investorG Posted March 22, 2020 Share Posted March 22, 2020 See attached... Edit: FWIW, just asked him and Dick Bove agrees with Bill Dallas' comments in screenshots attached. Thanks. That makes sense. Help out America now and worry about the other things at a later point. Link to comment Share on other sites More sharing options...
Luke 532 Posted March 22, 2020 Share Posted March 22, 2020 Whalen calling for immediate warrant exercise by Treasury. If UST takes common stake in GSE's, junior prefs are worth par. https://www.theinstitutionalriskanalyst.com/post/what-must-be-done-to-support-housing-finance Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 22, 2020 Share Posted March 22, 2020 Whalen calling for immediate warrant exercise by Treasury. If UST takes common stake in GSE's, junior prefs are worth par. https://www.theinstitutionalriskanalyst.com/post/what-must-be-done-to-support-housing-finance yes, but whalen is an idiot Link to comment Share on other sites More sharing options...
beaufort Posted March 22, 2020 Share Posted March 22, 2020 Hopefully he is an idiot who's view on this one issue, exercise warrants and provide 'balance sheet support' (with Treasury recapping both Fannie and Freddie instantly), gets some traction. They can sell the commons later, along with Boeing and whatever else Treasury buys. Link to comment Share on other sites More sharing options...
Luke 532 Posted March 22, 2020 Share Posted March 22, 2020 Not sure if anybody is listening to the press conference tonight, but moments ago Trump said (and I paraphrase): "We don't nationalize businesses. Ask Venezuela how that goes." Certainly seems good for those that fear F&F will be nationalized due to a bad economy. Link to comment Share on other sites More sharing options...
orthopa Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 23, 2020 Share Posted March 23, 2020 Hopefully he is an idiot who's view on this one issue, exercise warrants and provide 'balance sheet support' (with Treasury recapping both Fannie and Freddie instantly), gets some traction. They can sell the commons later, along with Boeing and whatever else Treasury buys. I didn't read Whalen's piece but exercising the warrants brings in about $100 in fresh capital Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. it is my view that if scotus decides seila the way I expect, then the NWS is toasty if not toast. I believe Ps should not give any credence to the seniors in a settlement negotiation unless the seila outcome is bad Link to comment Share on other sites More sharing options...
investorG Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. it is my view that if scotus decides seila the way I expect, then the NWS is toasty if not toast. I believe Ps should not give any credence to the seniors in a settlement negotiation unless the seila outcome is bad given current circumstances, it's not likely they will cancel an OID that would indirectly cost the federal govt $180bn when another simple option (forward looking relief) exists. Link to comment Share on other sites More sharing options...
orthopa Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. it is my view that if scotus decides seila the way I expect, then the NWS is toasty if not toast. I believe Ps should not give any credence to the seniors in a settlement negotiation unless the seila outcome is bad If things start to unravel or the treasury sees a window to settle and/or return some money over the 10% do you see them doing so before selia is decided? The could suddenly be operating from a position of weakness if the MBS market takes a shit right? Link to comment Share on other sites More sharing options...
investorG Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. swapping the sr pref for common would involve some arbitrary exchange ratio whereas the warrants were set in place 12 years ago and thus less random and more clean. Link to comment Share on other sites More sharing options...
investorG Posted March 23, 2020 Share Posted March 23, 2020 Hopefully he is an idiot who's view on this one issue, exercise warrants and provide 'balance sheet support' (with Treasury recapping both Fannie and Freddie instantly), gets some traction. They can sell the commons later, along with Boeing and whatever else Treasury buys. I didn't read Whalen's piece but exercising the warrants brings in about $100 in fresh capital I think I agree with your conclusion that it's unlikely to happen given other priorities but exercising the warrants -- which aren't subject to court challenges (unlike sr pref) -- could be more of an attempt to bring in the gapped-out spread between mbs - tsy (to allow for refinancing) rather than inject capital. Link to comment Share on other sites More sharing options...
investorG Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. it is my view that if scotus decides seila the way I expect, then the NWS is toasty if not toast. I believe Ps should not give any credence to the seniors in a settlement negotiation unless the seila outcome is bad If things start to unravel or the treasury sees a window to settle and/or return some money over the 10% do you see them doing so before selia is decided? The could suddenly be operating from a position of weakness if the MBS market takes a shit right? I'd be guessing but I think their first priority is and should be helping Americans by using FnF rather than worrying about legacy shareholders, for now. Link to comment Share on other sites More sharing options...
james22 Posted March 23, 2020 Share Posted March 23, 2020 In other words, are we setting up for an insane perfect storm where prefs are made whole (or close to it) while the entire stock market is on sale? -junior prefs go close to par Plaintiffs do this because they see everything is depressed in price and they want to take advantage and buy some companies on the cheap rather than wait around for the courts/settlement/Admin/etc. Yes, please. Link to comment Share on other sites More sharing options...
orthopa Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. it is my view that if scotus decides seila the way I expect, then the NWS is toasty if not toast. I believe Ps should not give any credence to the seniors in a settlement negotiation unless the seila outcome is bad If things start to unravel or the treasury sees a window to settle and/or return some money over the 10% do you see them doing so before selia is decided? The could suddenly be operating from a position of weakness if the MBS market takes a shit right? I'd be guessing but I think their first priority is and should be helping Americans by using FnF rather than worrying about legacy shareholders, for now. No and I agree with that too, Im just hypothesizing a quick recap via the Sr preferred. Isnt a recapped FnF a stronger FnF? My assumption for price would be last 30 days trading price like other bailouts, C etc. Link to comment Share on other sites More sharing options...
Midas79 Posted March 23, 2020 Share Posted March 23, 2020 At this time wouldnt it be best to swap the Sr Preferred for common and scrap the warrants? Would get to own way more of the company, common does get screwed way more then warrants but would recap faster right? Would have to watch out for owning more then 80% though. In any scenario where the Srs are gone preferred should go to par. Maybe if anything this helps move along another PSPA amendment? Settling the whole FnF issue although projected to go longer would be a nice kitchen sink move while everything is hitting the fan. If whalen is right (I dont have a good feel for if he is or not as I dont have access to any of the markets he speaks of) this could unravel fast along with the market. swapping the sr pref for common would involve some arbitrary exchange ratio whereas the warrants were set in place 12 years ago and thus less random and more clean. Converting the seniors to commons gives UST around 99% of the commons ($205B of liquidation preference of the seniors vs $2.5B of market cap of the commons right now). If the seniors get converted, UST can name its ratio. They can also structure the transaction to convert piecemeal and avoid ever having a controlling stake, let alone the 80% that would trigger a balance sheet consolidation. Link to comment Share on other sites More sharing options...
Luke 532 Posted March 23, 2020 Share Posted March 23, 2020 Full unlimited backstop of agency MBS (attached)... Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted March 23, 2020 Share Posted March 23, 2020 Tax question. Has anyone looked into whether selling one issue and buying another constitutes a wash sale? A quick google seems to imply that if they have different interest rates (as many of the different series do) it does not constitute “substantially identical”. What if you sell and buy different series from the same issuer (Freddie)? Link to comment Share on other sites More sharing options...
Luke 532 Posted March 23, 2020 Share Posted March 23, 2020 There it is, open-ended MBS buying: The Fed's firehose is fully open. Open-ended Treasury & MBS buying, sets up a TALF program for ABS, student loans, credit card and small business loans. Also planning a small-business lending program. Treasuries rally. The dollar weakens. @TheTerminal FHFA authorizes @FannieMae and @FreddieMac to support additional liquidity in the secondary mortgage market https://t.co/enpXJUXzG4 Link to comment Share on other sites More sharing options...
orthopa Posted March 23, 2020 Share Posted March 23, 2020 Tax question. Has anyone looked into whether selling one issue and buying another constitutes a wash sale? A quick google seems to imply that if they have different interest rates (as many of the different series do) it does not constitute “substantially identical”. What if you sell and buy different series from the same issuer (Freddie)? I have thought about moving from Fannie to Freddie and vice versa which I think would not constitute a wash sale. Different companies entirely. The issue I have come across is the bid ask and volume. In the end I believe I would get less shares as I would get caught on the wrong side of the spread in both. Link to comment Share on other sites More sharing options...
Luke 532 Posted March 23, 2020 Share Posted March 23, 2020 The issue I have come across is the bid ask and volume. In the end I believe I would get less shares as I would get caught on the wrong side of the spread in both. Do a combo order. Either they both fill simultaneously, or neither fill. Makes it less likely to execute, of course, but ensures you don't get on the wrong side of the spread on both. Do keep in mind the possibility that Fannie may exit conservatorship or have consent decree prior to Freddie. I currently only own Fannie prefs in part due to this, although all prefs should do well both Fannie and Freddie. Link to comment Share on other sites More sharing options...
DRValue Posted March 23, 2020 Share Posted March 23, 2020 The issue I have come across is the bid ask and volume. In the end I believe I would get less shares as I would get caught on the wrong side of the spread in both. Do a combo order. Either they both fill simultaneously, or neither fill. Makes it less likely to execute, of course, but ensures you don't get on the wrong side of the spread on both. Do keep in mind the possibility that Fannie may exit conservatorship or have consent decree prior to Freddie. I currently only own Fannie prefs in part due to this, although all prefs should do well both Fannie and Freddie. Think i'll do this, take the tax loss and re balance. Cobf members should team up for some extras liquidity :-) Link to comment Share on other sites More sharing options...
DRValue Posted March 23, 2020 Share Posted March 23, 2020 The issue I have come across is the bid ask and volume. In the end I believe I would get less shares as I would get caught on the wrong side of the spread in both. Do a combo order. Either they both fill simultaneously, or neither fill. Makes it less likely to execute, of course, but ensures you don't get on the wrong side of the spread on both. Do keep in mind the possibility that Fannie may exit conservatorship or have consent decree prior to Freddie. I currently only own Fannie prefs in part due to this, although all prefs should do well both Fannie and Freddie. Think i'll do this, take the tax loss and re balance. Cobf members should team up for some extras liquidity :-) Balanced FNMAS and FMCKJ, got more shares, and spread my risk too. Well done Orthopa! Overall I own more Fannie than Freddie still, but I'm OK with that. Link to comment Share on other sites More sharing options...
investorG Posted March 23, 2020 Share Posted March 23, 2020 I didn't read Whalen's piece but exercising the warrants brings in about $100 in fresh capital -warrants exercised -junior prefs go close to par -plaintiffs sell their juniors at close to par -plaintiffs drop lawsuits because they've sold near par Plaintiffs do this because they see everything is depressed in price and they want to take advantage and buy some companies on the cheap rather than wait around for the courts/settlement/Admin/etc. That's surely what I would do if warrants are exercised. Result: companies have many billions more capital, lawsuits are dropped, plaintiffs are happy, housing market stabilized by GSE's, etc. :) how would this raise capital? the dems and media are going to watch the corporate bailout side like a hawk. It'd be a large political risk to act in a manner that surges the jr pref before November. Link to comment Share on other sites More sharing options...
Luke 532 Posted March 23, 2020 Share Posted March 23, 2020 how would this raise capital? Nevermind, think I was wrong. Going to delete my post not to confuse anybody. Thanks. Link to comment Share on other sites More sharing options...
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