FNM/FRE when the housing market goes bad and these entities become liabilities for them.

 

Who do you think would  be the best suitors for Fannie and Freddie when the housing market goes bad and wants to dump them? So the gov will keep the money now and then try to find buyers for trillions of dollars of securities when the market turns down?

 

Sounds like a great housing finance plan.  I can tell you put a lot of thought into this.

Link to comment
Share on other sites

  • Replies 16.7k
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Posted Images

Is there even a chance for them to place it in receivership? The companies are making so much money. The job market is at its highest. The companies will be making even more money as interest rates go up. What would be the basis for them to even consider it?

 

Political ill-will. Politics has nothing to do with good outcomes, logic, or solutions. It has everything to do with getting your way and/or making sure your opponent suffers.

 

Self interest. The NWS is immensely profitable for the government right now, why give it up? Mnuchin works for the government now and Trump, who will need every penny he can get hold of for his projects? Why give away the goose who lays golden eggs now every 6 month? I would expect the governement trying to dump FNM/FRE when the housing market goes bad and these entities become liabilities for them.

 

If this was the real line of reasoning, then tax reform would be off the table entirely.

Link to comment
Share on other sites

Is there even a chance for them to place it in receivership? The companies are making so much money. The job market is at its highest. The companies will be making even more money as interest rates go up. What would be the basis for them to even consider it?

 

Political ill-will. Politics has nothing to do with good outcomes, logic, or solutions. It has everything to do with getting your way and/or making sure your opponent suffers.

 

Self interest. The NWS is immensely profitable for the government right now, why give it up? Mnuchin works for the government now and Trump, who will need every penny he can get hold of for his projects? Why give away the goose who lays golden eggs now every 6 month? I would expect the governement trying to dump FNM/FRE when the housing market goes bad and these entities become liabilities for them.

 

Monetizing the warrants and maximizing the value of the common equity is in their self interest. Who cares about golden eggs into perpetuity? Only the next 4 and maybe 8 years is what matters.

Link to comment
Share on other sites

"From Trump University to his litany of failed projects and developments, Donald Trump is infamous for the bait and switch, selling fantasies of luxury, then ensnaring buyers in schemes of wealth extraction. As president, Trump is making this an ethos of government, promising to help the disadvantaged, and using that mandate to slash benefits and funnel tax dollars to the wealthy and connected. The Trump image always has been and continues to be a con, and we, the American public, have been had."  http://www.slate.com/articles/news_and_politics/politics/2017/03/trumpcare_proves_that_trump_s_promise_to_take_care_of_rural_voters_was_always.html?wpisrc=burger_bar

 

Link to comment
Share on other sites

I downsized my position earlier this week. I don't think Mnuchin (or Trump) will do anything for us, or rather my pessimism has increased lately, leading me to reduce my position.

 

How much did you reduce? 50%?

 

 

http://www.housingwire.com/blogs/1-rewired/post/39521-where-does-housing-finance-reform-stand-now#.WMFi_lbvV8Q.twitter

 

The panelists, pictured above, are all veterans of proposed GSE reform and included: Edward DeMarco, senior fellow in residence with the Milken Institute, Michael Bright, director at the Milken Institute Center for Financial Markets, Mark Zandi, chief economist at Moody’s Analytics, Jim Parrott, senior fellow at the Urban Institute and owner of Falling Creek Advisors, and Jim Millstein, founder and CEO of Millstein & Co.

 

Of the 5 panelists above, which reform is closestly aligned with current shareholders / pref holders? I know DeMarco and Parrot are working for the big banks so not good for current shareholders. How about the other 3 reforms?

Link to comment
Share on other sites

In a recent interview, Millstein was asked about the GSEs and conservatorship and he said the only thing that can work is the line of least resistance, which for him was a) recapitalize the entities, b) re-regulate them, c) end the conservatorship.
Link to comment
Share on other sites

FWIW people lightening up is what keeps the most bullish of us grounded and is a good thing. When everyone thinks an investment is a home run it usually isnt and vice versa.

Good remark, orthopa. Everytime there was a "las vegas" euphoria we know how it ended.
Link to comment
Share on other sites

"From Trump University to his litany of failed projects and developments, Donald Trump is infamous for the bait and switch, selling fantasies of luxury, then ensnaring buyers in schemes of wealth extraction. As president, Trump is making this an ethos of government, promising to help the disadvantaged, and using that mandate to slash benefits and funnel tax dollars to the wealthy and connected. The Trump image always has been and continues to be a con, and we, the American public, have been had."  http://www.slate.com/articles/news_and_politics/politics/2017/03/trumpcare_proves_that_trump_s_promise_to_take_care_of_rural_voters_was_always.html?wpisrc=burger_bar

 

FWIW has trump ever made a promise specifcally on FnF? I dont remember one.

Link to comment
Share on other sites

FWIW people lightening up is what keeps the most bullish of us grounded and is a good thing. When everyone thinks an investment is a home run it usually isnt and vice versa.

Good remark, orthopa. Everytime there was a "las vegas" euphoria we know how it ended.

 

Euphoria's got nothing to do with it. Just need faith that our govt is not going to steal private assets because it's convenient for them. Ultimately, they will do the right thing.

Link to comment
Share on other sites

http://www.politico.com/story/2017/03/jeff-sessions-justice-department-probe-eric-holder-loretta-lynch-235862

 

I guess Sessions is too busy with all of the other Obama "legacies" to care about the FnF case at this moment.

 

Yeah, that too. I'm most interested in how many votes this Trumpcare bill gets though. It has a better shot then housing reform, imo.

Link to comment
Share on other sites

"From Trump University to his litany of failed projects and developments, Donald Trump is infamous for the bait and switch, selling fantasies of luxury, then ensnaring buyers in schemes of wealth extraction. As president, Trump is making this an ethos of government, promising to help the disadvantaged, and using that mandate to slash benefits and funnel tax dollars to the wealthy and connected. The Trump image always has been and continues to be a con, and we, the American public, have been had."  http://www.slate.com/articles/news_and_politics/politics/2017/03/trumpcare_proves_that_trump_s_promise_to_take_care_of_rural_voters_was_always.html?wpisrc=burger_bar

 

FWIW has trump ever made a promise specifcally on FnF? I dont remember one.

 

 

That is a good use of FWIW. and evidence to date indicates that a Trump promise is actually not worth anything at all.    :D 

 

 

Link to comment
Share on other sites

"From Trump University to his litany of failed projects and developments, Donald Trump is infamous for the bait and switch, selling fantasies of luxury, then ensnaring buyers in schemes of wealth extraction. As president, Trump is making this an ethos of government, promising to help the disadvantaged, and using that mandate to slash benefits and funnel tax dollars to the wealthy and connected. The Trump image always has been and continues to be a con, and we, the American public, have been had."  http://www.slate.com/articles/news_and_politics/politics/2017/03/trumpcare_proves_that_trump_s_promise_to_take_care_of_rural_voters_was_always.html?wpisrc=burger_bar

 

FWIW has trump ever made a promise specifcally on FnF? I dont remember one.

 

 

That is a good use of FWIW. and evidence to date indicates that a Trump promise is actually not worth anything at all.    :D

 

Whats a mnuchin promise worth?

Link to comment
Share on other sites

 

We will most likely know the answers to those questions by April 17. That’s the deadline the government has just been given to produce thousands of documents it has been withholding from plaintiffs in one of the shareholder cases.

 

Mark your calendar's and get your popcorn ready. It's going to be a comedy or a sad movie.

Link to comment
Share on other sites

I know we're all value investors here but I can't help but recognize this obvious trading opportunity. Given the declines in recent weeks, the market is at most neutral on the shares. If the dividend goes through on March 31, I don't see much more or any further decline. However if the sweep is paused, imo that's an easy like 40% gain.

 

Regardless of how shareholders ultimately prevail, Mr. Mnuchin has made it very clear that he wants the companies recapitalized. The market would send the shares shooting up if the NWS is paused, and I think there's a significant possibility of this given his comments. Assuming a 10% chance of no dividends to Treasury, makes a very interesting trade.

Link to comment
Share on other sites

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 account

Sign in

Already have an account? Sign in here.

Sign In Now



×
×
  • Create New...