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

[Guest cherzeca]

I think the selloff is happening because Calabria opened the door to release with consent decree happening after the inauguration. That means at a roughly 50% chance that it never happens; the Dems seem to be okay with the status quo.

 

I mean really, 2022 or 2023? Wtf. I'm rather tempted to just sell a large chunk and wait, but unfortunately I don't have any other compelling investment ideas at all. It's this or cash for me.

 

do you have links to Calabria's latest, Midas? 

 

seems to me the market is driving the pathway, so of course calabria has to be open to that.  cant go to consent decree phase until at  least some capital is raised in market

[investorG]

The timeline discussed today by Calabria is embarrassing for the combined GSE reform team and more relevantly for those of us who have had confidence in that team.  The first potential step (of many) out of this morass is admitting that we have been wrong and muscleman has been right. 

 

Good luck, everyone!

[Jcmeg35]

I think the selloff is happening because Calabria opened the door to release with consent decree happening after the inauguration. That means at a roughly 50% chance that it never happens; the Dems seem to be okay with the status quo.

 

I mean really, 2022 or 2023? Wtf. I'm rather tempted to just sell a large chunk and wait, but unfortunately I don't have any other compelling investment ideas at all. It's this or cash for me.

 

do you have links to Calabria's latest, Midas? 

 

seems to me the market is driving the pathway, so of course calabria has to be open to that.  cant go to consent decree phase until at  least some capital is raised in market

 

I think @midas79 is referring to this:

“Maybe they’ll exit around 2022, 2023, that time frame," Calabria said today re Fannie/Freddie exit from conservatorship, IPO would be in "2021, 2022." 

 

This is frustrating to hear, but I would remind everyone that the market had a big selloff in July when the Reuters article came out where Calabria said something similar - granted the Treasury report was also delayed and it was unclear if it was ever going to be released.  However, since then the timeline has seemed to have been sped up. Unclear if this is another instance of underpromising or the real plan..

[Guest cherzeca]

agree that this '21-22 timeframe is very disappointing.  calabria seems to be dampening expectations, which he probably thinks is to his benefit.  could also indicate an expectation that SCOTUS will take up the Collins APA cert petition and that nothing will be done until that case is decided in summer 20. 

[TwoCitiesCapital]

I think the selloff is happening because Calabria opened the door to release with consent decree happening after the inauguration. That means at a roughly 50% chance that it never happens; the Dems seem to be okay with the status quo.

 

I mean really, 2022 or 2023? Wtf. I'm rather tempted to just sell a large chunk and wait, but unfortunately I don't have any other compelling investment ideas at all. It's this or cash for me.

 

Yes, certainly disappointing. That being said, when I ask myself if anything else in my portfolio is likely to 150+% over the same time period, I generally have to conclude I should be holding the preferred if not adding at this point.

 

Progress has been super slow, but we've moved miles from where we were when Trump was first elected and the question of a release from conservatorship was still a huge uncertainty with most of us still depending on the courts who had a disappointing track record.

 

Now, it seems like that path through admin action  is solidifying and becoming more certain by the day and the court cases have given us a break as well.  The only question is a matter of timing and I'm ok with that type of uncertainty.

 

Let's not lose the forest for the trees - progress for the last few years has been in the right direction. Don't sweat the day-to-day details unless if they reflect a reversal of that direction.

 

 

[Guest cherzeca]

of course there is a difference between settling lawsuits and amending SPSA, and closing a re-IPO, and calabria only referred to the latter.  one may think that the former will only occur at the time the latter is done, but if it is done earlier and before any D POTUS inauguration, the process is really baked-in and cant be reversed

[hardincap]

I think the selloff is happening because Calabria opened the door to release with consent decree happening after the inauguration. That means at a roughly 50% chance that it never happens; the Dems seem to be okay with the status quo.

 

I mean really, 2022 or 2023? Wtf. I'm rather tempted to just sell a large chunk and wait, but unfortunately I don't have any other compelling investment ideas at all. It's this or cash for me.

 

Have you spent significant amount of time on other ideas? If you haven’t bc of f&f then it’s costing you opportunities. There’s been some very compelling ideas discussed on here that have already significantly outperformed f&f this year (and last)

[undervalued]

of course there is a difference between settling lawsuits and amending SPSA, and closing a re-IPO, and calabria only referred to the latter.  one may think that the former will only occur at the time the latter is done, but if it is done earlier and before any D POTUS inauguration, the process is really baked-in and cant be reversed

 

At what point do you think the preferred will be around at least 60% par? After settling the lawsuits and amending SPSA or closing the re-IPO? Originally the thesis was after sweep has ended, now that had happened. What needs to happen next? Do you think the big players are making money from trades or from preferred reaching finish line (IPO)?

[muscleman]

Like clockwork, when FNMAS is going down, MM post about his abilities...

 

Your post ignores facts.

Usually, I laugh at perma bears with this kind of language too, but am I a perma bear on FNMAS?

[muscleman]

"...I  think what Mr. Market is telling me is likely that the events for FNMAS will be postponed and a major bull market is starting..."

 

this is what I dont understand about your thinking, MM.  to my mind, the greatest risk that would postpone events for GSEs is the market turning bearish, which would prevent them from raising capital.  if you think there is a bull market starting (I would have said "continuing") then you would be inclined to conclude that the GSEs are able to do their capital raise.  now I realize today that there is a lot of selling because the market is afraid that trump will be removed and pence will piss on the GSEs or some such, but just using your own thought process, I would have thought you would be now bullish on GSEs.

 

What I meant is exactly what Hardincap just posted. There are many stocks setting up for a major bull run soon, and there are no imminent events for GSEs, so the opportunity cost is very high by continuing to hold the shares.

 

[Guest cherzeca]

of course there is a difference between settling lawsuits and amending SPSA, and closing a re-IPO, and calabria only referred to the latter.  one may think that the former will only occur at the time the latter is done, but if it is done earlier and before any D POTUS inauguration, the process is really baked-in and cant be reversed

 

At what point do you think the preferred will be around at least 60% par? After settling the lawsuits and amending SPSA or closing the re-IPO? Originally the thesis was after sweep has ended, now that had happened. What needs to happen next? Do you think the big players are making money from trades or from preferred reaching finish line (IPO)?

 

I cant answer these questions, other than to point out that IF there is no re-IPO before 1/21 and IF a D POTUS is elected and IF calabria/mnuchin wanted to bake the process so there could be no easy way to reverse it, then they would do the litigation settlement and SPSA amendment before the D inauguration. this would create a shareholder valuation that would be too much to be ignored by any D POTUS who wanted to renationalize

[Guest cherzeca]

I think the selloff is happening because Calabria opened the door to release with consent decree happening after the inauguration. That means at a roughly 50% chance that it never happens; the Dems seem to be okay with the status quo.

 

I mean really, 2022 or 2023? Wtf. I'm rather tempted to just sell a large chunk and wait, but unfortunately I don't have any other compelling investment ideas at all. It's this or cash for me.

 

Have you spent significant amount of time on other ideas? If you haven’t bc of f&f then it’s costing you opportunities. There’s been some very compelling ideas discussed on here that have already significantly outperformed f&f this year (and last)

 

I have a well developed watchlist and I have found nothing that has been particularly more interesting than SPY.  care to name names?

[hardincap]

I have a well developed watchlist and I have found nothing that has been particularly more interesting than SPY.  care to name names?

 

dm'd

[muscleman]

I think the selloff is happening because Calabria opened the door to release with consent decree happening after the inauguration. That means at a roughly 50% chance that it never happens; the Dems seem to be okay with the status quo.

 

I mean really, 2022 or 2023? Wtf. I'm rather tempted to just sell a large chunk and wait, but unfortunately I don't have any other compelling investment ideas at all. It's this or cash for me.

 

Have you spent significant amount of time on other ideas? If you haven’t bc of f&f then it’s costing you opportunities. There’s been some very compelling ideas discussed on here that have already significantly outperformed f&f this year (and last)

 

I have a well developed watchlist and I have found nothing that has been particularly more interesting than SPY.  care to name names?

 

Tried to send you a message too but surprised that you blocked my personal message......  ::)

[DocSnowball]

of course there is a difference between settling lawsuits and amending SPSA, and closing a re-IPO, and calabria only referred to the latter.  one may think that the former will only occur at the time the latter is done, but if it is done earlier and before any D POTUS inauguration, the process is really baked-in and cant be reversed

 

At what point do you think the preferred will be around at least 60% par? After settling the lawsuits and amending SPSA or closing the re-IPO? Originally the thesis was after sweep has ended, now that had happened. What needs to happen next? Do you think the big players are making money from trades or from preferred reaching finish line (IPO)?

 

I cant answer these questions, other than to point out that IF there is no re-IPO before 1/21 and IF a D POTUS is elected and IF calabria/mnuchin wanted to bake the process so there could be no easy way to reverse it, then they would do the litigation settlement and SPSA amendment before the D inauguration. this would create a shareholder valuation that would be too much to be ignored by any D POTUS who wanted to renationalize

 

NWS has not really ended, rather the additional capital retained has been added to the liquidation preference for now. I'm thinking the re-IPO process will force the companies and FHFA to address what happens to preferred and common shares and get the lawsuits out of the way. Trying to keep this is mind and not worry about the day to day news bytes. Yes delay means conversion or resumption of dividends has been delayed, but the timing of release is a small issue compared to the fact that release is being planned for.

 

I don't have a good explanation of market behavior and won't even try, the market doesn't seem to be worrying about political risk when valuing SPY or other equities so hard to use that explanation for GSEs. I do worry about insider information or greenmail which shows up in a conservative position sizing of 5% despite the margin of safety now again offered by Lamberth and Collins.

[investorG]

The Collins en banc ruling was clear - as of now he can be fired by the Prez, right?  Why does Calabria pretend otherwise?  Has he even appealed the Collins verdict to the SC?

 

It seems he's counting on either a) a R 2020 election victory b) the SC to rule in his favor in the CFPB (or Collins) case pre-election c) a Dem to keep him in 2021 and/or d) a R 2021 Senate who stalls on confirming a new head such that his deputy is indefinitely in charge to carry out his original plan. 

 

None of the above 4 seem re-assuring against his weak timeline.  So either he's lazy (not likely), has some ulterior motive, or perhaps is being threatened by trump / mnuchin to fall in line or lose his job.

 

 

[Guest cherzeca]

"as of now he can be fired by the Prez, right?"

 

no.  Ps filed cert on const remedy which should stay entire const claim. also split circuits re same stat language for cfpb director, so until next summer when SCOTUS rules on seila, still uncertain.

[ValueMaven]

talk about dead money!!!

 

wow Pref's are getting killed!!! 

 

Politics are impossible to handicap!! 

 

FNMAS down -7% over the last 6M's while SPX up 10%

[investorG]

agree that this '21-22 timeframe is very disappointing.  calabria seems to be dampening expectations, which he probably thinks is to his benefit.  could also indicate an expectation that SCOTUS will take up the Collins APA cert petition and that nothing will be done until that case is decided in summer 20.

 

seems somewhat clear that if the SC takes the case (either APA or constitutional or both), then everything stops until June 2020 (I assume they could still fit this case during this term?).

 

and if they don't take the case, the debate is over would Mnuchin seek a deal in 1h 2020 or is he/Trump too scared of this issue and would -- if they even do anything at all -- wait until after the election for any potential 4th amendment etc...

 

I wish everyone good luck -- looks like we'll need some.

 

 

[SnarkyPuppy]

I think everyone needs to take a step back and realize how directionally positive the last 12 months have been

[Luke 532]

I think everyone needs to take a step back and realize how directionally positive the last 12 months have been

 

+1

[Guest cherzeca]

agree that this '21-22 timeframe is very disappointing.  calabria seems to be dampening expectations, which he probably thinks is to his benefit.  could also indicate an expectation that SCOTUS will take up the Collins APA cert petition and that nothing will be done until that case is decided in summer 20.

 

seems somewhat clear that if the SC takes the case (either APA or constitutional or both), then everything stops until June 2020 (I assume they could still fit this case during this term?).

 

and if they don't take the case, the debate is over would Mnuchin seek a deal in 1h 2020 or is he/Trump too scared of this issue and would -- if they even do anything at all -- wait until after the election for any potential 4th amendment etc...

 

I wish everyone good luck -- looks like we'll need some.

 

I just dont know whether treasury really wants APA claim to be argued so much or just cert granted to set up a settlement negotiation posture. 

[muscleman]

talk about dead money!!!

 

wow Pref's are getting killed!!! 

 

Politics are impossible to handicap!! 

 

FNMAS down -7% over the last 6M's while SPX up 10%

 

This seems like a really emotional blow out. I encourage people here to read the book "Trading in the Zone". It is all about controlling emotions.

With that said, this will be my last post here. Don't ever ask how MM thinks, because whenever I see that and respond, I get another round of taunting.

 

I initially felt it is ok because some of you may still find my posts helpful, but then yesterday I found even Chris blocked my personal messages. I thought we were friends?

 

Good luck guys.

 

[allnatural]

Good luck muscleman, you are more brains than muscles these days

[undervalued]

Good luck muscleman, you are more brains than muscles these days

 

+1.

 

I think everyone needs to take a step back and realize how directionally positive the last 12 months have been

 

+1

 

I agree that the last 12 months have been positive however does current situation has more risk or less risk compare to 12 months ago? Do we have more variables now that has to go right compare to 12 months ago?