merkhet Posted November 10, 2014 Share Posted November 10, 2014 Moreover, Treasury's warrants can easily have their strike prices increased so that by exercising the warrants, they could raise a significant amount of capital immediately. Why would the strike price increase? Because a smaller (but still good) profit on the warrants of a well capitalized insurance company >> a large (but illusory) profit on the warrants of a not so well capitalized insurance company. For instance, assume that the combined companies are worth $250 billion or thereabouts. That means, the Treasury is, in theory, the owner of around $200 billion of warrants/stock. However, that will all go away the moment that there's a downturn because the company doesn't have much capital. If, instead, the Treasury pays $100 billion into the pot and is able to sell those warrants/stock for $200 billion, the Treasury still comes out ahead w/ $100 billion AND the companies are pretty darn stable w/ $140 billion in capital -- and well on their way to the $250 billion they need in capital. Depending on what you think the $25 billion income stream should be worth, you can then fiddle with the amount that the Treasury owns and provide a larger zone of possible agreement as to the capitalization. (If you give it a 15x multiple, than a 50-50 split would put the Treasury take @ $150 billion and reduce the time to 5% capitalization to around 2 and a half years.) Link to comment Share on other sites More sharing options...
merkhet Posted November 11, 2014 Share Posted November 11, 2014 Ackman & Co. talk a little bit about Fannie & Freddie during the Pershing Square Holdings conference call. http://www.pscmevents.com Link to comment Share on other sites More sharing options...
muscleman Posted November 11, 2014 Share Posted November 11, 2014 Fannie Mae’s Profit Trap Comes Into View Mortgage-Finance Company’s Shares Appear to Be Overvalued http://online.wsj.com/articles/fannie-maes-profit-trap-comes-into-view-heard-on-the-street-1415569299 John Carney can really make a living writing these kinds of articles for WSJ. :) Link to comment Share on other sites More sharing options...
phil_Buffett Posted November 11, 2014 Share Posted November 11, 2014 Ackman & Co. talk a little bit about Fannie & Freddie during the Pershing Square Holdings conference call. http://www.pscmevents.com thanks merkhet Link to comment Share on other sites More sharing options...
brker_guy Posted November 11, 2014 Share Posted November 11, 2014 Quote from: fareastwarriors on November 10, 2014, 08:47:35 AM Fannie Mae’s Profit Trap Comes Into View Mortgage-Finance Company’s Shares Appear to Be Overvalued http://online.wsj.com/articles/fannie-maes-profit-trap-comes-into-view-heard-on-the-street-1415569299 John Carney can really make a living writing these kinds of articles for WSJ. :) IMHO, I think Carney has personal vendetta against Fannie/Freddie... As merkhet has rightfully pointed out, he got all his facts all messed up. Yet, he still writes about ad nauseam. Link to comment Share on other sites More sharing options...
fareastwarriors Posted November 11, 2014 Share Posted November 11, 2014 You guys ever try emailing him to discuss his articles? Link to comment Share on other sites More sharing options...
brker_guy Posted November 11, 2014 Share Posted November 11, 2014 You guys ever try emailing him to discuss his articles? I think that is a futile efforts. Others have tried and failed... http://timhoward717.com/2014/09/21/john-carney-wsj-fails-big-in-yet-another-attempt-to-bash-shareholders-of-fannie-and-freddie/ I used to enjoy reading Heard on the Street column, but these days, I just ignore it. I think Carney is just voicing his personal opinion, and my personal view on opinion is like "a**hole": Everybody has one.... Link to comment Share on other sites More sharing options...
CorpRaider Posted November 12, 2014 Share Posted November 12, 2014 Yeah, I REALLY wish Bloomberg would buy the FT and beef up the U.S. offering. Link to comment Share on other sites More sharing options...
rainman Posted November 15, 2014 Share Posted November 15, 2014 Bruce seems sold out . Link to comment Share on other sites More sharing options...
stevevri Posted November 15, 2014 Share Posted November 15, 2014 http://www.bloomberg.com/news/2014-11-14/fairholme-exits-fannie-freddie-common-limits-disclosures.html Bruce exited the Common, and will no longer disclose preferred because they don't have to apparently. “We remain steadfast in our belief that — at a minimum –- shareholders are due just compensation,” Berkowitz said in a letter to investors dated Oct. 1 about the Fannie-Freddie stake. “We will continue to pursue our legal rights.” Link to comment Share on other sites More sharing options...
Mephistopheles Posted November 15, 2014 Share Posted November 15, 2014 http://www.bloomberg.com/news/2014-11-14/fairholme-exits-fannie-freddie-common-limits-disclosures.html Bruce exited the Common, and will no longer disclose preferred because it doesn't have to... So he doesn't have to disclose the preferred because he no longer owns the common? Anyone know the reason? Also, I don't get why Ackman doesn't have to disclose his common holdings. http://www.sec.gov/Archives/edgar/data/1336528/000117266114001862/xslForm13F_X01/infotable.xml Or is it because they are not listed on an exchange? Link to comment Share on other sites More sharing options...
Guest wellmont Posted November 15, 2014 Share Posted November 15, 2014 he won't disclose his position to sec but he will disclose it to fairholme shareholders at minimum twice a year. Link to comment Share on other sites More sharing options...
stevevri Posted November 15, 2014 Share Posted November 15, 2014 So he doesn't have to disclose the preferred because he no longer owns the common? Anyone know the reason? Also, I don't get why Ackman doesn't have to disclose his common holdings. http://www.sec.gov/Archives/edgar/data/1336528/000117266114001862/xslForm13F_X01/infotable.xml Or is it because they are not listed on an exchange? The SEC defines "Section 13(f) securities". It's under Question 7 on this page. They maintain a quarterly list of of those securities at http://www.sec.gov/divisions/investment/13flists.htm Seems like because they are off exchange and not listed they wouldn't have to list them. Link to comment Share on other sites More sharing options...
brker_guy Posted November 15, 2014 Share Posted November 15, 2014 Guys, I think it appears that Berkowitz might have sold the preferred too. Look at his 13F filing for this quarter: http://www.sec.gov/Archives/edgar/data/1056831/000091957414006682/xslForm13F_X01/infotable.xml Compare that to last quarter, both of the commons and preferred were filed: http://www.sec.gov/Archives/edgar/data/1056831/000091957414004823/xslForm13F_X01/infotable.xml So does that mean Berkowitz is capitulating? Correct me if I am wrong, merkhet. You know more than me about this. Link to comment Share on other sites More sharing options...
merkhet Posted November 15, 2014 Share Posted November 15, 2014 I don't think he's required to disclose the preferred shares. I know for a fact that, as of February 2014, Paulson & Co. had a very large position in Fannie & Freddie preferreds, but I've never seen them listed in his 13-F. I was at his office, and he stated that it was one of his largest positions. Hell, they extended me an interview because of my questions about Fannie & Freddie. Therefore, I have no reason to doubt the Bloomberg report that Fairholme is limiting its disclosure about the Fannie & Freddie preferred shares -- however, I would note that this would not necessarily rule out the possibility that he has sold his preferreds. Notably, I'm only really bothered to the extent that Fairholme no longer fights the court battle for us in the Court of Federal Claims. Everyone has to decide for himself/herself whether the claims are meritorious or not -- as opposed to just relying on Berkowitz or someone else being in the name. Link to comment Share on other sites More sharing options...
merkhet Posted November 15, 2014 Share Posted November 15, 2014 Actually, I'm not getting where he sold out of the Common Shares either. For purposes of this Form 13F-HR for the third quarter of 2014, the filer is not disclosing its holdings in both Federal Home Loan Mortgage Corp and Federal National Mortgage Association, because such securities are not included on the Official List of Section 13(f) securities released by the Securities and Exchange Commission. Again, this doesn't mean he didn't sell the shares -- it merely means he's no longer disclosing his ownership in them. So long as he's willing to continue paying Cooper & Kirk's legal fees, I'm okay with that. Link to comment Share on other sites More sharing options...
stevevri Posted November 15, 2014 Share Posted November 15, 2014 It's not just a Bloomberg report. This is the 13F Cover Page. http://www.sec.gov/Archives/edgar/data/1056831/000091957414006682/xslForm13F_X01/primary_doc.xml It has this: "For purposes of this Form 13F-HR for the third quarter of 2014, the filer is not disclosing its holdings in both Federal Home Loan Mortgage Corp and Federal National Mortgage Association, because such securities are not included on the Official List of Section 13(f) securities released by the Securities and Exchange Commission." Link to comment Share on other sites More sharing options...
stevevri Posted November 15, 2014 Share Posted November 15, 2014 Actually, I'm not getting where he sold out of the Common Shares either. Only place I see that is Bloomberg. They could be wrong Link to comment Share on other sites More sharing options...
merkhet Posted November 15, 2014 Share Posted November 15, 2014 I'm expecting a bloodbath come Monday -- should get mighty interesting for those that are thinking about buying more -- I picked up a few more preferred shares today. Link to comment Share on other sites More sharing options...
merkhet Posted November 15, 2014 Share Posted November 15, 2014 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/aig-american-international-group/msg197919/#msg197919 The trial began Sept. 29, and is now scheduled to conclude before the Nov. 27 Thanksgiving holiday. The losing side is almost certain to appeal the court’s decision, and any final resolution is probably years off. We'll probably get a resolution on the AIG case before year-end, which may provide some interesting guidance towards the Fannie & Freddie cases. Link to comment Share on other sites More sharing options...
Mephistopheles Posted November 15, 2014 Share Posted November 15, 2014 I was at his office, and he stated that it was one of his largest positions. Hell, they extended me an interview because of my questions about Fannie & Freddie. Impressive! How did you end up in his office, if you don't mind me asking? Link to comment Share on other sites More sharing options...
Mephistopheles Posted November 15, 2014 Share Posted November 15, 2014 Berkowitz wouldn't be able to sell (or buy) based on material non-public information that he obtains via the discovery process, right? Let's say though that the discovery process doesn't present any useful information for the Plaintiffs, much less so than expected by the market. Would he be able to use this lack of information in a decision to sell? Link to comment Share on other sites More sharing options...
muscleman Posted November 15, 2014 Share Posted November 15, 2014 I'm expecting a bloodbath come Monday -- should get mighty interesting for those that are thinking about buying more -- I picked up a few more preferred shares today. If the bloodbath comes on Monday, why buy today instead of on Monday? Link to comment Share on other sites More sharing options...
muscleman Posted November 15, 2014 Share Posted November 15, 2014 I was at his office, and he stated that it was one of his largest positions. Hell, they extended me an interview because of my questions about Fannie & Freddie. Impressive! How did you end up in his office, if you don't mind me asking? Same question here. How did your interview end up? Did you get an offer from Paulson? Link to comment Share on other sites More sharing options...
phil_Buffett Posted November 15, 2014 Share Posted November 15, 2014 i doubt that he sold out. he just not disclose the stake. nothing more. Link to comment Share on other sites More sharing options...
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