Freddie Mac, 8.375% Non-Cumulative Perpetual Preferred Stock (FMCKJ)

[44centsAKAchoccake]

Shelby

http://www.valuewalk.com/2014/11/fannie-mae-senate-congress/

[wcharlie]

Nice end of day hits here

[stockprofitter]

huh?

[Dollars1]

fnma board says you're up 28% after hours

[betahighlander]

Good link I got from another board.
the report is from the CRS- and reports for Congress Not the POTUS- president of the United States

http://www.fas.org/sgp/crs/misc/R42760.pdf

[philipmax]

nice long article but not informative, nothing new.

[betahighlander]

Check out this link- long rant- but it makes several points
http://discuss.morningstar.com/NewSocialize/forums/p/328931/3454949.aspx#3454949

[philipmax]

Interesting lawsuit by AIG's Hank Greenberg now in Federal Claims Court seeking recompense for stolen shares of AIG by Treasury and Fed.
His arguments are applicable to our situation.

[philipmax]

I went to FNMA hub board. They talk too much. They list 1000 or more entries per day. Most are useless.

On a more troubling front. Today the FHFA announced that there are accounting difficulties with the write-offs. The implication from Bloomberg article are that F&F will be compelled to write off so much of their mortgages that they will wipe out common stock equity. Scary prospect, considering that the accounting rules are arbitrary and easily manipulated by political expediency.

I never commented before on QE3, but, by the wording, I get a feeling that the FED is slowly absorbing the toxic mortgages from the banks to free up their (the banks') capital. At some point the FED will turn to F&F and "stick the garbage on F&F's front door.

[philipmax]

That's why these issues are so exciting.
There is always a chance that someone who is well connected in Washington will grab these entities for themselves (think Carlyle Group, or Blackstone, or Blackrock and such, perhaps). If they grab these, they'll take them away from us with UNE-GOTTZ (sic) with regard to the public good or to shareholders' rights.
They can do so because... THEY CAN!

Other than that threat, we are look pretty good here.

[betahighlander]

and for me anyway
As long as i do not cash in
interest rate on earnings I would have to give to Uncle O.

$$$$money money money$$$

Maybe a pipe dream - But it is real possibility.
So much entertainty right now- hence to fantastic risk reward.

[philipmax]

Awesome!

Checked it out that's 6.14+Libor. Still 7.875% on $25.00 base.

I liked the 5 year window for redemption. We may very well have an opportunity to feast on a rich div.

[betahighlander]

For me it would be world series ring if they paid the divi.

not sure about the unilateral.
see link for how the fixed rate changes to a fixed floor with a variable component as of 12.31.12 this was part of the original issue terms.
One more thing most of the pfd issues can be redeemed at any time now. FMCKJ at least is in 5 year windows. next date 12.31.17

see links- freddie mac site for their pfds

http://www.freddiemac.com/investors/preferred_stock.html


freddie mac site for ckj:

http://www.freddiemac.com/investors/pdffiles/FtFPrefStock-oc.pdf

[philipmax]

Beta... Wouldn't it be better if they start paying Div. on the FMCKJs rather than call them for redemption?

They recently, unilaterally, changed the "rate" on these PFD to 6.42%+LIBOR. Current anticipated yield, about 7.875%.

Two problems with that.

1- I'm not sure they can flip the rate on PFD after issue?

2-If the div. is suspended, and they anticipate redemption in the future, why fool around with the security if you don't expect to pay the div. anyway?

Very strange!

[betahighlander]

LOL- spell check is both a blessing and a curse

fmckj - all the way to Redemption Value $25

[philipmax]

Correction:The genie is out of the bag not the "spellcheck" Genny on post 62.

[philipmax]

Whatever is suggested, nothing could replace the system as it stands. F&F should never have been made public shareholder companies. By parceling out ownership to the public, congress, in the 1970's, cleverly hid $Billions of national debt away from the window (but still in the bag). Now, the balance sheet of these GSE's have nearly $19 Trillion in outstanding debt. If this Ginny is put back in the bottle, our National Debt goes to $36 Trillion.

And what can be instituted as a substitute?

I can understand a gradual increase in banks' "skin-in-the-game" plan, say 5% to 10%, of issued mortgages, but, at 100%, the system will freeze up just like the 1930s.

Even the proposed Warner-Cocker bill envisions some GSE in the future. So here we are back in the same mess again.

The problem is not F&F, it was management of these GSEs that worked their bonuses on volume rathar than quality. They walked away scott free with $ Billions in bonuses and the shareholders are left hoding the bag.

[betahighlander]

Agreed:
New territory- the c-ship was poorly thought out and was a cram down by GS boy toy Geitner.

DeMarco - like him or not has done the best he can as he sees it.

I personally think he could have done better for the GSE stockholders.

We Really need to get to net zero- The corkner bill will be extremely expensive and i think the building industry and RE industry have enough pull, to slow it down long enough.

Should the GSE- continue to not only improve results but implement additional reforms - we will be "golden"

[philipmax]

Thanks.
I visited some FNFNM and FMCC Hub spots but they were dry. So, I migrated here. We'll see if becomes active or not. Yahoo is full of "one liners" insulting and trashing each other so I stayed off. SeekingAlpha is a mature discussion group. Unfortunately, I haven't yet tapped into the continuum vein of information there. It's a hit or miss streaming of articles. I don't want to be stranded either.

As you know there will be some smart-Alick who'll predict explosive prices, and others who will put this whole issue as a folly.

If you or anyone finds a real insight into the value (or non-value) it would be helpful to all.

We never experienced a "conservatorship" before. I am not sure if anyone knows the legal standing of this entity. Not sure the originators knew either.

[betahighlander]

Phillip Max -there is more activity for pfd on the fnmas board.
This group migrated from Yahoo MB.
but splintered some use freddienfannie on google groups.
the commons board is bit hectic.

Good discussion on fnmas- but they will call you out if you are just pumping or dumping-

[philipmax]

What does a democratic capitalist society do when it nationalizes a company or an industry?
This country is no stranger to nationalizing private property.
A few examples:
WWI and WWII we have examples of companies that were confiscated.

The drug company Bayer (aspirin)Was taken over in WWII. Returned to shareholders in the 1960s. The company prospered under US Government ownership and Stockholders profited as well.

GAF, formerly known as General Alanine and Film Company, today known for roofing products, but in WWII it was critical in making war materiel. Also, returned to stockholders in a very profitable transaction benefiting both Government and Shareholders.

AT&T was taken over in WWI under the guise of a "critically needed for national defense". Returned to shareholders after the war with enhancements.

And

All the major railroads in the USAin 1917 were taken over by the Gov't during WWI because there developed huge logjams on the rails due to incompatibility and lack of interchangeability of equipment between the different RRs. Returned in 1921, to owners after more than a $100 Million in US taxpayers' money ($10B today's $s)to improve the system.

Now, F&F have to be dealt with.
If, our legal system still works on precedent, then we have a great investment on our end. If, however, we let greedy private self-interest groups get it, we are screwed. Look up CSX takeover of Conrail under Dubye 2001.

PS I really don't want to be the only poster on this board. Anyone here can disagree and bring their input into the discussion.

[philipmax]

This week Senators Warner *D VA) and Corker (D-TN) proposed a bill to terminate FMCC & FNMA within 5 years. They are to be replaced with US Gov't guarantees for privately funded mortgages. Duh???

What do these gentlemen think Fanny&Freddie are doing?

What shall we call these new entities? How about, Fanny and Freddie, since they'll do the same functions.

Silly as it sounds, there are few options out there to replace or even augment F& F. Why? because they worked so well for 80 years.
There need not be a "fix" for something that works so well.

Next unsolved issue:
Government confiscation of private property. Namely, my common and preferred stock in F&F.

How are you going to do that, boyz???

[philipmax]

I'm looking for a blog site that will be open to full discussion of Federal take-down/takeover vs. return to stockholders. This may be the place. So, all discussions are for education purposes and not to hype or dump the stocks.

Having said that, I notice that there are two types of talking heads in a tug-of-war discussion that are fishtailing the stocks.

First, the CONGRESSMEN who throw out all kinds of suppression and destruction statements about the GSEs.

When the stocks fall precipitously, the second group comes to save these entities.

This group includes some Hedgies,as well as, Ralph Nader.

So obviously, there are politically well connected people who want to sequester these companies for themselves and use the congress as there fulcrum.

Stay tuned.

[Opex]

With Freddie doing so well in 2013 and being government controlled, my question is why not privatize again and let them make the final payments to our government?
I am keeping an eye on this one.


Per Share Data & Valuation Ratios ($) 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Tangible Book Value NM NM NM NM NM 22.26 33.57 32.59 38.79 39.01
Earnings -0.64 -3.63 -6.09 -7.89 -34.60 -5.37 2.84 2.83 3.94 6.68
Dividends NA Nil Nil Nil 0.50 1.75 1.91 1.52 1.20 1.04
Payout Ratio Nil Nil Nil Nil NM NM 67% 54% 32% 16%
Prices:High 0.42 1.00 1.68 2.50 34.63 68.55 71.92 73.91 74.20 64.78
Prices:Low 0.14 0.13 0.24 0.35 0.25 22.90 55.64 54.50 56.45 46.48
P/E Ratio:High NM NM NM NM NM NM 25 26 19 10
P/E Ratio:Low NM NM NM NM NM NM 20 19 14 7
Income Statement Analysis (Million $)
Interest on:Mortgages NA NA 14,375 33,290 35,067 39,342 38,825 33,721 32,467 33,302
Interest on:Investment NA NA 95,425 6,815 5,369 3,568 4,262 2,606 3,136 3,796
Interest Expense NA NA 92,131 22,150 33,332 38,064 37,270 29,899 26,566 28,150
Guaranty Fees NA NA NA NA NA NA NA NA NA NA
Loan Loss Provision NA NA 17,218 29,530 16,432 2,854 215 251 143 10.0
Administration Expenses NA NA 1,546 1,651 1,505 1,674 1,641 1,535 1,550 NA
Pretax Income 9,445 -5,666 -14,882 -22,384 -44,561 -5,985 2,161 2,652 3,856 7,175
Effective Tax Rate NM 7.06% NM NM NM NM NM 14% 20% 31%
Net Income 10,982 -5,266 -14,026 -21,553 -50,119 -3,094 2,211 2,189 2,937 4,816
Balance Sheet & Other Financial Data (Million $)
Mortgages NA NA 292,896 606,934 649,259 709,786 700,543 709,503 664,582 660,531
Investment NA NA 1,844,895 127,870 107,591 41,668 56,945 57,324 62,027 83,936
Cash & Equivalent 87,568 99,434 37,012 64,683 45,326 8,574 11,359 10,468 35,253 23,142
Total Assets 1,989,856 2,147,216 2,261,780 841,784 850,963 794,368 813,081 806,222 795,284 803,449
Short Term Debt NA NA 197,106 343,975 435,114 295,921 294,861 288,532 282,303 295,262
Long Term Debt NA NA 2,045,482 436,629 407,907 442,636 459,077 460,260 449,394 444,351
Equity -77,618 -86,426 -78,710 -61,531 -59,640 12,615 22,192 22,582 26,807 26,878
% Return on Assets 0.5 NM NM NM NM NM 0.3 0.3 0.4 0.6
% Return on Equity NM NM NM NM NM NM 8.7 8.0 10.2 17.2
Equity/Assets Ratio NA NA NM NM NM 2.1 2.8 3.1 3.4 3.3
Price Times Book Value:High NA NA NM NM NM 3.1 2.1 2.3 1.9 1.7
Price Times Book Value:Low NA NA NM NM NM 1.0 1.7 1.7 1.5 1.2

[fresco]

just catching up on the preferred; nice work on this and thanks

[TheFinalCD]

FM CC is in conservatorship, and the pref class of shares are the ones that the Hedge Funds are after, if theres any equity left it goes to pref shareholders...common are always last, and in many cases cancelled

[betahighlander]

link to Freddie Mac prospectus


http://www.freddiemac.com/investors/preferred_stock.html

Date Description CUSIP OTC
Symbol
11/29/2007 Fixed-to-Floating Rate Preferred Stock Offering [PDF] 313 400 624 FMCKJ
9/24/2007 6.55% Preferred Stock Offering [PDF] 313 400 640 FMCKI
7/17/2007 6.02% Preferred Stock Offering [PDF] 313 400 657 FMCKL
4/10/2007 5.66% Preferred Stock Offering [PDF] 313 400 665 FMCKN
1/10/2007 5.57% Preferred Stock Offering [PDF] 313 400 673 FMCKM
10/11/2006 5.9% Preferred Stock Offering [PDF] 313 400 681 FMCKO
7/12/2006 Variable-Rate and 6.42% Preferred Stock Offering [PDF] 313 400 699
313 400 715
FMCCT
FMCCS
10/25/2001 5.7% Preferred Stock Offering [PDF] 313 400 731 FMCKP
5/23/2001 Variable-Rate And 6% Preferred Stock Offering [PDF] 313 400 756
313 400 749 FMCCJ
FMCCP
3/20/2001 Variable-Rate And 5.81% Preferred Stock Offering [PDF] 313 400 764
313 400 772 FMCCN
FMCCO
1/23/2001 Variable-Rate Preferred Stock Offering [PDF] 313 400 780 FMCCM
11/2/1999 Variable-Rate Preferred Stock Offering [PDF] 313 400 798 FMCCL
7/16/1999 5.79% Preferred Stock Offering [PDF] 313 400 830 FMCCK
9/18/1998 Variable-Rate Preferred Stock Offering [PDF] 313 400 848 FMCCG
9/18/1998 5.1% Preferred Stock Offering [PDF] 313 400 855 FMCCH
3/18/1998 5% Preferred Stock Offering [PDF] 313 400 863 FMCKK
4/23/1996 Variable-Rate Preferred Stock Offering [PDF] 313 400 608 FMCCI

[44centsAKAchoccake]

Here are a few of my personal favorites. You can get the prospectuses at quantumonline dot com or the company websites. Some have a redemption value of $50 others have RV of $25. Issued at different times so have different dividend rates. Quasi equity and quasi debt. Somewhere in between equity and a long-term bond, lol.

FNMFN
FREGP
FNMAS
FNMAJ
FMCCT
FMCKJ
FMCKI
FNMAI

Personally, I'd probably stick to FMCKJ, FMCKI, FNMAS, etc.

[Stamas88]

What's the diff between all of them

Mainly what's this 6.2% etc

Looking to buy prefers but there's way too many

[Stamas88]

Worth buying?

What's the diff between this and Fmcc

[TheFinalCD]

whats the end result ?

[TheFinalCD]

hes on!

[TheFinalCD]

wow that's a lot thx

[TheFinalCD]

really starting to heat up!

[saltflat96]

SA, email me at [e-mail]

[woondedeagle]

Thank you feral - good info..

[feralcomprehension]

I'd work the math on both scenarios and see how it worked out, if there was an obvious better choice.

Model 1: Sell CKJ, lop off 30% of the profit (or whatever your LT tax rate is), buy XXXX for the balance, multiply by the difference in RV (if that's your thesis, some target below that if not) and that's your nut.

Model 2: Stay in CKJ, multiply by whatever your price target is (make sure the underlying rule is the same) and compare that result to the one above.

If they were close and you needed more accuracy make sure and take out taxes in both scenarios and allow for the fact that you already paid tax on part of the gains in model 1.

[woondedeagle]

How would you handle the tax consequences of trading out of CKJ, for example, with considerable profits into a 50?

[jmbell42]

I agree for the RV potential in the preferred shares. I myself got in to FMCKL, but right now I can't remember why I chose that one over the others. I'm guessing that there was a price arbitrage in FMCKL vs FMCKJ (something like $1.00/FMCKL vs 1.20 FMCKJ), so that's probably why.

I'm sitting on some nice longer-term gains (got in Jan 2012), so I'm pretty happy, but a return to RV will be sweet!

I'm not a heavy hitter like some of you guys... if I get RV, then I might be sitting on $40K... which is nice for my stage in life!

Best,

Jared

[feralcomprehension]

I don't normally pay close enough attention to maintain a trading position, but given that volatility is likely to continue forever doing so should really be a priority. Would you please consider sharing when you're strongly considering taking action? I'm not interested in your actual positions or moves, more a sense of when conditions are approaching ripeness.

"CKJ had a fast runup, I might be inclined to move from that to one of the low-priced 50s if it goes up much more. [Todamooon!]"

'Moonasooooonah!' was always my fave.

[betahighlander]

I am looking for Redemption value in the pfds- the dividend would be a HUGE bonus.
I made some money on the commons- but the prospects of RV seem to be on the horizon !!!

Go Fmckj

[betahighlander]

list- the link website is easier to read and has links to the circulars
http://www.freddiemac.com/investors/preferred_stock.html

Date Description CUSIP OTC
Symbol
11/29/2007 Fixed-to-Floating Rate Preferred Stock Offering [PDF] 313 400 624 FMCKJ
9/24/2007 6.55% Preferred Stock Offering [PDF] 313 400 640 FMCKI
7/17/2007 6.02% Preferred Stock Offering [PDF] 313 400 657 FMCKL
4/10/2007 5.66% Preferred Stock Offering [PDF] 313 400 665 FMCKN
1/10/2007 5.57% Preferred Stock Offering [PDF] 313 400 673 FMCKM
10/11/2006 5.9% Preferred Stock Offering [PDF] 313 400 681 FMCKO
7/12/2006 Variable-Rate and 6.42% Preferred Stock Offering [PDF] 313 400 699
313 400 715
FMCCT
FMCCS
10/25/2001 5.7% Preferred Stock Offering [PDF] 313 400 731 FMCKP
5/23/2001 Variable-Rate And 6% Preferred Stock Offering [PDF] 313 400 756
313 400 749 FMCCJ
FMCCP
3/20/2001 Variable-Rate And 5.81% Preferred Stock Offering [PDF] 313 400 764
313 400 772 FMCCN
FMCCO
1/23/2001 Variable-Rate Preferred Stock Offering [PDF] 313 400 780 FMCCM
11/2/1999 Variable-Rate Preferred Stock Offering [PDF] 313 400 798 FMCCL
7/16/1999 5.79% Preferred Stock Offering [PDF] 313 400 830 FMCCK
9/18/1998 Variable-Rate Preferred Stock Offering [PDF] 313 400 848 FMCCG
9/18/1998 5.1% Preferred Stock Offering [PDF] 313 400 855 FMCCH
3/18/1998 5% Preferred Stock Offering [PDF] 313 400 863 FMCKK
4/23/1996 Variable-Rate Preferred Stock Offering [PDF] 313 400 608 FMCCI

[betahighlander]

list of Freddie pfds.
the link has the circular information
http://www.freddiemac.com/investors/preferred_stock.html

Preferred Stock Circulars

As announced by Federal Housing Finance Agency Director, James Lockhart, on September 7, 2008, all future common and preferred stock dividends would be eliminated, other than dividends on the senior preferred stock issued to the U.S. Department of the Treasury.

In accordance with the Senior Preferred Stock Purchase Agreement, until the senior preferred stock is repaid or redeemed in full, Freddie Mac may not, without the prior written consent of Treasury, redeem, purchase, retire or otherwise acquire any Freddie Mac equity securities (other than the senior preferred stock or warrant).

Adobe's Acrobat Reader Plug-in is required to view the files accessible on this page, which have been created in PDF format.

Order printed versions of these documents
Date Description CUSIP OTC
Symbol
11/29/2007 Fixed-to-Floating Rate Preferred Stock Offering [PDF] 313 400 624 FMCKJ
9/24/2007 6.55% Preferred Stock Offering [PDF] 313 400 640 FMCKI
7/17/2007 6.02% Preferred Stock Offering [PDF] 313 400 657 FMCKL
4/10/2007 5.66% Preferred Stock Offering [PDF] 313 400 665 FMCKN
1/10/2007 5.57% Preferred Stock Offering [PDF] 313 400 673 FMCKM
10/11/2006 5.9% Preferred Stock Offering [PDF] 313 400 681 FMCKO
7/12/2006 Variable-Rate and 6.42% Preferred Stock Offering [PDF] 313 400 699
313 400 715
FMCCT
FMCCS
10/25/2001 5.7% Preferred Stock Offering [PDF] 313 400 731 FMCKP
5/23/2001 Variable-Rate And 6% Preferred Stock Offering [PDF] 313 400 756
313 400 749 FMCCJ
FMCCP
3/20/2001 Variable-Rate And 5.81% Preferred Stock Offering [PDF] 313 400 764
313 400 772 FMCCN
FMCCO
1/23/2001 Variable-Rate Preferred Stock Offering [PDF] 313 400 780 FMCCM
11/2/1999 Variable-Rate Preferred Stock Offering [PDF] 313 400 798 FMCCL
7/16/1999 5.79% Preferred Stock Offering [PDF] 313 400 830 FMCCK
9/18/1998 Variable-Rate Preferred Stock Offering [PDF] 313 400 848 FMCCG
9/18/1998 5.1% Preferred Stock Offering [PDF] 313 400 855 FMCCH
3/18/1998 5% Preferred Stock Offering [PDF] 313 400 863 FMCKK
4/23/1996 Variable-Rate Preferred Stock Offering [PDF] 313 400 608 FMCCI

[betahighlander]

fmckj- is an attractive pfd- the yield will be very good- once dividends are paid

[feralcomprehension]

Helloo? Is anyone home?

(Is this thing on?)

[skibrian]

devil...we're over here: http://investorshub.advfn.com/Fannie-Mae-Preferred-S-FNMAS-20248/

come join us!

[littledevils90210]

Yeah, I sell and I buy and sell and buy in and out....I do like the preferreds though. What has really changed? IMO, nothing detrimental. OK. They take away the capital building aspect. But, the money is going to pay down the amount invested in Freddie. It will reduce the senior preferred.

I am a buyer of the 50s mainly. I like the cheapest 50 and maybe the cheapest 25. Guys, forget the interest play. That is done....go for the value and as always.....go figure...devil

[44centsAKAchoccake]

Treasury Secretary Timothy Geithner is expected to step down if President Obama wins a second term.

Word on the street, according to the Wall Street Journal, is that White House Chief of Staff Jacob Lew and former chief of staff to President Clinton Erskine Bowles are on the short list of potential Treasury Secretary replacements.

The incoming Treasury Secretary will be facing a fiscal cliff right off the bat with the nation heading into a new year where automatic tax and spending cuts kick in unless Congress is able to cut a deal.

Economists have warned a failure to reach a deal could push the nation into another recession.

[e-mail]

[44centsAKAchoccake]

Well, I lost $18 in September, compared to about $106,000 in August. Maybe things will start looking up after the election.

[44centsAKAchoccake]

Yes, that's right. I'm planning for more volatility too--trying to get a new job lined up starting July 1, 2013. Ideally, I'd retire, but I think I better plan to work for a few more years, lol. I'm still optimistic about the FnF preferreds, but I'm prepared to wait it out a few years.