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

[rros]

all junior pref holders should have mindset they are holding out for par, whether by being called or in a conversion rate that they like.  I don't see treasury doing a re-IPO of common without being able to pay dividends on common, and this will only happen if dividends are turned on for prefs (which will cause them to trade to par...or even at a premium in cases of high div rate) or the prefs are "convinced" to convert, or they are called and paid out at par.

 

we are par-seeking missiles

This makes sense.

 

 

[rros]

the Mba cohort is pushing for legislative reform to occur before recapitalization.   

 

does this view hold water?  or is it better to get going on the recap in December as a catalyst / spark for legislative reform (my view)?

 

in theory, the potential for action would open after the congress recesses for the year in December.

 

mnuchin appears conservative on the matter to date.  but the moelis / paulson / schwarzman group is quite close to trump.

Mnuchin is on record saying any serious talk of reform requires companies to have capital first. But this was in the early days, before radio silence.

[Eye4Valu]

https://www.wsj.com/articles/mortgage-industry-braces-for-trump-administration-to-make-changes-at-fannie-freddie-1541955600?mod=hp_lista_pos5

 

 

[Luke 532]

Thank you to all those that replied to my questions.  Much appreciated!

[Guest cherzeca]

https://www.wsj.com/articles/mortgage-industry-braces-for-trump-administration-to-make-changes-at-fannie-freddie-1541955600?mod=hp_lista_pos5

 

this article seems like an MBA plant.  worthless, but thanks for posting eye

[rros]

Chris, can you expand please? Not positive that the WSJ officially confirms the admin route? I could not read it.

[investorG]

the Mba cohort is pushing for legislative reform to occur before recapitalization.   

 

does this view hold water?  or is it better to get going on the recap in December as a catalyst / spark for legislative reform (my view)?

 

in theory, the potential for action would open after the congress recesses for the year in December.

 

mnuchin appears conservative on the matter to date.  but the moelis / paulson / schwarzman group is quite close to trump.

Mnuchin is on record saying any serious talk of reform requires companies to have capital first. But this was in the early days, before radio silence.

 

ok, thanks.  Mnuchin has accomplished very little in the first two years (most give tax reform credit to Brady, cohn, mcconnell, trump, etc.) and so hopefully his pencil is sharpened for this. obviously he's a smart man and few know more than him on this matter. 

 

there's also a chance they need to try to keep the housing market in decent shape, rather than bank-pleasing tinkering, to offset headwinds elsewhere.

[Guest cherzeca]

Chris, can you expand please? Not positive that the WSJ officially confirms the admin route? I could not read it.

 

whenever I read an article that admin reform=reducing GSEs' footprint (using that euphemism), I hear the MBA whispering.  any sound article on administrative reform would address capital, the senior preferred, monetizing (or not) treasury's warrants.

[orthopa]

I know this could have been said before but it looks like we are getting closer and closer to action. I think its pretty clear admin action will be what gets the ball rolling and I bet its the new FHFA director that does it soon after he/she is announced. As I said before I think the admin likes to float ideas to see reaction and there really has been no big push back other then MBA and but their stance has soften significantly. That being said prices have moved very little so I am adding some more preferred today.

 

Anyone have any prognostication on conversion. I know Luke asked this before and Im not looking for an prediction on exact conversion ratio but how it may be proceed. My thought it that is has to based off of par and as cherzeca says par is the goal and IMO non negotiable since the push behind Moelis are big preferred owners. Maybe a conversion based on eps taking into account warrants monetizing but that takes years.  And then you have to take into account dividend as if par is expected dividend come into play due to/with that.

 

Just trying to handicapped possibly moving to some common as market once known will price it instantly. Probably not worth wasting time on with too many unknown at this point.

[rros]

But one can also say Mnuchin has accomplished more than any of those fine gents. He masterfully dodged the Trump bullet and kept his seat at Treasury. A different take: he has shown extreme loyalty. Which may mean it is Trump who really matters now.

[Guest cherzeca]

you may recall that Paulson was Trump's transition advisor on housing finance.  either that was a head fake or Trump has incorporated Paulson's view, after his own fashion. 

 

getting a deal done with democrats will earn trump kudos.  any administrative deal that makes sense will likely get maxine waters support...getting a deal done doesn't have to be a passed bill.  so trump may see that timing is right for admin movement.

[orthopa]

I tried to find it back in this thread but it has become so long. Where do we stand now in Sweeney's court? Haven't heard much out of that court in a while.

[allnatural]

I tried to find it back in this thread but it has become so long. Where do we stand now in Sweeney's court? Haven't heard much out of that court in a while.

 

Briefing will be completed in January I believe. Assuming there is oral arguments, Sweeney should decide by summer 2019.

[allnatural]

Did you miss when the same judge who originally ruled against shareholders reversed his ruling and ruled in favor of shareholders by throwing out the governments motion to dismiss? This was the same claim that was REMANDED back to the lower court in the same Feb 2017 ruling you reference.

 

 

I tried to find it back in this thread but it has become so long. Where do we stand now in Sweeney's court? Haven't heard much out of that court in a while.

 

Honest question - after the ruling from Feb 2017 - do we really expect the courts to do the right thing in this case ever? I've personally lost a lot of faith that there is a path to justice in the justice system.

[rros]

C'mn people... my 11 year-old boy will inherit this claim and will continue to try to make as miserable as possible anyone who sits at the FHFA and Treasury. And he could do it for many more decades without me. Don't let them off the hook!

[Midas79]

Any thoughts on the Fifth Circuit having granted an en banc hearing in the Collins case?

 

http://www.glenbradford.com/wp-content/uploads/2018/11/17-20364-00514719656.pdf

 

I wonder how much of the oral argument will focus on plaintiffs arguing that the NWS should be overturned versus defendants arguing that the FHFA is constitutionally structured. At least the plaintiffs get another chance to pound on the points made in Willett's dissent.

 

The constitutionality part seems mostly moot to us shareholders because Trump will have appointed a new FHFA director by the time the oral arguments even happen.

[investorG]

Any thoughts on the Fifth Circuit having granted an en banc hearing in the Collins case?

 

http://www.glenbradford.com/wp-content/uploads/2018/11/17-20364-00514719656.pdf

 

I wonder how much of the oral argument will focus on plaintiffs arguing that the NWS should be overturned versus defendants arguing that the FHFA is constitutionally structured. At least the plaintiffs get another chance to pound on the points made in Willett's dissent.

 

The constitutionality part seems mostly moot to us shareholders because Trump will have appointed a new FHFA director by the time the oral arguments even happen.

 

low odds but worth a try.

 

attention lawyers:  please dumb it down for the judges and explain if they side with the plaintiffs (the little guys), the US govt / taxpayer still receives all their investment back, plus roughly $100bn of interest profits and potentially another $100bn of warrant value.

[Luke 532]

Moelis plan backed by Blackstone/Schwarzman...

https://www.nationalmortgagenews.com/articles/paulson-blackstone-said-to-back-plan-for-freeing-fannie-freddie

Paulson & Co. and Blackstone Group are among investors backing a proposal...

...was developed by investment bank Moelis & Co...

...Both John Paulson and Blackstone Chief Executive Officer Stephen Schwarzman have acted as economic advisers to President Donald Trump.

 

Schwarzman hanging out with Trump on the eve of the mid-term election last week...

https://www.bloomberg.com/news/articles/2018-11-07/-good-night-for-trump-despite-house-losses-sanders-says

President Donald Trump watched election returns Tuesday with dozens of friends in the palatial East Room of the White House, including Republican megadonors Sheldon Adelson and his wife, Miriam, and Blackstone Group chief executive Steve Schwarzman.

[Guest cherzeca]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

[rros]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

Thank you, Chris. Nothing like the legal inside view.

[Luke 532]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

 

Tim Howard's response to cherzeca's comments above...

Thank you. That’s very good information and analysis. And i agree with you that the en banc rehearing is excellent news for the plaintiffs.

 

We’ve now seen two reversals of judicial viewpoint on net worth sweep-related opinions in the last month and a half: Judge Lamberth’s ruling on September 28 that claims related to the breach of implied covenant in Perry Capital should be allowed to proceed, and now the 5th Circuit’s decision to rehear the appeal of the Collins case. In both instances, I suspect what’s happened is that as judges have had time to focus more closely on the fact patterns in these cases, the argument that the net worth sweep was a matter of judgment permissible under HERA–as opposed to a pre-meditated seizing of two companies’ assets, covered up by a now-revealed sequence of false statements by Treasury– becomes less credible or sustainable, and is now cracking. If so, we may indeed finally have reached a turning point in this saga.

[rros]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

So this... "and a majority of the circuit judges". Does this refer to the 3 judges? Then, this is why you believe 2 out of 3 (Willet and someone else) want a second look at the issue?

[Guest cherzeca]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

So this... "and a majority of the circuit judges". Does this refer to the 3 judges? Then, this is why you believe 2 out of 3 (Willet and someone else) want a second look at the issue?

 

no all active 5th circuit judges

[rros]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

So this... "and a majority of the circuit judges". Does this refer to the 3 judges? Then, this is why you believe 2 out of 3 (Willet and someone else) want a second look at the issue?

 

no all active 5th circuit judges

Oh.. must be the 26 listed here?

http://www.ca5.uscourts.gov/about-the-court/fifth-circuit-judges

[Guest cherzeca]

 

re collins rehearing:  WHOA!

 

One of the truisms of judicial review is that judges don’t take a case unless they have to.

 

This applies even more so with respect to rehearings en banc. A merits panel has already heard this case and issued its opinions, 2-1 against Ps with a stinging dissent by Judge Willets. A majority of the 5th circuit judges have decided that the case needs to be reheard. You simply are not going to get that a conclusion that the case needs to be reargued and re-decided unless a majority of judges have a serious belief that the dissent may be right. Ask a judge if he is overworked (and underpaid) and you will get unanimous agreement. Judges don’t grant rehearings without significant reason.

 

P briefs are due 12/12, and govt briefs due 1/11/19. oral argument to be heard two weeks thereafter.

 

the rehearing order doesn’t specify, but Ps asked for rehearing on both the APA claim (that NWS not within conservator’s authority to conserve and preserve assets) and denial of relief on finding that FHFA is unconstitutionally structured. It seems both claims are up for re-argument and rehearing.

 

also the rehearing order doesn’t state that this case is being consolidated with the All-American separation of powers case. I take that as a plus since that would only tend to complicate things for the hearing en banc.

So this... "and a majority of the circuit judges". Does this refer to the 3 judges? Then, this is why you believe 2 out of 3 (Willet and someone else) want a second look at the issue?

 

no all active 5th circuit judges

Oh.. must be the 26 listed here?

http://www.ca5.uscourts.gov/about-the-court/fifth-circuit-judges

 

yes but not the senior judges listed there.  see this:  https://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_Fifth_Circuit