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TRCPA, I would temper my expectations about a vaccine - we may never get one. There is no SARS vaccine for a reason. These viruses alter to elude the immune system hence making the principles on which a vaccine works questionable
I read an interesting epidemiologist on this recently, lots of labs and teams are hyping to get cash and publicity. This veteran researcher gave a sobering fact-based perspective
Not saying a vaccine does not happen, but it is far from sure too
TRCPA, thank you for laying out your reasoning which is interesting.
We obviously disagree over JPS conversion which is a big difference
Mnuchin and Calabria decide EVERYTHING and they could go your multi-round raising or one big raise. I think the mechanics make more sense on latter - but nothing is certain so we shall see
Hopefully all longs do well
The companies and Treasury can agree to whatever they want - and Calabria makes all decisions for the companies
So this is another red herring
Calabria and Mnuchin are making the decisions and not Dimon, but we shall see...
Hmmm, but all of the facts remain the same and the logic of the RnR remains the same. Some facts as I see them:
A JPS conversion is very likely, since it increases CET1 - so $33 billion dilution
A large offering of new common shares is likely, since they need to meet capital rule requirements before release from conservatorship under some kind of consent decree -- so $50-$100 billion dilution
Face value of JPS protects prefs, allows them to convert at offering price -- hence avoiding common dilution
Nothing protects old common -- its values is DILUTED and MASSIVELY
Lisbon is a beautiful city (threw that in so we can agree on something)
Common holders have a Noah's Ark in front of them, in pref shares, they can board the Ark by converting their common to pref -- THIS IS ALLOWED!
I would board that Ark between now and the Fall because otherwise the flood of dilution will wipe away the stain of present common holders...
OK, I am done for the day here, going to have a run and fix a windowsill on my old house, good luck my friend!
TRCPA, thanks for the thoughts. I agree overall about Dimon's comments being a positive for RnR
I am not sure I agree about the effect of a vaccine on the markets
A SCOTUS ruling with retroactive remedy would be a tonic on Monday lol
Let's hope, best, potty
Hmmm, and existing common get diluted by the $33 billion in junior pref being converted to new common PLUS there are also huge offerings of common to new investors, likely at the same price that the JPS get converted, so that dilution ON TOP
... Kai from the yahoo board might need to think about that LOL
There is a reason that Calabria said "shareholders will be heavily diluted" -- and for the board pedant the usual meaning of "shareholder" is a common holder
Heavily diluted indeed... so you do need to change your name to Common Diluted to Hell, CDH...
If I still held common shares, ie if I were still a shareholder, then I would take the recent drop in JPS as an opportunity to switch from common to JPS. I did that the last time common was at $3, made a killing...
BTW I moved my holdings around this week, so now I am only in pref series at 6%+ yeild... given the purchase price that means I am well over a 20%+ yield if divvies were to resume
Just a lot more safety in a variety of scenarios in the Fall
I have to say I am warming up the FnF story again, since so many other parts of the market are a little scary now -- I am not unhappy sitting in these securities through Xmas
Hi Kthomp, thanks, this was enlightening...
The Dimon quote is interesting indeed... a raise would be extremely lucrative for JPM, so I can see why the CEO might take notice
But that implies it happens and on a grand scale
I also think Calabria (and therefore Mnuchin) would be fools to let the raises move beyond January 15th, if they intend to do them, since the lawsuits will fly -- and coming from the new regulator and Treasury secretary they will have some weight
On the other hand, if Calabria/Mnuchin just get FnF out under a consent decree and with contract/conditions as steps that would be good...
But I take your point about FnF still being in the problematically undercapitalized condition and Calabria being a stickler for HERA... Depending what they do with senior pref and warrants, and JPS conversion, then a raise in the Fall could be a lot less large -- and it would make FnF's release much more ironclad...
It makes a lot of sense to do the one big package - IF they can get those two raises done (and on a smaller scale allowed by JPS conversion, pref treatment, etc)
I have my fingers crossed the moves lower on Friday were not SCOTUS leaks, but we shall see...
Hi Kthomp, I ran out of messages yesterday, so sorry I did not respond earlier...
Reading some of your posts, you think we are going to have a JPS conversion close to one big capital raise, presumably for each company. And that this happens AFTER the election...
But with JPM and MS starting now, and then ramping up after capital rule is revised and finalized in August, do you really think they have enough time to do the raises between Nov 5 and Jan 15?
Calabria is going to be terminated, and a deputy installed, on Jan 15 and unless everything is encased in contracts, then things will be reversed... In the SPG abandonment of the TCO takeover, I also heard the suggestion that contracts are now treated as guides in American law that can be challenged in courts -- so how rock solid would the situation be?
Just curious if you think the offering for both companies happens in the Fall and whether you think they have time to do it?
Thanks for sharing your take on what is coming, I find your reasoning pretty plausible but I am concerned about the short window for an offering
JPS prices tanked in last hour Friday, I really hope that we did not have a leak from SCOTUS...
The appeal of conspiracy theories is that they are very easy to spin to explain almost anything
The problem is that at some point the conspiracy theory hits the cold concrete of reality and the facts -- and the believer in the mistaken conspiracy theory suffers the consequence of hitting the concrete hard
There is no schedule, just a lot of independent people who (a) see the dilution coming in an RnR and (b) see that that the pref avoids (or even benefits from) the dilution whilst the commons is destroyed by it
A lot of people independently reaching the same conclusion is often taken to be support for that conclusion BTW
You and the litigant thing lol, I don;t get the relevance at all...
Hi Kthomp, I think I agree. But I tend to think Mnuchin and Calabria do a BIG BANG with SPSA amendment, NWS cancelled, senior pref retirement, and JPS conversion...
Then release FMCC and FNMA under consent decree -- and let the decide when or if to do offerings over coming years
So Calabria and Mnuchin do not decide mechanics of the offerings.
Do you agree?
Maybe you should try reading what Mr Kao offers as reasons, evidence and arguments? He is pretty compelling... common is likely to get diluted and pref is plausibly going to be converted so it has all upside of common without that dilution risk.. but I paraphrase
Give the Kao, the Bove and the Tilson a read and make your own decision, rather than who you have seen someone with
TRCPA, it is an interesting question how many raises they do.
One route is the Ackman idea of a small common raise, or convertible pref, to establish a floor price. Then wait for SP to rise before doing another raise higher, rinse and repeat...
The other route is do one big raise in coordination with the pref (junior and senior) conversions -- and be done with it
The Conservator and Treasury are deciding what happens in the Fall -- I can see how they go the second route...
But who knows?
Was anyone claiming they were trading? lol
BTW Bove was projecting that pref converts at $2.50 common price -- and offering happens at $2.50 as well. The pref converts at its face value and is not determined by the volume it trades...
Take a read of this note by Bove from 2019 to see the dilution that he thinks is coming to common:
https://kaoboymusings.com/wp-content/uploads/2019/11/Bove-update-9-16-19.pdf
But maybe you will just stick to trading...
Navy, I own FNMFO too, why not pick on it too... lol
Interesting insight on commons v pref...
Re: Fannie/Freddie-Common vs Pref? I’ve always disagreed with Whitney/Ackman on this (see link). Imho they’re ignoring the very real possibility of equitization of the pref which would massively dilute common to the benefit of prefs and uncap the upside. https://t.co/xNGQvBLBFn
— Michael Kao (@UrbanKaoboy) June 18, 2020
TRCPA, you cannot dilute a holding you do not have, so "no" potential investors cannot dilute themselves -- since they have no holdings to dilute
Almost like there is a common truth that a lot of independent people are articulating ... hmmm... makes you think?
That penny gain is bringing the pain... ?
Ano, they just find a bunch of Calabria's Cato or Heritage buddies to go on the board, no difference -- not a hard game to play
I wish, but I think NO CHANCE at all...
Treasury has shown no impetus to settle -- they will do only what the courts force them to do so far, I expect that to continue
Wish you were right and they behaved differently
I could give a crap about what a gutter TV hack does in the future... most of the presenters on Fox are obviously embarrassed about the guy
Roberts apparently swings on politically charged to protect the court and so he does that in important cases of wide popular concern -- imho neither CFPB or FHFA is of wide popular concern... Not sure if most people know about either agency
So let's hope Roberts sticks to his principles, rather than seeking to protect the court
Fingers crossed
LOL, under the Trump administration SEC actions have dropped... guess what the result is?
Game time at ScotusBLOG...
Thank you Sir!, opinions start posting at 10 am EST there
Stinkie, careful with that everclear, we don't want you to die just at the moment of victory lol
I have been impressed by Rule of Law Guy's point -- SCOTUS has emphasized in cases last year, and before, that agency over-reach needs to be detered and that retro-active remedies are the way to do that
Let us hope that the conservative justices stick to that very sensible precedent, since the abuse of power at FHFA under (acting) Director DeMarco is the worst agency over-reach in the modern era
If anything needed to be showcased as a lesson, then FHFA's actions are it...
Fingers crossed over the coming month
Futures down again this morning
Hope SCOTUS delivers at 10am
Yeah, I agree you don't buy at $5.50 if you have the risk of having to sell at $5...
I assume the reverse split won't come until AFTER the SPSA amendment, consent decree, etc. so not until after Nov 5 th... curious whether it happens in 2020...
Getting a listing again on NYSE, and at SP over $30, would certainly attract new money and increase the SP - hence making the offering less dilutive
So I presume the companies would want to do it as soon after consent decree gives them back some control
I think they are allowed to issue common shares in conservatorship, the conservator has all the powers of the board and shareholders, but that is different from whether anyone would buy them... I agree that no one buys till all the details of the new situation - regulatory, contractual and financial - are all laid out in a crystal clear, and untouchable (by future FHFA director) fashion
Probably a mercy lol, they find enough doozies as it is...
Right, you guys need to go advocate over on StockTwits and Robinhood... and Dave Portnoy's platforms...
And pray these folks don't get slaughtered in the coming correction
One thought: IF the Robinhood, and the Portnoy army, got interested in FnF, THEN you might get over $5 - at least for a while... maybe go over to Robinhood and advocate?
I think all these folks are going to get slaughtered, but what do I know?
The smart money, Nomura etc, say $5-$6 is the value of the common, so I don;t see how it gets to $8-10 when we don;t know the details of the SPSA amendments, consent decree, offerings -- or even if they will ever be released
I believe so, but others with more detailed knowledge need to weigh in
Here is one reason why you can be -- they were ALREADY listed under the Conservatorship and the conservator ASKED to have them delisted and they were not forcibly delisted
So that suggest yes
Please God that SCOTUS rules that way, but let's say SCOTUS goes with a weaselly ruling with Roberts as swing vote, I just worry that Judge Atlas won't rule till 2021 - our experience of the timelines of Federal judges would suggest that... so I worry this won't happen soon
But fingers crossed for SCOTUS ruling or Judge Atlas having a response ready to go...