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

[doughishere]

What was the last favorable outcome for plaintiffs? I lost count at how many there were for them.

[Guest cherzeca]

i tend to think it was the fhfa/treasury filing in pagliara yesterday, saying that delaware doesnt apply to fannie because it doesnt have a delaware charter

[orthopa]

Added more preferred on this down draft.

 

any reason for this downdraft?

 

Not sure i have a direct cause. Delayed reaction to NWS?

[undervalued]

Added more preferred on this down draft.

 

any reason for this downdraft?

 

Not sure i have a direct cause. Delayed reaction to NWS?

 

How about Doc 25 http://www.gselinks.com/Court_Filings/PagliaraDE/12105-0025.pdf?

 

Fannie Mae and FHFA's Brief in Support of their motion to dismiss or substitute, arguing that (i) Fannie Mae isn't a Delaware corporation the Delaware courts have no jurisdiction, (ii) FHFA stands in Fanne Mae shareholders' shoes, (iii) HERA blocks all litigation FHFA doesn't like, and (iv) Mr. Pagliara hasn't stated a proper purpose for the records he wants to see;

[Guest cherzeca]

Added more preferred on this down draft.

 

any reason for this downdraft?

 

Not sure i have a direct cause. Delayed reaction to NWS?

 

How about Doc 25 http://www.gselinks.com/Court_Filings/PagliaraDE/12105-0025.pdf?

 

Fannie Mae and FHFA's Brief in Support of their motion to dismiss or substitute, arguing that (i) Fannie Mae isn't a Delaware corporation the Delaware courts have no jurisdiction, (ii) FHFA stands in Fanne Mae shareholders' shoes, (iii) HERA blocks all litigation FHFA doesn't like, and (iv) Mr. Pagliara hasn't stated a proper purpose for the records he wants to see;

 

what i referred to above on this page.  seems like a hail mary to me.  why should section 220 of dgcl require a del charter if fnma selected dgcl as the rule of decision of its corp governance?

[rros]

What may move the stocks the most, in my view, will be Calabria's guidelines for housing reform which will be adopted or part of what Treasury will pursue and push Congress to work on.

[Luke 532]

So we have Mnuchin mentioning that he expects tax reform to be passed by Congress in August (bill introduced prior to then, so 4 months tops).  We know that corporate tax reform will be a part of that.  And we know the hit on DTA's for Fannie/Freddie would cause a draw.  Trump recently signed an executive order stating no more bailouts so avoiding a draw is important to Trump.  We also know the gov't. has a shade under 80% warrants and would make a ton of money on GSE reform that also benefits shareholders.

 

Carson said housing is involved in the infrastructure bill that they are currently working on.  We know housing accounts for 20%+ of the American economy and any reform to housing, for any realistic person, has to deal with the Fannie and Freddie issue.  It is also going to cost about $1 trillion for the infrastructure plan (partially offset by the gain in warrants that Treasury sells once they appreciate).

 

We also have Calabria saying that a framework is coming "within months." (could be 2 months, could be 11 months, or anywhere in between)

 

Now we're hearing that both infrastructure and tax reform bills might be advanced simultaneously.  Introducing both bills simultaneously has deal and compromise written all over it... good 'ol politics.  It also seems this will happen within 4 months given Mnuchin's quoted timeframe on tax reform, infrastructure being advanced simultaneously with tax reform, and Calabria's stated timeframe.  Couple that with so many people in Trump's camp leaning in a GSE-friendly direction.  I know the market disagrees with me, but man this seems like a very attractive investment at current levels (at least the prefs).

 

Report: Trump wants to move tax reform, infrastructure together

http://thehill.com/policy/transportation/326046-report-trump-wants-to-move-tax-reform-infrastructure-together

 

[undervalued]

Just wondering, I am not sure if this question has been asked before.. If what the government did was illegal, how come there were no pre-2008 shareholders that scream this move? All we hear now are hedge funds trying to profit? What happened to all the funds who lost billions before, do they not care anymore?

[Luke 532]

Just wondering, I am not sure if this question has been asked before.. If what the government did was illegal, how come there were no pre-2008 shareholders that scream this move? All we hear now are hedge funds trying to profit? What happened to all the funds who lost billions before, do they not care anymore?

 

Because the lawsuits are challenging the NWS in 2012 and not the conservatorship in 2008.

[SnarkyPuppy]

I don't think anyone disagrees that mortgage reform is going to come sooner rather than later.  The issue is whether or not some private resolution which excludes current shareholders is implemented.  My biggest concern has always been mnuchin having some creative and complicated reform to restructuring how private mortgage insurance would work.

 

Of course he'd have to screw over Berkowitz and Paulson as well. 

[Luke 532]

I don't think anyone disagrees that mortgage reform is going to come sooner rather than later.  The issue is whether or not some private resolution which excludes current shareholders is implemented.  My biggest concern has always been mnuchin having some creative and complicated reform to restructuring how private mortgage insurance would work.

 

Of course he'd have to screw over Berkowitz and Paulson as well.

 

That certainly is a possibility.  But it would do two things I imagine Mnuchin doesn't want: severing friendships with friends and keeping the lawsuits open and ongoing.

 

He'll lose some political points helping shareholders but I also think the compromising that will take place of advancing infrastructure and tax reform simultaneously will lessen that political hit.

[rros]

Just wondering, I am not sure if this question has been asked before.. If what the government did was illegal, how come there were no pre-2008 shareholders that scream this move? All we hear now are hedge funds trying to profit? What happened to all the funds who lost billions before, do they not care anymore?

Since they can't hold penny stocks or stocks under a certain price mark maybe they were forced to sell once that threshold was broken. 

[investorG]

while I am disappointed in the 4q16 sweep going through and also quite surprised at the current securities' prices, I believe it's fair to judge the administration's actions after the govt funding bill has been finished (scheduled for late april) to help prevent a repeat of 2015 jumpstart language insertion.  the Gorsuch confirmation is also important not to disrupt.  I wish everyone peace in the rocky waters and good luck.

[doughishere]

So we have Mnuchin mentioning that he expects tax reform to be passed by Congress in August (bill introduced prior to then, so 4 months tops).  We know that corporate tax reform will be a part of that.  And we know the hit on DTA's for Fannie/Freddie would cause a draw.  Trump recently signed an executive order stating no more bailouts so avoiding a draw is important to Trump.  We also know the gov't. has a shade under 80% warrants and would make a ton of money on GSE reform that also benefits shareholders.

 

Carson said housing is involved in the infrastructure bill that they are currently working on.  We know housing accounts for 20%+ of the American economy and any reform to housing, for any realistic person, has to deal with the Fannie and Freddie issue.  It is also going to cost about $1 trillion for the infrastructure plan (partially offset by the gain in warrants that Treasury sells once they appreciate).

 

We also have Calabria saying that a framework is coming "within months." (could be 2 months, could be 11 months, or anywhere in between)

 

Now we're hearing that both infrastructure and tax reform bills might be advanced simultaneously.  Introducing both bills simultaneously has deal and compromise written all over it... good 'ol politics.  It also seems this will happen within 4 months given Mnuchin's quoted timeframe on tax reform, infrastructure being advanced simultaneously with tax reform, and Calabria's stated timeframe.  Couple that with so many people in Trump's camp leaning in a GSE-friendly direction.  I know the market disagrees with me, but man this seems like a very attractive investment at current levels (at least the prefs).

 

Report: Trump wants to move tax reform, infrastructure together

http://thehill.com/policy/transportation/326046-report-trump-wants-to-move-tax-reform-infrastructure-together

 

What does trump do.....say hes going to do something. Fail at it. Then set even loftier goals?

[Luke 532]

What does trump do.....say hes going to do something. Fail at it. Then set even loftier goals?

 

You are assuming that handling one bill* (Obamacare) is less difficult than tackling two bills (tax reform and infrastructure) simultaneously.  It's not as simple as 2 > 1 so, by default, 2 is more difficult.  In other words, it is more difficult to earn one $5 bill than it is to earn two $1 bills.

 

*repeal and replace is really dealing with two bills (repealing one, replacing it with another)

 

[Luke 532]

Joshua Rosner will be on Tucker Carlson tonight at 9:40pm to talk GSE's, 11,000 docs, etc.

[Luke 532]

Joshua Rosner will be on Tucker Carlson tonight at 9:40pm to talk GSE's, 11,000 docs, etc.

 

Starts at 35:45 mark in this video: https://www.youtube.com/watch?v=eupgMc9z1gE&feature=youtu.be

[Flynnstone5]

FNMAS is pretty appealing at the current price. I bought more a couple days ago. It just feels odd to me that they are trading this low given the security and even liquidation preference that prfd's are supposed to have. I get the commons getting hammered given complete uncertainty at this point.

 

This is either a second chance on prfd's or the market knows something bad is coming and I'm an idiot for ignoring it.

[Desert_Rat]

Joshua Rosner will be on Tucker Carlson tonight at 9:40pm to talk GSE's, 11,000 docs, etc.

 

Starts at 35:45 mark in this video: https://www.youtube.com/watch?v=eupgMc9z1gE&feature=youtu.be

 

I like the angle: Treasury stealing from homeowners via higher rates, possibly to fund Ocare! There's not much truth to it but it's certainly better than hedge funds looking to turn a profit.

[Desert_Rat]

FNMAS is pretty appealing at the current price. I bought more a couple days ago. It just feels odd to me that they are trading this low given the security and even liquidation preference that prfd's are supposed to have. I get the commons getting hammered given complete uncertainty at this point.

 

This is either a second chance on prfd's or the market knows something bad is coming and I'm an idiot for ignoring it.

 

I'm sure the market's concern is over nothing getting done by this admin because Trump doesn't have the support. And if nothing gets done, can gets kicked down the road another 4 years.

 

I can understand the repeal and replace failure because once those Ocare entitlements were given and Trump promised to continue at least two of them, they were locked in, but no fiscally responsible repub was going to support a new bill that maintained them. But besides that, I get the impression that this admin won't get anything accomplished because of total opposition from the Dems and those particularity staunch Repubs (FC).

 

That means no tax reform, no draw, certainly no housing crisis, and no resolution. Unless court ordered, of course.

 

It's a concern; It's always been numero uno to me.

 

[beaufort]

I just bought more FMCKJ.  I wouldn't worry to much about what the market knows. 

 

@cherzeca re Hindes/Jacobs re interpretation of DGCL s.151.

 

How long after materials are made available to this court in July 2017 does it usually take for summary judgment on an interpretation of law?

[orthopa]

Regarding price if the ultimate hoped outcome is par, nothing to worry about. Just more of a reason to buy. What I find interesting is that the price jumped on big on Mnuchins comments but then plummets on the appeal of a court case that was dissmissed once already.

 

If Mnuchins signals shareholders are screwed you run for the hills unless something in Sweeneys court comes out very favorable IMO.

 

No one publicly has mentioned shareholders getting screwed expect maybe Corker correct? The shareholders getting nothing started as an Obama administration worry if the companies were "wound down". Mnuchin has said out of govt control and ownership. Congress is working on reform and is now under the impression that Mnuchin and Watt may act unilaterally. Recap and Release were dirty words for the last 8 years and Corker in his recent letter said congress may decide recapitalized restructured versions of FnF maybe the way to go.

 

The likely-hood of significant reform being done in congress before the end of the year and capital going to zero or even before the DTA/tax issue is low. Thus IMO Mnuchin acts and has the political optics to act at that time.

 

The Rosner interview maybe the start of some cover for Sessions/DOJ to release the documents. Would need much more coverage tho but again if the optics are there, much easier to release.

 

The political climate/timeline seem more certain for shareholders then before when it was complete uncertainty and wind down was the way to go. I dont think the price is reflecting such.

[orthopa]

Mnuchin has really clammed up regarding FnF and Trump somehow has gone his whole presidency so far without mentioning them. Strange for a guy like him.

[Guest cherzeca]

I just bought more FMCKJ.  I wouldn't worry to much about what the market knows. 

 

@cherzeca re Hindes/Jacobs re interpretation of DGCL s.151.

 

How long after materials are made available to this court in July 2017 does it usually take for summary judgment on an interpretation of law?

 

good question. 

 

first decision point is whether judge sleet asks for oral arg.  if so, then build in a couple of additional months.

 

sleet looks like a guy who knows how to make a decision when he wants to make a decision.  he decided to wait on hindes/jacobs for the perry appeal decision, and he followed it reasonably soon after it came out, re shareholders being able to make direct claims, when he remanded pagliara to the delaware courts.

 

his pagliara decision bodes well for hindes/jacobs, but focus carefully on fhfa's arguments that federal law has preempted delaware law.  this has already been made by fhfa re the original complaint, and it has been answered by Ps, so you can review those docs.  i dont think fhfa's argument that delaware is inconsistent with federal law is a good one...indeed HERA specifically states that fhfa shall succeed to directors' powers, so HERA uses delaware law insofar as it empowers fhfa to manage the companies...but i was wrong on perry so whoo knows.

 

so, how long?  minimum of three months, but this is just a guess. 

[beaufort]

I went through the Pagliara filing dated April 4, 2017 re inspection of books and jurisdiction.

 

Unbelievable.  Fannie submits to the Delaware jurisdiction for adjudication and then argues it is not governed by Delaware law.

 

I think insurance companies are bad, but the cherry on the cake are government defendants.  Here we are dealing with both.