Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Everything you have all been waiting for is about to happen. 100% chance FNMA and FMCC will trade above $15 between now and end of 2021 with the catalysts starting to begin this October 9th and cascading forward into the new uptrend. It's not about court decisions, conspiracy theories, or deep analysis. It just comes down to money and the whales that move this world around. It is completely farcical for anyone to think legacy shareholders are going to get wiped out or dilluted into oblivion on this one.
There is too much at stake on the power table for this to go sideways.
Most in life will never come close to touching the inner circle. This circle operates in increments of decades and plans out three generations into the future.
Trust the process, be patient, and know that the journey is now closer to the destination compared to when many of you started it oh so many years ago.
Do not abandon your conviction in the 11th hour as so many do.
This will be my last post as I head off to hospice to embrace the end of my life knowing I have left my children and grandchildren a lifetime of wealth and safety.
In time, all things shall be revealed.
October 9th, 2020 (ER)
April 5th, 2021 (FP)
It has begun. The rocket is counting down.
Time to begin accumulation if you have not done so.
October 9th, 2020 (ER)
April 5th, 2021 (FP)
Get ready for the rocket.
The eye is rising on the third movement.
October 9th, 2020 (ER)
April 5th, 2021 (FP)
Get ready for the payday.
The rocket is gassing up.
Get Ready For The Rocket
January 13th, 2020 (CP)
March 23rd, 2020 (CR)
October 9th, 2020 (ER)
April 5th, 2021 (FP)
Get Ready For The Rocket
January 13th, 2020 (CP)
March 23rd, 2020 (CR)
October 9th, 2020 (ER)
April 5th, 2021 (FP)
Opinion on price action today and next week
At this point, based on the economic calendar next week and status of earning season, we do not see any major external catalysts which would result in FNMA/FMCC taking a market-based impact that would cause a movement intraday exceeding 10%.
There is too much support pressure from investors now waiting for release of the plan with new buyers coming in. The en banc also looks to have less negative teeth at this point.
The only thing that will materially spike the price will be the release of the GSE reform plan or leading-up comments next week from Mnuchin and Kudlow.
For today, from 11:00am to 2:30pm eastern expect a potential 5 to 8 cent dip off today's high due to low afternoon volume. That dip should be fully recovered by 3:45pm eastern with a new high of $2.98 to $3.01 (prediction).
Looking forward to Monday. Have a great weekend.
Time for a deep breath
The Fed comments were not earth shattering. China hit us with retaliatory tariffs two hours before the Fed spoke. Market is going to price in more help from the Federal Reserve.
FNMA and FMCC appear to continue to push higher. We may even hit $3.00 today. Great news!
Time to call it a day and go shoot some clay pigeons with the boys. May you all have a relaxing weekend and enjoy what happens next week.
Great question and I will try to answer clearly.
The Fed Chairman Jerome Powell last spoke about policy on 7/31. The confusion he caused during his Q&A session resulted in a major selloff for the markets. This gave the players on the OTC an opportunity to re-balance their share inventory and you saw (for example) FNMA drop from $2.35 to $1.98 on that day. So this was market makers, short sellers, panic sellers, and people who wanted to exit FNMA/FMCC to cash out and buy the dip in other securities which drove the price down. This caused a major drop in FNMA/FMCC. They recovered but then Trump a day later declared 10% tariffs on the remaining $300b tranche of Chinese imports which caused another drop followed by another recovery.
Major economic/market news catalysts like this can cause FNMA/FMCC share prices (and all other stocks) to be impacted for the reasons mentioned prior (market maker share shaking, short sellers, panic sellers, and people reallocating to buy other stocks which are now cheap).
So tomorrow if Powell says the right things, the market will go up or remain the same. If he says the wrong thing, we may see another decline back down to near $2.00 per share again with a rebound over the next following days.
So just understand that this is what is going on and be ready to handle it emotionally. You can ignore it and ride it through or you can buy more shares if it dips. The reason for this information is so that you're not scared out of your position because you see big change in price. Just trying to prepare you and keep you informed.
The main takeaway: Keep track of the Fed calendar for meetings. Their decisions can cause massive swings in the market and often do.
"The release of the treasury’s report could still be weeks away, and any changes it recommends might take months or even years to implement, indicating that the conservatorships may not end anytime soon."
Mohsin and Weinstein are vulture reporters that scalp second hand information and put a bias on it to move price. They have put out several articles this year with inaccurate and overly biased information which caused downward price pressure. These kids need to go back to journalism school and learn about objective reporting with real sources and facts that are checked.
As Bloomberg's staff turns over to a fresh batch of millennials and the high caliber professional veterans retire, the quality of this new group has really gone down. The depth of character is missing and both the content and research is painfully lazy.
If this article causes a small shakeup, we'll be glad to pickup those extra shares at a discount.
TBTF banks had their chance and squandered it back in 2008-2012. Time to free the GSEs and move on to other things. Stay strong. Stay long. The best is yet to come.
There will never be over 10 billion shares of FNMA/FMCC. That will never happen. A secondary offering is also unnecessary. The GSEs do not need a massive offering to rebuild capital the right way. A properly adjusted SPSPA will fix many issues.
We're not here to convince you of the future price of the shares or to drum our chest and pontificate about hypotheticals.
We're here to help you carefully think through the value of holding these shares for the long term and ignoring the paid skeptics whose principals are currently unfairly benefiting in the market. We're also here to provide you with legal limited access information when it becomes available to us.
As long as these shares remain on the OTC, certain trading techniques allow them to force unnatural volatility and large players (predominately shorts) can more easily control share price intraday. It is abundantly clear. All you need to look at is the price, volume, order flow, and understand the networks behind the OTC. Before we entered our primary long position on FMCC, it was trivial to move around the price action and dampen trends with order algos simply by turning on/off big position submits.
Just wait until these are relisted. Trust the process and stop trying to divine a future outcome that is entirely out of your control. Spend your free time enjoying life and anticipating the profits that will come to you. Goodluck. Stay strong. Stay long.
RuudG, that is a fair question about price. Consider the following...
I tend to shy away from discussions pertaining to valuation because everyone has their own method. To my team, the $10 is the most conservative range of the estimates based on near-worst case scenario dilution from Treasury exercising warrants, a reduced footprint, and after the shares have been relisted. We frankly think the share price value is much higher. Outlining exactly how we arrive at our minimum value estimate is always a subjective activity. Again, everyone has their own approach.
I'll leave you with a perspective posted a while back.
Microsoft (MSFT) trades on NASDAQ at $137/share. Last year it had $110 billion in revenue and $16.5 billion in net income. It has 7.64 billion shares outstanding with a market cap of $1.06 trillion. 74% of its shares are held by institutions. Microsoft is ubiquitous in that the operating system and other software runs all over the world.
Fannie Mae/Freddie Mac last year had $43 billion in combined revenue and $25.1 billion in net income. FMCC has 650 million shares outstanding and FNMA has 1.16 billion. Combined their market cap is currently $4.38 billion. FMCC has 13.83% institutional holding and FNMA has 14.81%. The GSEs are ubiquitous in that they hold up the housing market and allow Mortgage Backed Securities investments to function. They represent around +/-13% of the economy.
Lets say the 79.9% warrants were exercised by UST and preferred shares converted to commons and the common shares were diluted to an estimated 10 billion shares. Let's estimate a worse case scenario here.
If these shares are relisted and may now be purchased by large hedge funds, may be added to ETFs and indexes, how long do you think the price is going to stay under $10 per share?
These stocks are absolutely beaten down by the fact they are delisted and in conservatorship. When that ends, do you really believe $10 per share is unreasonable? $25? $50? $100? Where do they belong once they are placed back into the market on the proper footing and institutional buying is resumed and options trading on CBOE is resumed? Where do the GSEs belong in comparison to peer S&P500 companies?
$10 per share will just be the start. Imagine when dividends resume. When you pass these shares to your children in a trust, do not be surprised if they trade over $50. But let's not get ahead of ourselves...
Stay long. Stay strong. The best is yet to come.
Stockman1010101's advice is absolutely great advice and spot on.
Expect more gap ups each day as word spreads. If you can acquire shares below $3.00 this is still a great discounted price to buy at. Don't sit on the sidelines waiting for the perfect moment to buy back at $2.00 again.
The opportunity is now and the window is closing soon. Shortly many of you will have enough of a profit buffer (if not already) to no longer fear the intraday price action moves.
Remember we are all the owners of Fannie Mae and Freddie Mac. This is our company as shareholders. We believe that our companies will be here for many years and have great value in the marketplace. Continue to trust your gut. The best is yet to come!
Amazing Day
Good job everyone. Once we get through the Fed news conference tomorrow at 10am eastern, next week is looking to be repeat daily gap ups and buy volume during the start and end of the day. If you can, try to accumulate on profit taking dips during low volume periods between 11am and 1pm eastern.
This looks like it is going to drill past $3.00 within a week. Remember, many retail investors may have problems buying stocks on the OTC and their intent to buy may take a few days as they transfer money and setup brokerage accounts that can buy off the OTC.
Not everyone is aware of the GSEs so as the news spreads throughout the market we can anticipate additional buy volume. We now have new Bloomberg, Fox Business, and yes WSJ articles. There was also mention on CNBC today. The news is spreading. All good events.
There is enormous capital sitting on the sidelines waiting on confirmation. When confirmation happens, there will be no way to catch this.
Let's also not forget that the 5th Circuit has not yet posted their 8/22 opinions today. This is unusual as we check this daily. Could we have an en banc decision tonight? We think at this point the en banc cannot harm us. It will either keep the status quo (if Collins loses) or act as an upward price catalyst (if Collins wins) creating new price support levels.
Goodluck everyone and constantly keep in your mind the value you believe these shares are worth. Do not get caught up in the intraday price action movements. It always gets harder just before the change event. You fear the potential drop down and tend to forget the value of the equity and where it actually belongs. We now have multiple new support levels built around $2.20, $2.60, and $2.70. Everyone is waiting to see the plan and this will add to support. Soon $3.00 will become the new bottom of value with $5, $7, and $10 in sight.
We can all agree these shares are worth at least $10 per share. Stay long. Stay strong. Today was phenomenal. Have hope and trust the thesis that lives within your heart and your mind. Do not betray it out of fear. Trust your gut and your knowledge. Very good things are ahead for next week.
Request: Everyone set $150 limit orders this Friday
This may have been discussed prior, but we want all of you to reach out to everyone you know that has FNMA and FMCC stock and ask them to submit an order that is good until cancelled to sell all their shares at $150 per share. This is a LIMIT sell order and not a market order. You will essentially have this order sitting out there indefinitely and never sell unless the share price reaches $150. You may have to refresh this every 6 months.
Why would you do this? This is going to prevent your brokerage firm from lending out your shares to those who want to short. It is also going to reduce liquidity for the market makers and force them to naked short shares on those trying to buy. Eventually the market maker is going to have to rotate up the share price to try to get the price high enough to convince shareholders to sell so they can flatten their short position. It causes a headache for them to get imbalanced on managed shares and puts upward pressure on share price.
We doubt enough people will do this to have material impact but you never know. We would really like you to do this especially if you trade with Interactive Brokers, TDAmeritrade, Merrill Lynch, or Charles Schwab. Stop letting your broker lend out your shares to shorts and market makers. Call them up and discuss this. Goodluck.
Yes, that did happen today but there is another important event this Friday.
The Jackson Hole Economic Symposium is an annual symposium, sponsored by the Federal Reserve Bank of Kansas City since 1978, and held in Jackson Hole, Wyo., since 1981. Every year, the symposium focuses on an important economic issue that faces world economies.
This annual conference starts this Thursday and Powell is going to speak on Friday. The markets move when the Fed Chairman speaks. This Friday will be an important event.
If Powell indicates no future rate reductions and easing, the market is going to react negatively. Many equities will sell off very quickly. Many will recover within a few days after. Just don't let this be a reason for you to dump your position out of fear because you're not aware of these economic events.
What we don't want is to see retail investors sell out of their shares this Friday and then miss the train next week when everything begins to kick off. Avoid that situation and stay long. Some of you will sell at $10. We are planning to hold until at least $25 and through relisting on NYSE. The best is yet to come. Goodluck.
If you had read my post, we finished accumulating fully the prior week when it faded down to $1.98 per share. Today was a very nice day for us considering our average cost basis is $1.34 per share. My only point for the retail investors/traders is to not end this Friday outside of your long position. Make sure you have your shares. Next week you won't be able to catch it. Aside from that, agree with you on your points. This isn't the time to be day trading this. This is the time to stay long and not sell too early. Be patient to take your profits. This will go past $10 per share soon.
This Friday Fed Chairman Jerome Powell is going to speak. What he says will cause the markets to jump or drop very quickly. It will generate large volatility with 1-2% move in the market. Ideally he will talk about the Fed starting a course of cutting rates and monetary easing to help sustain economic growth. If he doesn't talk like this, the markets will get upset and you will see automatic selling of equities. Market makers will also use this as an opportunity to re-balance their shares to support liquidity.
This could cause FNMA and FMCC to drop 10 to 50 cents per share like what happened a few weeks back when the Fed talked and then the next day Trump declared 10% tariffs on the remaining $300 billion tranche of Chinese imports. We saw shares drop down to $1.98 which was fantastic and allowed us to accumulate at a discount.
As this Friday Fed meeting comes many traders who have some long positions tend to do one of two things:
1) They sell off their shares prior to the Fed meeting on Friday. They wait for the market to settle down after the news event and then buy back into their shares. There is already an expectation priced into the market that the Fed will mention some kind of future rate cut (such as 25 basis points) and so confirmation of that would cause stocks to begin trending up. However, if they don't take this posture, you can expect a fairly violent drop. Your option is to miss out on a potential minor gain in the market or avoid an ugly drop.
2) Other traders will keep their long shares and wing it. If the Fed announces something that causes the market to drop, you can sell off a portion of your position (25-50%) and buy it back on the dip as it begins to retrace. This lets you lock in some profit and get more shares at a discount.
Some people aren't aware of the Fed news event and may get scared out of their shares because they lack the information as to why the shares are declining. That would be a huge mistake. Kudlow and Mnuchin are going to speak about the GSEs next week. Calabria is finalizing capital requirements. China is on a timeout for now. The administration can now focus on this. They want to show they are protecting the taxpayers and stopping what they perceive as socialism by returning property to the middle class shareholders that were screwed by prior administrations.
The plan will likely address a modified SPSPA with a perpetual backstop fee to Treasury. That is fine. Treasury will also likely lay out a plan to exercise warrants but do so in a smart way to prevent share price impact. Who cares if we end up with 7-12 billion in outstanding shares. NWS termination date will be declared. Cap requirements will be defined by FHFA. Everything is lining up nicely. There is also the En Banc kicker which is taking a lot longer than anticipated. This clearly suggests the opinion will be precedent setting and likely rule against the Government. The judges must ensure their majority opinion has sound logic and is written well. There is a 65% chance En Banc will stop NWS and lay out a remedy for Plaintiffs.
Our advice to everyone on this board is to just forget about these shares for the next year. Set an alert when the stock reaches $10 and go enjoy life. This is out of your hands. The cake has been baked and now we're just waiting to see it revealed at the party.
Ford, Citigroup, AIG, and so many others have come and gone. This is the last of the great opportunities that rose out of the 2008 crash. Those who stayed long and accumulated shares under $1.00 will be well rewarded.
I keep saying I will not post anymore but continue to get tremendous amounts of private (and some public) messages.
Goodluck to all who hold both common and preferred. Just remember that most people tend to second guess themselves right before they reach the end and jinx themselves. Do not let this happen to you. We believe FNMA and FMCC are worth $50-$100 per share (great companies) and expect to see this level in the next 8 years with $10 reached by March 2020 at latest.
One final message...
I left but had to come back to warn you all. No matter what happens do not sell this week, especially on Friday. Goodluck. The time we have all waited for is about to happen. $10+ per share.
Hail Mary Time and Goodbye
Budget deal signed accounting for GSE costs in next fiscal year.[Check]
Trade talks on hold. Treasury can re-task to housing finance.[Check]
Tariff income will offset ending NWS.[Check]
En banc ready to be published.[Check]
Kudlow has the plan ready to release.[Check]
Tomorrow begins the final accumulation of another $20 million of commons for my sheets.
In 14 months everyone on my team will retire with new catamarans, vacation homes, and full financial security.
When I started this business over 25 years ago my dream was to take care of my people and to build a business that made a difference in the lives of those I cared about. I hired each one of them. They are family to me. This move will make or break our shop. This decision, my decision, will impact the lives of 82 families.
My name is Gary and I have run a private firm for the last two and a half decades. I traded in the open pits of the CME. I once lost over a million on a trade and I have made many times that since. I helped pioneer some of the software in Thomson Reuters Eikon. I ran the algorithm that put up the ask wall to accumulate large quantities of shares in FNMA since May. I am also the one who has been shorting FMCC at open periodically while remaining long on FNMA. We now begin our final buy orders of FMCC to even up for the trip past $10.00 per share.
As we move into the final leg of this journey there is no turning back. There is no stop loss set. We're fully committed to our long position in FMCC and FNMA commons. Our trust now rests in the hands of our judiciary and people like Calabria, Mnuchin, Trump, Kudlow and Larry Fink to keep their promises.
It may be that we all fail together. It may be that our analysis, hopes, and plans do not work. But I have a feeling...a feeling that those who stood tall against this 11 year storm will see the light of day and boundless profit will be theirs.
This shall be my last post. Goodluck everyone. All your dreams are about to come true.
It was weird that the Fed cut occurred exactly between Freddie and Fannie earnings release dates and everyone would have jitters about rates impacting future MBS profitability. There is also the fresh reminder of the NWS going into the general fund at Treasury when F/F release their quarterly earnings.
Look at what is happening today. The shorts are now doing top chops instead of a large opening unload. Yesterday and in the past few weeks they have done large opening unloads and covered by end of day. Look at the up and down chop of today's price action. There are no real buyers and sellers today and it has mediocre volume. Everyone is waiting.
Those who are playing short positions seem to be exiting daily or every Friday. They will flip on a dime the second there is good news. They are traders who will take profit in any direction. When good news drops, the DMMs, traders, retail, and institutional holders will hit the ask hard. No one will put up a massive limit offer if they can let the price action continue to climb. They will sell into that with smaller fills to achieve maximum profit. You won't see an offer "wall" in that scenario.
The thought process everyone has to work through is: Are you willing to risk this falling back below $1.00 for the chance to make 5 to 10 times profit in the next 12 months? There are still multiple lawsuits pending. Calabria is on record. Kudlow is on record. Mnuchin is on record. They are finalizing a plan. They have stated they want to get the GSEs out of conservatorship. It has been 11 years.
Another good question to ask: Will this stock trade under $3.00 per share in 2026? That is statistically very unlikely.
I would recommend that people set a stop loss at $0.90/share and only check the price every Friday after close. You will drive yourself insane watching it daily. The only people that should watch it daily should be traders who are recycling through long and short positions to scalp daily/weekly profits.
Remember: En banc must come out. The plan must come out. Those will be the catalyst you need that will allow you to finally know if your decision was good or not good. We're paid to sit on our hands. Profit comes through patience and having a trading plan that defines your risk/reward ratio, entry price, exit price, and thesis for taking the trade. If your thesis has not changed and you haven't hit your stop, why exit? Invest and trade with a plan. Stick to the plan. Be consistent. Do not be swayed by fear or emotion. That is how people like me swallow up your shares and move the profit into our account instead of yours. Emotions ruin lives but you should always trust your gut and weight your gut against your thesis. If your gut and your thesis align, do not second guess your decision unless new information forces you to recalculate.
Commons are still a tremendous opportunity. The longer this en banc takes, the higher chances it will be a published opinion that sets precedent for future case law. And statistically, it always takes longer when ruling against the Government. We estimate 68% chance en banc favors Collins without remand to lower court. NWS will be stopped.
It was really a risk management decision. We had already exceeded our profit target for the preferred and were up over 200% on them. Moved some of that profit into more commons and are using the remaining capital on different investments. We may get back in on preferred with a smaller position depending on how the future unfolds.
The cause for the drop on Wednesday
The cause for the drop:
1) People exiting positions prior to Fed announcement to play it safe or re-balance into other equities. 25 points were met so people reloaded their positions.
2) Some impact from Freddie earnings and upcoming Fannie earnings related to hedging
3) Short sellers piling on for a final hurrah before En Banc / The Plan drops
4) Some people got scared out of their shares due to the trending down of commons while preferred seemed to recover (flip flopping between the two)
5) End of month rebalancing for many funds and PE firms
Do not be surprised if tomorrow there is another "U" shaped day of price action. This is where it sells down at start of day and then recovers before end of trading when the shorts close their positions. If you want to nab some profit from this please see my other post. These stocks are beaten down fairly badly. Even the short traders need to let them breath back up. Their goal is to profit off 10-30 cent deltas each day. If they beat it down too far those distances close the gap and it becomes less profitable. They actually don't want to short this to zero but rather keep it in a range where it moves between $2 and $3 and they can profit off long/short reversals.
We're still long on commons but fully exited all preferred. Yesterday was a great day to pick up shares. We did large purchases when they were hovering around $2.00 and it was nice to see them recover so well. A favorable En Banc will cause this to skyrocket so quickly.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=149323250
Time To Begin Daily Shareholder Calls/Emails to FHFA
I have been away for a while on vacation. It looks like things are close to happening and this is very exciting. En Banc and the new plan are going to send this stock north of $5 in a heartbeat. You saw the 250,000 block trade on 7/23 when Calabria was talking? It ripped the price up quickly. There is so much pressure right now this stock is going to overreact at the first sign of certainty.
It is more important then ever that you contact FHFA repeatedly each day via phone call and emails to repeatedly request that Mark Calabria release a statement for his intention to protect the existing shareholders. He needs to make a statement and he needs to be on record. Earlier this year he said "they currently trade and will continue to trade" but we need more narrative from him on how he's going to protect and respect the shareholders. This is also important for current legal proceedings.
So please take 15 minutes out of your life each day to call and email the following contacts below. There is also a submission form on FHFA's website. If enough of us do this, we can make an impact. Do not sit on the sidelines and expect other people to move the ball. We move the ball together. I already have my entire team (30 people) committed to doing this each day. You need to do this too.
Note, the following information is public information from FHFA's website:
Media please contact: MediaInquiries@FHFA.gov or 202-649-3700.
Members of Congress or staff please contact: 202-649-3802.
WebMaster: FHFAwebmaster@fhfa.gov or 202-649-3031.
https://www.fhfa.gov/AboutUs/Contact/Pages/Request-for-Information-Form.aspx
The Real Reason Friday Recovered
It was not because Gasparino's tweet.
It was not because @CarlosVignote aka "Here I am" aka "Black" post on Yahoo forum.
It was because the intraday shorters and those who held shorts since Monday (multiday) needed to close prior to going into the weekend.
Gasparino and anyone with basic trading knowledge knows what happens on Fridays within 30 minutes of market close. 100s of equities have short squeezes on Fridays when the short positions cover with buys to exit going into the weekend. Many traders will also buy the dip and ride the short squeeze up and then sell in the last 2 minutes of trading.
This is why you will often see at 3:30pm to 3:45pm Eastern a rapid dip followed by a rapid recovery up to 3:55pm followed by a smaller selloff dip before market close at 4:00pm.
Gasparino knew there would be shorts covering and so he timed that tweet to make it appear as if he was the cause. Why? Because so many of these business reporters get compensated or additional airtime when they can post news that makes the market move.
If you trade, often Monday and Friday are where the money is made because you'll get all kinds of volatility and momentum.
That's it. Next week will be interesting.
We Didn't Short Today. What You Should Do.
We didn't short any commons today and in the last 6 months we have only shorted a few times by taking alternate positions between FNMA and FMCC when bad news dropped and we knew there would be covering before end of day.
For today we took a painful haircut on our position with the gap down and afternoon fade. Not fun.
We did begin exiting JPS and will exit it by next week. We're 100% done with JPS and are locking in profit from low pps accumulation in 2018.
I was clear that today would be a strange day. It could have been a lot worse but the common prices held at historical support levels. Some of you have to recognize how good that is.
The stock didn't bottom out. At one point there were 12 million limit orders holding the bid at $2.50 for FNMA. That was an impressive thing to see.
If you really want to make a difference you should do the following:
Contact FHFA, Treasury, WH, and your elected officials in Congress and explain how harmed you have been by this conservatorship. Explain how it has negatively impacted you and will drive your future voting. You need to see the shareholders taken care of.
Contact as many journalists as you can (FOX, CNN, NBC, ABC, CNBC, WSJ, AP, Reuters, WSJ, Bloomberg, White House press pool, etc.) and ask that they submit the following questions next time they are in front of Trump, Calabria, Mnuchin, or Kudlow.
1) Don't you care about the shareholders?
2) When exactly will you end the NWS?
3) What will you do if en banc doesn't rule in government favor?
4) What is your capital rule?
5) When will you relist the stock?
6) What will you do with the SPSPA?
7) What will you do with the warrants for common?
8) What will you do to protect the rights of the 100,000+ legacy shareholders so they are restored and no longer harmed?
When good factual news about this stock appears, repost that on twitter, reddit, stocktwits, and any other message board to increase social awareness and sentiment. Tell all your family and friends on Facebook about this corrupt situation. Spread awareness as far as you can.
Do this instead of speculating on a message board and you will have far greater impact.
Today shook out the short term investors on common. If this goes to $2.40 for FNMA and $2.20 for FMCC I will begin to be worried. If they remain in a $2.30 to $2.50 range for the next 30 days, that is not bad. We want to see continued bounces off prior support with steps into higher levels.
En Banc will change everything.
Analyzing Reuter's Calabria Interview
Yes, we were wrong about the en banc. We sent a guy down to New Orleans for two weeks to ask employees coming into and leaving the offices for any updates. We called all the clerk office numbers we collected from publicly available records and tried to extract the information. We talked to attorney friends prior on language to use for softening out the information without crossing any legal lines. All legal journalist techniques. They gave some indicators initially but then got very tight lipped.
After that impasse we did analysis of all prior court cases and the duration for rendering both published and unpublished opinions. We charted all the cases prior to the en banc hearing which had not yet had opinions released to try to calculate the pipeline of workload they would have to complete before they could focus on working through the Collins case (assuming they did their work in a largely serialized fashion). We then applied statistics to this.
In the end we were wrong about the en banc today. They have processed through the other cases and yet en banc opinion remains. Orals were heard on 1/23/2019. We estimated today for release based on real days (not work-only days). If you just count work-only days and exclude weekends and holidays, 180 days (6 months) is 10/08/2019. FHFA and Treasury know this too. So why would they announce they will release the plan in August or September if the 180 day mark opinion average for work-only days is the first week of October? Why even make that statement today?
Answer: They are not going to release their plan until they know the results of the En Banc and I suspect they do not have high hopes for the En Banc ruling in their favor. They know something.
So the reality is the en banc can drop any day but it would be beyond extraordinary if it went past 10/08/2019 in our opinion. We're already in the twilight zone with this quasi-investment.
However, let's examine what Calabria actually really said and point factor it as we look at how tomorrow might open.
https://www.reuters.com/article/us-fannie-freddie-reform/u-s-government-report-on-housing-finance-reform-is-essentially-done-regulator-idUSKCN1UC2OE
Comment 1: said in an interview it was his “hope” that they would have exited or be ready to exit conservatorship before his term ends in 2024.
Analysis 1: He did not say the timeline was from now until 2024. This is a business goals statement. He views his tenure as Director to set them on the proper path, whatever the time may take. He's not advocating for exactly 2024. He wants to do the right thing before he leaves. This is the context of this remark. (neutral)
Comment 2: “That’s my time horizon,” he said, referring to the end of his term. “I’m under no expectation to try to get all this done. ... So if in four years, nine months they’re not out of conservatorship, I’m not pushing them out.”
Analysis 2: This statement supports comment 1 analysis. He has an ideology of how the mortgage market should work. He's emphasizing again that he wants to put the GSEs on a sound footprint and do it right and not just quick. It could be quick or it could be slow as long as it is done per his vision of proper. Again, this isn't suggesting he will purposefully take until 2024. (neutral)
Comment 3: Calabria said the report was “essentially done,” that he had seen a draft, and expected it to be published in August or September. (positive)
Analysis 3: This is a great statement. This is tremendous progress. The report is complete in draft. He has reviewed it which means Treasury has reviewed it. It is likely on its way to Kudlow. They expected June but August/September is hardly any time in the world of Government, especially with all the things going on with trade, sanctions, and debt ceiling. (positive)
Comment 4: Treasury Secretary Steven Mnuchin, who has led the push for reforming Fannie and Freddie within the administration, is “juggling a number of balls,” Calabria said.
Analysis 4: Calabria is providing an explanation as to why it is taking longer. He's explaining how busy Mnuchin is. This indicates he is aware the issue is pressing and is providing a reason for the delay. He actually cares about the timetable by making this statement. He wants it done sooner even though earlier he stated he's in no rush. (positive)
Comment 5: Despite his heavy workload Mnuchin continues to work with his team on housing finance issues on a weekly basis, a person familiar with the matter told Reuters.
Analysis 5: While not a Calabria quote, we heard this one a few weeks ago. This is good. We want Mnuchin meeting weekly on the issue. The fact Reuters included it in the article and potentially in the Calabria interview is supportive of progress and not delay. (positive)
Comment 6: Calabria said he expected the Treasury will in the report back some form of government guarantee for Fannie and Freddie. But he said he planned to advocate for a guarantee limited to the mortgage-backed securities issued by the pair, rather than a government backstop for the companies themselves.
Analysis 6: This is good. This indicates a long-term sustained existence of the GSEs as opposed to winding them up into something else or receivership. They know they cannot get security guarantee without Congress so they will continue to use a modified version of the SPSPA to provide entity support while it recapitalizes. (positive)
Comment 7: “The market looks pretty strong now, so that to me is the time when we want to make real repairs, he said.
Analysis 7: Further support for him wanting to get this done sooner than later. Again, he is willing to take as long as it takes to get it right but he wants it done sooner. (positive)
Negative Statements: 0
Neutral Statements: 2
Positive Statements: 6
Other factors:
(1) Remember, the plan is essentially done. It's not "theoretical". It has been worked on extensively to reach a working draft.
(2) Mark Calabria, Larry Kudlow, Steve Mnuchin, and Trump are all on the record stating the GSE takeover was wrong.
(3) Mark Calabria said that commons and preferreds currently trade and will continue to trade. He has awareness of the stock and the shareholders.
(4) Mark Calabria seems to take his role as conservator seriously. He likes the GSEs and wants them to be sound. He is an ideologue and that is good. He may want new charters in the future but that is not an issue for probably 10 years. The GSEs will be around for a long time. His last minute letter to 5th circuit is either a white flag, a delay tactic, or trying to cement his power over FHFA so he can implement his plan without Executive interference if things do not go his way. I still trust Calabria. They are building a potential backdoor in case 2020 doesn't pan out and he's forced to deal with a new POTUS, Congress, and Treasury Sec.
(5) En banc is still in play and beyond the timeframe we anticipated. Longer is better for shareholders because the judges will have likely determined their opinion sets precedent and they have to take the extra time to get it right because this case will now be cited in future judiciary proceedings. Go lookup the difference between "published" and "unpublished" opinions.
(6) TBTF discussions do not seem to be materializing for new capital raise. This suggest FHFA and Treasury may have to allow GSEs to recap via retained earnings and adjustments to g-fees before anyone is going to want to invest in new equity. This suggests less chance of new equity thus less dilution which is good for common pps.
(7) Reuters wrote about the GSEs. That is getting higher visibility on the news food chain. Looking forward to when CNBC talks about it and the WSJ writes an article. More visibility is what we want. We want these stocks relisted.
Tomorrow will be an odd day. Some may exit because the timeline is too long for them. Some may try to exploit and short. However I believe if the En Banc rules in favor of Collins, we are on a good path. Commons look to be winning. We're going to be getting out of most of our preferred now and take our profit on them while holding long on commons.
My fear for tomorrow is the market may overreact and we'll head down to 2.40 support levels before regaining. I could be entirely wrong but it would be wonderful if all the investors took the time to really think through how this chess match will unfold. Long on commons is looking more and more logical.
Goodluck everyone and apologies if any hopes were dashed for today's en banc ruling. We're certainly disappointed as well.
If en banc does not drop in 60 minutes our entire model and research failed. If it happens within the next 14 days, I'll still consider it a failure as I pride myself on solid investigation and statistics. We trade and we invest.
Goodluck everyone. We are still very bullish on commons but are now selling down preferred.
Started covering earlier. Finishing up due to slower fills. 2.68 short down to 2.62, reversal at 2.62 back to 2.66 on 300k shares so lead trader could get his $30k full pocket scalp. The power of recycling.
Always a good thing when you can chew into the market maker's algo and help fight against the abuse on the OTC.
35k down on rng sequence every 1-5 minutes while also doing multi-routing of smaller order lots.
Sorry for FNMA right now. Going to cover out the shorts by 3:50 eastern.
Ask Wall No Longer on Level 2
For the past 120 days there has been an ask wall.
What is the ask wall?
It is a large limit order to sell shares at a specific price which discourages upward price movement.
This may have been a firm trying to sell out of a position or to prevent price increase so they could continue to accumulate at lower prices with an algo (sell 1 at ask / buy 2 lower).
Looking just at FNMA, today is divergent in that:
1) Lowest number of trades and volume in first 60 minutes of trading in weeks. Yesterday had 5 million+ volume with around 2,600 trades. Today we're at 250k volume with less than 100 trades.
2) The large limit order (2-4 million shares) is not on level 2 data.
Someone wants this price to go up now and they are awaiting en banc to drop today. I still stand by my claim that en banc is going to be released today.
Goodluck everyone. We're excited to see this finally climb above $3.20.
Ran out of replies yesterday. Thanks for the questions and feedback. We continue to remain very bullish on GSE commons and preferred.
The en banc opinion will be released as published. This means it will set precedent. Precedent takes extra work.
It will be released tomorrow (July 17) and favor Collins. This is my opinion. If I am wrong, I will lose all credibility.
These last minute opinion letters will do nothing to change the decisions the judges already made weeks ago and are now finalizing in their majority and dissent opinion texts.
We just finished closing out the short positions and for the rest of the week our plan is to monitor and accumulate a few more shares if it dips down again. There is now too much risk to day trade this so close to en banc. Invest and trade wisely. Do not gamble.
You're right. Friday wasn't the last chance to buy cheap. No one could have predicted all these negative news articles would begin coming out so close to en banc being published. Hopefully people were able to buy more shares at a discount. En banc this week or I have zero credibility going forward. I'm that certain.
Terrific post. Completely agree. We are are fast approaching a significant volatility event and I believe it will favor the longs.
Yes we are. We have a lot on the line expecting that it will and have significant positions tied up in this.
My main purpose for posting and tracking this forum (among many others) is to gather social sentiment and to support the flow of accurate information. As you all know, this is by no means a normal investment.
We also do not want to see all our fellow investors with good hearts get scared out of profit by the continued apparent abuse on the OTC and by the bigger shops that can punch the price around.
We're just disappointed not a single reporter at the White House yesterday asked Steve Mnuchin for an update on the GSEs. We need the reporters to be asking for a status at every opportunity.
As far as my prior comments, we are 99.99% certain the en banc will come out this week.
We're also 100% certain the plan will not be released without the en banc. It is already done and sitting with Kudlow. They are waiting for the en banc.
None of this should be construed as investment advice. We continue to remain very bullish.
Very fair analysis and I tend to agree. I think the shareholders should spend less time trying to do battle with this guy and instead focus on contacting elected officials, Treasury, FHFA, and other organizations to increase the spotlight. An example would be asking any of the news outlets with White House press passes to actually ask an official in the next meeting for an update on the GSEs. We should be pressuring journalists to ask questions we are interested in and not trying to fight them.
Everyone has an agenda and speculates but we need to focus on getting the legitimate updates from government officials working on this.