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

[SnarkyPuppy]

 

"So let’s get the facts straight.  Receivership would not end the GSEs.  The fundamental difference between receivership and the current conservatorship is the ability to impose losses on creditors.  "

 

Too late. If we were placed in receivership the preferreds would be pennies and I wouldn't be here. But we weren't and there's no cause now. Other than that, pretty optimistic stuff. The word is getting out how wrong this is.

In receivership, the liquidation preference of the preferred shares gets triggered. :)

 

I still hold a substantial position because I think the preferreds will be made whole, but there's too many unknown unknown's right now in my humble (and probably wrong) opinion. 

[SnarkyPuppy]

I think if we're all being honest, without Berkowitz (and potentially Paulson's) investment(s) and connections to Mnuchin and/or Trump, there would be almost no conviction.

 

I've sold off ~50% of my position.

 

Opinions like yours puzzle me. For one it implies the same reasoning with these men as to why the govt will screw us - they're all unscrupulous and have zero constitutional or righteous bearing. They're all in for themselves. Two, the conviction should be that, since nothing similar to this taking, on this scale anyway, has ever been perpetrated by a US Govt, it's not gonna happen this time either, regardless of support, or lack of, from Berk, Paulson, Mnuchin and Trump. All they mean to the big picture is a presumably faster resolution, which is convenient and all, but in the end the same result will be had.

 

I've been accumulating for 4 years. I wish I was a great trader but I'm not so they all sit in my accounts. Going nowhere.

 

What do you make of the recent Perry ruling?

[rros]

I think if we're all being honest, without Berkowitz (and potentially Paulson's) investment(s) and connections to Mnuchin and/or Trump, there would be almost no conviction.

 

I've sold off ~50% of my position.

 

Opinions like yours puzzle me. For one it implies the same reasoning with these men as to why the govt will screw us - they're all unscrupulous and have zero constitutional or righteous bearing. They're all in for themselves. Two, the conviction should be that, since nothing similar to this taking, on this scale anyway, has ever been perpetrated by a US Govt, it's not gonna happen this time either, regardless of support, or lack of, from Berk, Paulson, Mnuchin and Trump. All they mean to the big picture is a presumably faster resolution, which is convenient and all, but in the end the same result will be had.

 

I've been accumulating for 4 years. I wish I was a great trader but I'm not so they all sit in my accounts. Going nowhere.

 

What do you make of the recent Perry ruling?

Having been in this trade for a long time and having followed Calabria I believe:

 

a) He has a reading of HERA 08 closer to what the understanding of shareholders is.

b) Understands that HERA is the new law the regulates the entities and is comprehensive.

c) Believes HERA has created the ability to "receive" the companies which did not exist before and is the *big* change.

d) Has stated the role of Treasury to be that of a creditor, therefore the NWS as part of a reform maneuver was an overreach.

e) He may also believe shareholders should have been wiped out via receivership. But that they weren't, therefore their rights have endured.

 

From his body language in past interviews I always got the impression he was never comfortable with the fact that shareholders had survived but was willing to admit they somehow did, almost by mistake. Over the years, I saw him becoming more moderate in his approach and more open to shareholders' claims.

 

But nobody can really assess what a Trump/Calabria may believe or do now.

[waynepolsonAtoZ]

FYI.

 

https://object.cato.org/sites/cato.org/files/pubs/pdf/working-paper-26_1.pdf

 

http://investorsunite.org/teleconference-new-paper-shows-conservatorship-of-fannie-mae-and-freddie-mac-does-not-comply-with-the-law/

 

 

[rros]

FYI.

 

https://object.cato.org/sites/cato.org/files/pubs/pdf/working-paper-26_1.pdf

 

http://investorsunite.org/teleconference-new-paper-shows-conservatorship-of-fannie-mae-and-freddie-mac-does-not-comply-with-the-law/

 

Among the Treasury and FHFA departures from HERA and established precedents are the following:

 

a) continuing the conservatorships for more than 6 years without any effort to comply with HERA's requirements to "preserve and conserve" the assets and property of the Companies and return them to a "sound and solvent" condition or place them into receiverships;

b) rejecting any attempt to rebuild the capital of Fannie Mae or Freddie Mac so that they can return to "sound and solvent" condition by meeting regulatory capital and other requirements, and thereby placing all risk of future losses on taxpayers,

c) stripping all net value from Fannie Mae and Freddie Mac long after Treasury has been repaid when HERA, and precedent, limit this recovery to the funding actually provided,

d) ignoring HERA's conservatorship requirements and transforming the purpose of the conservatorships from restoring or resolving the Companies into instruments of government housing policy and sources of revenue for Treasury,

e) repeatedly restructuring the terms of the initial assistance to further impair the  financial interests of stakeholders contrary to HERA, fundamental principles of insolvency, and initial commitments by FHFA,

f) disregarding HERA's requirement to “maintain the corporation’s status as a private shareholder-owned company” and FHFA’s commitment to allow private investors to continue to benefit from the financial value of the company’s stock as determined by the market.

 

The authors of this paper were intimately involved in the policy discussions and legislative drafting that led to the creation of HERA, Mr. Calabria in his capacity as one of the senior professional staff to Chairman Richard Shelby of the U.S. Senate Committee on Banking, Housing and Urban Affairs, and Mr. Krimminger in his capacity as a senior policy advisor with the FDIC

 

Obviously, Vice President Pence read this paper or, more likely, he was briefed by his staff on it. One of the reasons Calabria may have been hired as his Chief Economist. It will be very strange for Calabria to depart from this view.

 

But it is yet to be seen if he, as part of the new Administration, will too continue to break the law.

[Eye4Valu]

Better Calabria than Sperling or Parrot I would think.

[hardincap]

reuters:

The two will likely wait for congressional inaction to become a de facto impasse before letting Freddie and Fannie hold on to their profits, analysts said, estimating a decision could be made two or three quarters out.

 

“Mnuchin has been out there talking about a bipartisan agreement,” Heights Securities analyst Edwin Groshans told Reuters. “That process will have to play out until it in essence fails. When that process fails, that would open the opportunity for Mnuchin and Watts to act.”

[TonyG]

what gets me about that quote is they have had almost 10 years. how much longer do they want?

[Eye4Valu]

Looking for the political cover they would need?

[investorG]

per today's article, less 2017 congressional action likely means more room for mnuchin to act administratively --- an option he explicitly left open in the confirmation hearing.

 

I wish everyone great success!

[waynepolsonAtoZ]

Chris Roberts case got shot down (Judge Chang). I knew him, Horatio.

 

It really seems like the takings case is going to be the venue.

[randallchsu]

How big is John Paulson's position in fannie and freddie preferred shares?

[DocSnowball]

How big is John Paulson's position in fannie and freddie preferred shares?

 

Couldn't find out online - does anyone know?

[HalfMeasure]

How big is John Paulson's position in fannie and freddie preferred shares?

 

Couldn't find out online - does anyone know?

 

There are no disclosure requirements for it, so no one really knows exactly. It's material though.

[orthopa]

How big is John Paulson's position in fannie and freddie preferred shares?

 

Couldn't find out online - does anyone know?

 

There are no disclosure requirements for it, so no one really knows exactly. It's material though.

 

articles quoting his investment have said "Billion dollar investment". Billions in Fannie Mae. Who knows actual amount though. Ackman no longer discloses too right?

[stevevri]

Republican Jason Chaffetz Head of the House Oversight and Government Reform Committed posted the following bill:

https://oversight.house.gov/wp-content/uploads/2017/03/HR-__-the-Fannie-and-Freddie-Open-Records-Act-of-2017.pdf

 

John Berlau of CEI testified in front of the House Oversight and Government Reform Committee today.

 

Berlau testified about the Obama Administration claiming executive privileged regarding the 3rd amendment and how the taxpayer deserves sunshine on the issue as long as Fannie Mae and Freddie Mac remain under conservatorship.

[Seahug]

hi guys, am trying to not get caught up by emotional swings caused by twitter feed. there's just a lot of noise

 

is there an updated summary & analysis of pending legal cases - other than perry & fairholme

 

i read the 2015 calabria paper. i think it's ok actually

 

anyway would appreciate if someone could post

 

have not sold

 

thanks!

 

 

[investorG]

news headline from mnuchin this AM that public funds from infrastructure are expected around 200bn with the rest from private.

 

the warrants could fund this.

 

although not directly related, ben carson mentioned the words white house, housing, and infrastructure in the same sentence in an interview the other day.

 

 

[Desert_Rat]

Budget is tight, debt ceiling needs addressing, and GOP can't push initiatives through Congress. Tough times in Fannie Land.

[no_free_lunch]

Article in reuters about the GSE's.  They are now talking in mainstream media about privitization, or recap/release if you prefer.  I recommend everyone read this, there is a lot of content in here about the current situation, stuff I hadn't heard before.  For instance, they are talking about it being a couple quarters still before the dividends are touched.

 

Analysts expect the two institutions to make a full $10 billion dividend payment for the fourth quarter on March 31. But investors will be looking for any indication from Watt or Mnuchin about whether they plan to allow the mortgage firms to retain profits later on and begin the slow recapitalization process.

..

Though rebuilding an adequate capital buffer would take years - as long as two to three presidential administrations, according to one analyst - it would eventually allow Fannie and Freddie to leave government conservatorship, returning value to their investors.

..

The two will likely wait for congressional inaction to become a de facto impasse before letting Freddie and Fannie hold on to their profits, analysts said, estimating a decision could be made two or three quarters out.

“Mnuchin has been out there talking about a bipartisan agreement,” Heights Securities analyst Edwin Groshans told Reuters. “That process will have to play out until it in essence fails. When that process fails, that would open the opportunity for Mnuchin and Watts to act.”

 

http://www.reuters.com/article/us-usa-housing-finance-idUSKBN16T11J

[TonyG]

"Fannie Mae and Freddie Mac were the largest detractors. This came after a federal appeals court upheld a ruling that barred investors from suing to overturn the US government's 2012 decision to change the bailout terms to the "net worth sweep" of all profits generated. Whilst the development is a setback and disappointing, we never based our analysis on the court cases. In February, Treasury Secretary Steven Mnuchin reiterated his commitment to housing reform and ending government ownership of the two companies. Despite the volatility, we believe there is considerable upside to our holdings and a high probability of a resolution before the end of 2017"

 

http://www.schroders.com/getfunddocument?oid=1.9.2241573

 

Paulson fund.

[investorG]

technically, can watt pause the sweep on his own?

 

I mostly agree with the market and tim howard that mnuchin would prefer to have a plan in hand before moving on the NWS.

 

but I don't think he would get in the way if watt decides it's time to pause it and takes full ownership of the decision.

 

thank you

[muscleman]

"Fannie Mae and Freddie Mac were the largest detractors. This came after a federal appeals court upheld a ruling that barred investors from suing to overturn the US government's 2012 decision to change the bailout terms to the "net worth sweep" of all profits generated. Whilst the development is a setback and disappointing, we never based our analysis on the court cases. In February, Treasury Secretary Steven Mnuchin reiterated his commitment to housing reform and ending government ownership of the two companies. Despite the volatility, we believe there is considerable upside to our holdings and a high probability of a resolution before the end of 2017"

 

http://www.schroders.com/getfunddocument?oid=1.9.2241573

 

Paulson fund.

 

The performance was so bad.  :o

[waynepolsonAtoZ]

Watt has said he would defer to Tsy on the SPSPAs including the 3rd Amendment.

 

I think Tsy would need to change and then Watt would go along with it. Watt has already said he favors recap.

[Desert_Rat]

Not gonna happen before housing reform is my opinion.