Fannie Mae (FNMA)

[jog49]

Looks like Dr. Lye can't keep a job very long anywhere she's been.

[FNM500K]

KTcarney and kite boy posting frenzy today. Sounds like we have a good week ahead 🤣

[TightCoil]

Fight Back - Fight to Win
Fannie Mae - All the Way Go-Go-Go
Fight to Right the Wrong done to Shareholders
Protest - Complain - The Conservatorship has gone on for too long

[EternalPatience]

Oh you don't own commons? I thought you did..My bad

[Forrest Gump Luck]

I can see us getting screwed by the impending implosion of commercial real estate. 20 trillion dollar problem. Usually the way to handle too big to fail real estate is to punish the savers. Either inflate your way out of it, or? Sometimes I suspect that Paulson and cohorts don’t want to get money from monetizing GSE stock, rather they are going to get money by using fnf to bailout all the empty office buildings.
All the towers in LA are empty and underwater and have 4% 10 year mortgages that are all about to go into default.
I imagine that will crash everything. The banks are going to go broke.
Paulson is simply doing the same thing he did betting against the residential market, just on a larger scale in the commercial game.
All those office buildings. Not just the towers, but the 6 story office park cubes are now worthless and the banks are going to get stuck with them.
Mnuchin and Paulson will have cash after the crash and buy them cheap then sell them after the taxpayer gets stuck with bill.
Too bad it’s impossible to make them sensible residential.
I wonder what this crash is going to look like.
Anyone have ideas of how to make money on the coming commercial real estate crash?

[bradford86]

I think that we are closer to the end than the beginning. But the spspa kind of is the problem for why i dont own commons. Either the spspa has value or the warrants/commons have value.

[Viking61]

The FNMA chart is following a little bit behind but is making positive strides! GLTA!!

[Viking61]

That FMCC chart is setting up nicely for a continued move upward! GLTA!!

[real777mellon]

1 week chart showing $FNMA cannot be held down much longer. #moonshot 🚀 pic.twitter.com/XpiDrISOz3

— Stankonia Capital (@StankoniaCap) May 15, 2024

[The Man With No Name]

FnF closed at $1.51

hopefully the start of something

Don't be surprised if the bottom falls out.

[Patswil]

FnF closed at $1.51

hopefully the start of something

[The Man With No Name]

FnF's enormous regulatory capital holes cannot be filled unless the SPS are written down, converted to commons, or some combination of both.

Even with that happening, FnF would have to raise capital, and no capital raise is possible with the SPS overhang currently in place.

Exactly. I see no alternative to the example set in AIG.

[EternalPatience]

Time to make electric homes

[Wingsjr]

What? You just ignore that FnF started retaining earnings during who’s Presidency?

[kthomp19]

KThomp, you appear to have a solid, in depth understanding of FnF history as it pertains to FHFA and Treasury.

Thank you for the kind words.

How do you see the preferreds and commons doing? I realize there are numerous possible outcomes, but I'm curious what you think.

Short version: I think the juniors will end up with somewhere between 50% and 100% of par (stated) value via a conversion to common. Not converting the juniors makes no sense due to the CET1 capital requirement in the ERCF.

I think the commons are worth about $8 at the most when FnF are recapped and released, and that's only if Treasury chooses to write down the seniors entirely. If they convert those seniors to commons instead, as Mark Calabria wants them to do and as KBW expects, they will be worth somewhere between $0.25 and $2.00 per share, depending on how FHFA and Treasury structure the transaction. Probably towards the lower end of that range since there is no reason for either FHFA or Treasury to fear any lawsuits and that the situation for FnF common shareholders is far worse than that of AIG common shareholders, who got diluted down to 8%.

I expect the commons to rise and fall roughly in line with the juniors until recap/release time so I wouldn't short them, at least not for more than very short periods as an attempt at statistical arbitrage, but I avoid them entirely.

[kthomp19]

I wish they would have wiped out shareholders in 2008.

I'm glad they didn't. If it wasn't for all the government malfeasance that so many like to endlessly complain about, I never would have had the opportunity to make this much money on this investment.

Pre conservatorship shareholders would have sued and won but companies still gone.

Not gone but nationalized. Still, I see your point.

I would have never bought. Imagine where my portfolio would be without this loss since 2009.

Ah, so you're underwater? That's hard to do if you really did buy in back in 2009.

We deserve this to end and get paid dividends, etc.

You certainly seem to be suffering the same fate as the Sears investor in The Zurich Axioms. She lost money in Sears stock and kept buying more and more, chasing it down, to "make her money back".

There is no such thing as "making your money back". Yes, you want to make money, but why does it have to come specifically from FnF common shares? Some cosmic sense of justice? It doesn't exist.

[kthomp19]

WARNING: you all do know he’s a policy wonk and he’s an advisor at the Cato Institute, right? It’s 36 minutes long and you WILL be bored. He has strong opinions about agency independence, banking regulation, housing policy, he does want a combined financial regulator (at a minimum merging FHFA into the OCC), etc.

I listened to the podcast, thank you for the link.

He ADMITS pushing back on the Trump Admin when they wanted him to move on the GSEs because he thought as a regulator he shouldn’t buck what he thought was the will of Congress (HERA).

His quote at 14:53 is "I had fights with the Trump administration when I was an independent regulator and I was willing to push back on things."

However, the topic was the fact that FHFA is not independent anymore and that federal policy on many things, including housing now that the President can fire the FHFA director at will, is subject to a whipsaw effect where things change drastically whenever a President of the opposite party takes the White House.

Calabria's quote did not pertain to the conservatorships. You seem to have misconstrued it. I didn't hear any mention of the conservatorships at all in the entire podcast.

Another good quote by Calabria was at 30:22, though it also wasn't specifically about the conservatorships or even FHFA/FnF: "There's no enforcement mechanism for many parts of financial regulation. Sometimes there's the regulated entity, but external stakeholders - the rest of us - often don't have an avenue to make regulators follow the law."




When it comes to Calabria, something to keep in mind is that he has been much more active on social media recently, and by all appearances is angling for a spot in Trump's administration if Trump does win in November. This could very well be a second stint as FHFA director.

That means that his views can certainly affect FnF shareholders in the future and thus he needs to be given a lot of credence.

[kthomp19]

If you make 4.3B in a quarter and the shares only go for around $1.50 per share. The outstanding shares are 1.16 B shares. The math to me is the made $ 3.70 per share in the quarter.

Fannie Mae's own 10-Q says that "Net income (loss) attributable to common stockholders" was negative $4M and "Weighted-average common shares outstanding" is 5.867B. That comes out to an EPS that rounds to zero.

Source: Fannie Mae 2024 Q1 10-Q form, page 60

I know we are in a conservatorship.

And that's exactly the problem. The common share price won't reflect any economic or voting rights until those rights are restored. That requires both a removal of the senior pref overhang (via conversion or writedown) and an exit from conservatorship.

[kthomp19]

NOBODY, I repeat NOBODY, other than shareholders, especially any Congressmen, agency official, or influential policymaker, cares about the plight of shareholders. In fact, I contend that it is counter productive to contact ANY government official seeking any relief SOLEY on the basis of an appeal to shareholder plight.

Bravo! It is good to know that I am not the only voice in the wilderness on this issue.

Whining incessantly to members of Congress cannot possibly help. It is, as you say, counterproductive because it just makes FnF shareholders look like greedy bastards. There are already members of Congress, like Bill Foster of Indiana, who want all current FnF shareholders to be wiped out.

We are all in this for the money and nothing else. The only differences among us are who is willing to admit it. This isn't about justice or fairness or any of that bullshit. It's only money.

There is a simple question to find out someone's real motivations for owning FnF shares: "would you support a full senior pref writedown plus unwinding the SPSPAs plus returning all the excess NWS money plus a full government apology (etc) if it means you and everyone you know who owns shares has to sell right now at current prices and never buy back in?"

An answer of "no" means they're only in it for the money. "Yes" is basically bullshit; if that were the case they would sell right now. Refusal to answer amounts to "no".

If you all love the cheerleading here more power to you, if it helps you hang in there and find camaraderie, great! As they say misery loves company, but don't be fooled for an instant that you are making a difference to the powers with the boots on your neck. You have a better chance appealing as above, through the backdoor, but for Christ's sake do it smarter!

Amen.

But for some the need to feel like one is doing something is just too much to ignore. To our detriment.

[kthomp19]

I read the comment by 'Rule of law guy' and had a laugh. If you don't understand that the SPS aren't "fully repaid", then you shouldn't be commenting at all. And certainly TH's follow-up was just as stupid.

I had submitted my own response to ruleoflawguy there, but as is Tim Howard's prerogative he chose not to publish it. I put it on Twitter instead if you care to read it.

Text version:

The two problems with trying to have the liquidation preference (LP) offset the funding commitment are:

1) As Tim said, having the funding commitment continue post-conservatorship would be very helpful compared to it disappearing. Also, the LP is valued at $220B on the government's books (as of the most recent Financial Report of the US Government), while the contingent liability of the funding commitment is at most a few billion due to the extreme unlikelihood of it having to be touched at all let alone exhausted, in the future.

2) Treasury choosing to write off the SPS rather than exchange them for commons a la AIG amounts to writing an enormous check to shareholders for no reason. Mnuchin said that it would be illegal and would result in a lot of political fallout according to Calabria's book. While LP writedown would be seen as "fair" by shareholders (though certainly not by people like Senator Warner), I don't see any reason to expect it to ever happen given all the evidence we have.

[kthomp19]

The Conservator is supposed to have a duty to "Conserve and Preserve."

Supposedly yes.

Let's forget the history we all know here and assume this to be true.

No. It is unfortunately false. Page 2 of the Supreme Court's Collins opinion said:

So when the FHFA acts as a con-
servator, it may aim to rehabilitate the regulated entity in a way that,
while not in the best interests of the regulated entity, is beneficial to
the Agency and, by extension, the public it serves. This feature of an
FHFA conservatorship is fatal to the shareholders’ statutory claim.

The fact is that the Supreme Court ruled that HERA allows FHFA to act in its own best interests, even when that runs counter to the conserve and preserve mandate.

How is it they can give away billion$ to low income housing when their stated duty is to conserve and preserve. I would expect they should not be allowed, legally, to give ANY of that money away. Other than being the government that nationalized the GSEs, how do they get away with this?

The first step to wisdom here is to accept what the Supreme Court has actually ruled, and reject what you think "should" be the case.

[kthomp19]

Translation: we are f*cked until TSY decides to play fair.

You're starting to get it.

Now extend the thought experiment: what happens if Treasury never decides to "play fair"?

Assign a probability and a share price estimate to each scenario (Treasury "plays fair" or doesn't) and you might be surprised at the result.

[kthomp19]

What it does mean is that if they are to do so (convert senior preferred shares to any other class) they will need another amendment.

Correct.

After the jury decision, presided over by Lamberth, I want to see how they pull off yet another self-enriching act knee-capping current shareholders.

They will just do it. The jury verdict does not in any way prevent a senior-to-common conversion from happening. The knee-capping of existing shareholders happened in 2012 and the jury said that was perfectly fine, so long as the companies pay a total of $800M to shareholders.

Any new amendment will be the perfect opportunity to reassess the full picture and, in light of all that has transpired, the new assessment should be quite positive for the company and current shareholders.

I fail to see how a new amendment letting Treasury convert their seniors into commons would be positive for current common shareholders.

If you're talking about a new lawsuit, especially one based on the implied covenant case, all I can say is precedent shows that you will be waiting a long time for a pittance of a payout at best.

[kthomp19]

If you want to make an extreme click-bait statement, sure.

It's just the truth. I have heard the "common shareholders are the true owners of the companies" moralizing bullshit line so many times that it was worth putting things in stark terms.

you state facts yet drill down to a single conclusion that only time will tell if it's true.

The statement I made that you quoted is a fact in the present. There is no "time will tell" aspect because it isn't a statement about the future.

Shareholders have the rights associated with the Shareholder agreement. These rights do not dissolve suddenly in 2012 because of a contract between two government entities that violates the fair dealing with Shareholders. These rights travel with the shares. This is backed by the Berkley verdict.

None of these things has to do with economic and voting rights, which is what the existing common shares lack right now. Ownership implies both control of decision-making and rights to profits. I didn't say the common shareholders have no rights whatsoever, I said that they don't have any ownership rights.

In fact, Treasury could wipe all of the Common and JPS value based on their LP amounts.

Not without running FnF through receivership and transferring their charters to newcos. This is fully half of my investment thesis in the juniors.

It's also possible the leader of the free world will believe in the 5th Amendment.

All of the Fifth Amendment takings cases over the NWS and original SPSPAs/conservatorships have been dismissed. A few are on their last legs having hail-Mary appeals outstanding, but it's hard to see any of them even getting to trial let alone winning.

If "the leader of the free world" looks to the court system to define what is and is not illegal and constitutional, which is the purpose of the judicial branch, he will find that the NWS, conservatorships, and original SPSPAs were perfectly fine from a Fifth Amendment standpoint given that all the takings lawsuits were dismissed.

If you're counting on future Fifth Amendment takings claims to either prevent future government actions like a senior-to-common conversion, or remunerate shareholders for those actions, keep your expectations extremely tempered. One long-standing Supreme Court precedent is that takings awards are based only on what the property owner lost, not on what the government gained. Right now the shareholders have no economic rights and only a couple of billion dollars of provable value (market cap: share float times market price per share).

The resolution of Conservatorship may include NOT further violating the covenant of good faith and fair dealing with Shareholders. IMO, this would be the smarter resolution.

As I explained in another reply, it isn't reasonable to expect that shareholders could even bring to trial (i.e. not get dismissed), let alone win, an implied covenant case against the companies in the event of a senior-to-common conversion given that reasonable shareholder expectations as of the date of the conversion have to include the LP ratchets in the letter agreements, which prevent the common shares from gaining any economic value.

[kthomp19]

but is it on the TREASURY balance sheet ? and if yes - how does it show --- as the SP value or ?

Page 95 of the FY 2023 Financial Report of the US Government shows that Treasury values the Fannie senior prefs at $134.5B (about 71% of the full LP amount) and the Freddie senior prefs at $101.7B (about 89% of the full LP amount).

[kthomp19]

And there will soon be a ratified 2023 decision that says Shareholders do have a right to reap in the benefits of the company profits as per the shareholder agreement.

That first part misses the fact that only monetary relief was awarded, not injunctive (or any kind of other non-monetary) relief. What the jury said was that the companies can violate the implied covenant as long as they pay the shareholders a total of $800M, inclusive of pre-judgment interest on the Fannie juniors.

I don't see any justification for thinking that the jury verdict has any far-reaching consequences other than that monetary payment. Again, the plaintiffs asked for no non-monetary relief and the jury didn't award any either.

What's your point?

My point is that whether or not reasonable shareholder expectations have been violated, which is what triggers a breach of the implied covenant, depends on the expectations at the time of the alleged breach. That's the law, and that's what Judge Lamberth said when he allowed that claim to go to trial.

Shareholder expectations regarding an agreement between the companies (via FHFA) and Treasury to a senior-to-common conversion in the future would be set as of the most recent contract amendment before the conversion. That includes the removal of all economic rights of common and junior pref shareholders by the 2012 NWS and the fact that the letter agreements did not reinstate any of those rights.

This means that a senior-to-common conversion cannot possibly violate the implied covenant because legacy common shareholders would go from having no economic value to having very little. It's actually a net benefit, albeit a small one.

[kthomp19]

Yes, although this doesn't mean lawsuit/s won't be filed after the fact. They just have a near-zero chance of success.

I agree here.

Saying that lawsuits will be filed if Treasury dares to convert the seniors to commons is a prominent bit of common nonsense. It ignores the fact that such lawsuits have to actually succeed to matter.

While it's possible the 300+bn worth of SPS gets converted, it's also possible it's less than that.

What is your estimate on how much will be converted versus written down?

I think it's a 25% chance of none converted and all written down.
50% that all of it is converted.
25% that only the $193B worth of balance sheet SPS is written down and the rest is converted.

That latter scenario exists because a conversion of the balance sheet SPS involves moving that amount into the common stock line rather than retained earnings. Both common stock and retained earnings count towards all forms of regulatory capital so that's not an issue, but it might be odd to have this enormous common stock amount on the balance sheet while having hugely negative retained earnings (accumulated deficit).

There is no reason for FHFA to say no to any conversion ratio of the SPS though, so there probably isn't any functional difference between Treasury converting the entire LP and only converting the part that is off the balance sheet.

The amounts CAN be altered with a pen swipe.

Again, whether or not this is possible isn't really the point. What matters is the probability estimate of whether or not it will happen. I have a SPS writedown at 25%, and if anything I think that's too high. KBW has it at 0%, for example.

Your number is clearly much higher, though you haven't yet said what it is or why.

Possibilities don't matter here, probabilities do.

[kthomp19]

As I've said multiple times... I've already given you all the info I care to share. If you can reverse engineer something, good for you. If not, too bad so sad. I am under no obligation to show you my formulas nor the different scenarios.

This relates to something you said in this post:

What you want? Am I supposed to care? We have zero obligation to jump through hoops for you.

If you have a trivial amount invested in this there is no reason to run so many complicated scenarios as you claim to have done. And if you have a substantial amount invested, you should want feedback in order to find out flaws in your process that you haven't caught yourself.

At least I'm starting to understand your recalcitrance. You are refusing to answer only because it is me that is asking, as if publishing the details of your price model would somehow look like you giving in or losing face. Get over yourself. It is clear that you don't want an honest debate about the common share price, which I should have realized long ago when you were responding with blanket "I agree" statements to people who posted high share price estimates with absolutely no logic or reasoning behind them.

If you truly wanted to sharpen your investment thesis then you would publish all the details and welcome criticism. Alas.

[kthomp19]

At no point did Treasury state they thought anything was illegal. Treasury is an entity, not a person. I've said this multiple times and I don't see you producing any evidence to the contrary.

Yes they did.

There had been some calls over the course of the conservatorship for Treasury to just forgive all or part of its claim. That was a nonstarter, politically, for Treasury. Moreover, Treasury claimed that it could not legally do so.

Mnuchin told this to Calabria directly, then Calabria recounted it in his book. That isn't hearsay, it's reporting.

Again, I've answered your questions multiple times. The answers are vague and not to your liking because I'm not Nostradamus.

No you haven't. You don't have to be Nostradamus to give answers to things like what specific claim would be filed (such as your assertion that the LP ratchet can be the basis of its own separate implied covenant claim), what court it would be filed in, and what the requested remedy would be.

This isn't all-or-nothing. You don't have to have all the answers in order to have any answers at all.

But you are also the pot calling the kettle black.

Wrong. Hypocrisy is telling someone to do something while not doing it oneself. Talk of new lawsuits with no intention of filing them is a perfect example.

Me pointing out that you have never given a common share price estimate is NOT hypocrisy because I actually did the work myself and published the results.

[FFFacts]

Hiding the stress tests

False that is something that guido the wierdo made up.

Raising the cap rule to insane amounts

A 2% increase is not insane and it was based on math. Has no effect on a release if they raise that capital.

Not doing what the DJT letter said to do

He directed that letter to treasury not fhfa. It takes 2 parties to agree to amend the spspa.

Saying one thing before becoming Fhfa head and then not doing it

He can't do shit w/o treasury.

He became a shill for treasury

You have that backwards he was negotiating trying to release. mnuchin was the scum.

[Golfbum22]

Govt doesn’t own yet

Ackman does

Warrants were collateral

Govt has been more than paid back

[TightCoil]

FNMA & FMCC

Greeen Money Masheeeens

[jcromeenes]

Navy and who? lol.

[JOoa0ky]

LOL there are only 2 major holders of fannie mae...

[RickNagra]

We are next.

https://on.mktw.net/3wEcOp9 Check out this article from MarketWatch - Five things to know about meme stocks like GameStop and AMC — and why they’re hot again

[Golfbum22]

whoah

wait a minute

this says elected board member in the fine print?

something happening or I am just making something out of nothing?

don't answer that. LOL

[RickNagra]

SEC Filing | @FannieMae $FNMA
⁦@JarndyceJ⁩ read where she’s coming from. https://t.co/MjPxqTbzUO

— José E Burgos Lugo, PA (@TheBurgosGrp) May 14, 2024

[RickNagra]

https://fanniemae.gcs-web.com/node/41856/html

[Golfbum22]

delta down to .06

will it get to zero or above FNMA?

it's a slow repeating pattern that I should hav replaced bets on.

[stockanalyze]

how do you get 1 billion per quarter if adding 1 trillion?

[stockanalyze]

i am happy that you did not show your ugly face at the open

[stockanalyze]

did anyone here ask you if they have value? are you a financial analyst or something?

[along4zride]

Closer to zero than $5. What else is new.
Still priced below pre Covid levels (FNMA) and there is still excitement here .
Rumor is she is only halfway through conservatorship so still way overpriced at this level.

[RickNagra]

Oh wow. Lots of big buys in the last 15 minutes of trading. Maybe the meme people have arrived. More will likely come tomorrow morning. I will wake up early and sound the whale horn. I am WhaleBalls.

[RickNagra]

Can we breakthrough $1.50 today and set a new high of day ? Quite possible since no signs of Sherwin Williams so far. Probably still at Happy Hour per Golfbum.

[bradford86]

commons up today, hooray!

in my view, they have value if the government writes down the value of its spspa.

[Boat Shoes From Yahoo]

“ All the stocks trade based on fundamentals.” REALLY?
Only worth what some moron is willing to pay! The Secret Plan is more believable than the “fundamentals” with GME & AMC

[RickNagra]

The word “meme” comes from the Greek mimema, meaning something that has been “imitated.” According to Britannica, the word was first introduced by Richard Dawkins, a British biologist, in his book The Selfish Gene; his intention was for “meme” to sound similar to "gene.” In his book, Dawkins makes a direct connection ...

[RickNagra]

It appears the MEME craze is almost over. SEC investigation on deck.

[Patswil]

Buyers over sellers--2/1
https://ih.advfn.com/stock-market/USOTC/fannie-mae-qb-FNMA/trades