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You don't know illiquid until you sit on very valuable CH 11 PFD/Hybrid securities with guarantees for years as little by little every distribution to creditors finds excess of every creditors claim per tranche.
2008 is a 15+ year process that benefits from a slow unwinding, opportunities in buying on OTC what accredited only IPO participants dump, and knowing just what the heck you are buying.
Similar principals make GSE common stock the 8th wonder of the world in that how could it be so overlooked when we can just use our PC/phones to learn how they work, how they're finances are, and how they are exiting conservatorship -> most importantly why they are meant to become private sector companies with public listed shares and the environment they are coming into being so much more profitable and simpler than the one they left in 2008.
Many things about 2008 remain out there, illiquid for the majority of valuable investments in the open market - but FNMA and FMCC are the exception. If these two are illiquid I find it funny in the past 6 months the volume has broken the top 50 lists with tight spreads of one cent more than a dozen times up there with all the NYSE and NASDAQ listed company's common stock.
Illiquid. That's funny. Can't remember the last time I saw a FNMA or FMCC spread over a penny.
Important news if you realize selling MBS and buying mortgages off only a handful of banks/non-bank lenders by comparison to pre-conservatorship is Fannie's most important operation and also where the big revenue (that we one day will see dividends and spot price movement from) is generated: https://finance.yahoo.com/news/fannie-mae-mortgage-scoring-system-161232345.html
From Yahoo Finance! by Bloomberg LP Fannie Mae’s New Mortgage-Scoring System Aims to Lift MBS Demand
Just another big yet quiet step towards the end of this "temporary" conservatorship. Imagine if MBS products became offered using the connectivity of the internet we have in 2024 to retail for easy cash monthly disbursements for holders - unlike 2008 when the internet was simply not ready for that, nor software platforms running on the web.
We are conditioned since COVID especially to retail invest in just about anything imo. More competition is good for Fannie Mae selling MBS because you add the retail investor, the 401K portfolios of the employed worker, to the normal big institutionally filled MBS market in another US housing/home financing boom cycle and you make Fannie Mae ridiculously wealthy in the process and banks will benefit from this in big ways. One such way is offloading their risk faster for profits, offering lower rates on their mortgages, and offering mortgages to more diverse and larger populations of willing home buyers. It does work that way. Fannie and Freddie don't need the FED to buy their MBS anymore than the World needs to buy any more US Tbill debt. Time to invest in profitable, liquid, dividend paying instruments. New home demand remains high in many sections of the US despite "FFR % remaining high and 7% being the boogeyman all over the internet and press" -- that narrative is bogus. DR Horton just had a Q1 in Texas where despite high mortgage % rate they couldn't build fast enough to satisfy the demand and will continue building to keep demand for NEW houses satisfied. People pay too much attention to mortgage rates being tied to the FFR. Rates will lower when you free the GSEs to the public and do things that speed up the efficiency in buying loans off lending banks, banks profiting, bundles of responsibly originated mortgages being sold to investors - and increasing the amount of investors that can access MBS also allows the velocity of lending, bank profits and offloading risk + Fannies capacity to pack and sell these into MBS for larger sized populations with high demand is how the private sector doesn't need government to help it function. We can simply see Fannie and Freddie succeed if they give access to their MBS in ways like this news article proclaims to large populations using the connectivity we now have and also let the market demand that will rise with retail access to traditionally just institutions accessing MBS secondary markets make Fannie and Freddie wealthy enough to buy mortgages off mostly bank lenders in large quantities, faster speeds, making banks larger profits due to the velocity of sales. The rates banks will lend at will fall as they wish to lend to populations that need more affordable terms and also for the wealth and the building of new homes will flourish.
I would argue the FED ending it's purchase of MBS is the best thing you could have happen. Anytime government meddles with a system that could run better in the right free market private sector scenario, it hinders its productional capacity, capabilities, and value. Shareholders will flock to buy FNMA and FMCC common stock as well because with no gov't control comes dividends to the shareholders and in the proposed scenario I forsee - those profits will be turning heads as the excess waterfall from MBS sales at both higher velocity and larger populations increasing demand and competition, increasing MBS price and profits from = $5 dividends from the release day 1 thru it's first privatized quarter and who knows how far? In fact if they get unusually large I would imagine stock splits are in order. This is a 4.28 Trillion Dollar company by Ent Value. If you sold all of it's assets and gave it to its outstanding shareholders including the warrants in that total that's a whopping 3,784 USD per share of common stock. Wanna bet this company can handle expansion? I would expect a 10:1 split or two along the privatized future?
Once government stops hindering what the market can handle, you have a few banks gobbling up MBS for the first time since 2021 in JPM WFC B of A reported in January 2024 - and banks also are going to enjoy getting insanely rich from the profits of lending faster than ever before and expanding to the extreme demand for new housing as they can keep nearly all of the liability off their books because many Americans and immigrants alike can pay off their mortgage payments when the govt and FED gtfo out of the way. What lowers mortgage rates is not the FFR, but the capital banks will have to expand their lending on friendly terms with lower credit requirements because do you really need a 680 FICO and a six figure job to get housing to afford a $350,000 home with 30 yr fixed rates and a 6% interest rate going lower as banks become super capitalized? No. Also homebuilding creates jobs for many different industries. It all works better in the end.
My two cents. I wouldn't worry so much about a PURPOSELY popped bubble when a weeks time removed GSEs from the private sector and Lehman was forced into CH 11 because of a dispute in asset and liabilities valuation on its book with JPM Chase from a Fall 2007 FASB implementation of Mark to Market accounting (FAS 157).
I advise you read on that. Also $1.32? Steal of the century. You know the Trump pump will be >$10 before the election. Just like the first run of 15 months in the green began in Jan 2023, the Trump pump will begin sooner than October and November - heck you might even get a shocking release from conservatorship before the election because it's not a Biden or Trump admin that dictates the time for the need of private GSEs. It's more of a Jamie Dimon type ring of bankers that will select the time for the govt to gtfo the way. You'll see.
That's how the world works. MBNA since the 1990's into the 2000's bought Joe Biden. Trump may not be bought by banks but he sure as heck is private sector, wall street and bank friendly. JPow, FHFA, Yellen. None of these people run the show. That's the truth. Lawsuits are involved sure, but that's also sometimes as much theater as it is procedural for the future. You do realize the USA is a country where the legal framework and evolution of it has to be based on precedent. We are coming to the end of a reorganization where quadrillions of pages of legal proceedings set precedent in and out of courts.
This bullish post is brought to you by someone who doesn't gaf what the "leaders" of this GSE community think. I'm just sharing info as I invest heavily as well. Take it as a peace offering for anyone who is looking for answers to how this all ends/begins and will make you $FNMA folks a really nice amount of capital gains if you're holding here.
/should've tweeted this. Bill Ackman has shit on the length of this post.
$5 by blueberry season.
8:0 jury verdict means something government is grasping at straw's let's see tomorrow if we bounce off of April 5 low of 1.29 🛹🌵🇺🇸
Judge Lambert was very straight about it had to be 8-0 verdict ! Why? did he already know that the FHFA would appeal asking for this very thing and for him to deny the FHFA this motion and for it to hold up on appeal !!! The 8-0 makes it very clear to him which way he can decide this case.
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