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US Treasury Endorses the Commons Securities Platform. No need to merge the GSEs since the FHFA has already extracted one of their best functions and brought them into a new LLC. This must be the LLC HERA was referencing.
https://www.housingwire.com/articles/43420-us-treasury-advocates-for-financial-reform-and-digitalization
Homework Assignment: Which Ratings agency has a .01 price target for GSE Common shares??
Since you seem to think so highly of Ratings agencies, please remind the board what their stance on Commons (Jr. Equity) is.
The Ratings agencies didn't do a good job at predicting the last crisis. I don't think anyone takes them seriously anymore, besides a few Average Joe's.
OMG. Those charts must be eye-opening for your Average Joe's. Thank you so much for posting these. No wonder there's so much hostility towards the Sr. Equity (Preferreds) coming from the Jr. Equity (Commons). It all makes sense, these charts sum things up nicely.
Follow the money! Did they Rotate some Commons into Preferreds? Their Commons holdings look smaller compared to the report that came out earlier this year.
They completed the Single Security Common Securitization Platform. They don't need to merge the GSEs any longer. FHFA eliminated any potential of returns to either company by doing the CSS. It was genius.
Are we still using Yahoo Finance for up-listing hints? How many times have the GSEs up-listed on the weekend or after market close, and then they immediately down-listed before the next market open? At least 20 times this year.
They'll just leave the Jr. Equity (Commons) in a shell LLC, as per HERA. Sr. Equity (Preferreds) will at least get a nice stake in the NewCo. Just ask WaMu holders how their shell LLC worked out ($WMIH).
HERA states the Warrants will be exercised. That's a lot of dilution that Jr. Equity (Commons) will have to face. Best to be prepared for it rather than pretend it's not going to happen.
What is the likelihood the Common shares of the GSE's go the same route as Washington Mutual (aka WMIH)? Seems like a major risk considering HERA references spinning off the entities into a new LLC. I'd hate for Commons to get Escrowed
The 50-day Moving Average will be serious resistance. Considering most Average Joe's are still down ~50%, the smart ones are trading the pops to accumulate more money before this heads to sub-$1 so they can cost-average down.
The Day Traders are taking their 15-20% gains and selling. Gotta buy through their sells; otherwise, we'll dip back to $1.30s next week.
Berkowitz was right! Rumor was he was buying back the shares he had to sell for Redemptions. Looks like he got back in quickly!
Gap & Go tomorrow. $6+ Giddy up!
Section 4 would easily be arguable in court. "Public Interest," aka protecting the taxpayers, would surely be a reason for capital distributions.
They're gonna Salt the Earth with us, as they always do. Best bets in the near-term are Collins and Bhatti. If those fail, then maybe Sweeney will deliver some justice for us in mid-2019.
Preferreds still have Lamberth v2 to look forward to. Lamberth won't help Commons at all though. But nothing will happen there until 2019 as well.
Looks like a clear reduction in Commons that he then Rotated into Preferreds. Do the math.
Ackman: "Do as I say, not as I do."
He's hiding his true intentions while secretly Rotating into Sr. Equity.
Ackman did in fact sell Commons and bought Preferreds. Can't spin that can ya?
There's a difference between Rotating and Selling
Odd he didn't mention that on the call since he did Rotate over 10% of holdings from Commons into Preferreds.
These 10-15% swings have turned FNMA into an excellent trading stock. Since so many people are under-water and just holding at this point, the intra-day downside is fairly minimal. Not for your typical Average Joe, but this is a day-trader's dream.
It would've been nice if Ackman clarified his statements. We are still unsure if he Rotated more money out of Commons and into Preferreds. Just because he said he's not selling, doesn't mean he hasn't sold more Commons only to turn around and buy more Preferreds. Guess we'll find out soon enough
"Sell All Rallies" will occur if FNMA goes sub-$1. People will just trade the 10-20% swings and sell into every rally. Not fun to be long a stock like that, Average Joe's be warned.
Indeed, FNMA getting up-listed to the Dollar Menu is what is being speculated
Even the Funds that invested in Jr. Equity are realizing the risk and want to Rotate into the significantly safer Sr. Equity (Preferreds). I wonder if this will continue?! That will really put a short-term cap on Jr. Equity shares knowing the Funds are dumping millions of shares at every opportunity and Rotating into Sr. Equity shares.
The Rotation continues!
That's a significant Rotation for American Growth Fund. They now have more money in Preferreds than Commons. Jr. Equity doesn't have many supporters left at this point.
Senior Equity (Preferred Shares) may never see a dividend again. This is true. However, Senior Equity must be dealt with before Junior Equity (Common Shares) can have any value. There's no way around it. Better to be in a Senior position when you're investing in a Re-Capitalization as is the case with the GSEs.
If Senior Equity (Preferreds) are worth 10 cents on the dollar, then Junior Equity (Commons) must be worth a penny on the dollar. Each Jr. Equity share is valued at .001 on the balance sheet. So take 1% of .001 and that puts FNMA in the quad-0s -- .0001
It does not look good for Junior Equity (Commons), not at all
FMCC is better positioned financially and they also benefit significantly from the Common Security Solution, which negatively impacts FNMA. If you're betting on Commons (not the best bet no matter which way you slice it), then you should surely be betting on FMCC rather than FNMA.
Rotating out of Commons and into Preferreds is the best bet you can make if you assume there will be Administrative Reform rather than Legislative Reform.
The Good Ol' Boys Club always takes care of each other. The Trump/Mnuchin/Paulson connection is strong
With Administrative Reform (aka The Mnuchin Dilution Solution) looking like the most likely outcome, most people want to be in Preferreds. Preferreds benefit the most in an Administrative Resolution, and Commons could certainly get shafted via the Warrants being exercised (which seems guaranteed at this point) as well as the excessive dilution to raise capital levels.
Rotating out of Commons and into Preferreds is the best bet you can make if you assume there will be Administrative Reform rather than Legislative Reform.
Two government shills. They're only there until our Release, then they will get a HUGE pay-day and be on their merry way to a luxury government role, possibly at the FHFA.
Let's see if $1.25 holds again. If we lose $1.25, sub-$1 is almost guaranteed. Hang on to your hats folks! There's turbulence ahead and things are about to get bumpy! This is getting very concerning.
Common => Preferred Rotation Fever is running HOT! Who in their right mind wants to be in Junior Equity when they can be in Senior Equity? The Average Jokesters might finally be coming to their wits. I saw one of the leaders mention Preferreds earlier today in a Tweet that quickly got deleted.
Senior Equity shares continue to out-perform the Common shares by a long shot.
In a re-capitalization, you don't want to be in Junior Equity (aka Commons) or you risk being diluted via the Mnuchin Dilution Solution.
Thankfully, us Senior Equity (Preferreds) shareholders are positioned much better and don't run the risk of dilution.
Senior Equity (aka, Jr. Preferreds) have been holding up well. The continuous Rotation from Common to Preferred really helps Sr. Equity shares hold their value more so than Jr Equity (aka, Common Shares).
The Mnuchin Dilution Solution is coming. All Aboard the Senior Equity Preferreds before it's too late!
There was a very strong Rotation from C=>P occurring today. Haven't seen this much outflow from Common go directly into Preferred in quite a while. My guess is Ackman is probably entirely out of Commons and fully into Preferreds now. This was a heavy sell Common, buy Preferred day.
Berkowitz continues to press his Short Common position and it's working out brilliantly. Average Joe's better file that lawsuit quick before Berko decides the Commons' fate when he settles with the FHFA/Treasury
Indeed, Dollar Menu soon! Great stock to trade. When Commons start flirting with $1, Moelis will look even more appetizing, even to the Average Jokesters.