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Theft? Let's hear back when 36 cents would look like a windfall.
On the pink sheets...plenty of worthless stocks there
Quoted share price and value or two very different calculations.
Maybe you would like to have the NWS back?
Respectfully the only likely window of opportunity will be in another Trump administration. I doubt any other future President would have the balls to confront the commie swamp.
kthomp, I do understand exactly what you are saying. I get it.
Ackman got it wrong, end of story. This is heading to a nickel.
I'm not trying to prove anything. People respond to me, I respond back.
If anyone thinks there is upside from 78 cents, be my guest, load up the truck.
Now I have better things to do than to try to explain the realities of priority when most seem to think the government will just gift everything to commons.
There is only one capital stack and it's not subject to interpretation.
The government is first in line...the Seniors.
The Juniors are second in line.
And commons are last.
LAST.. PAID LAST....with any available funds (value). Will commons be worth 80 cents? Not no but hell no.
Hi Man with No Name,
Didn't the Rop and Bhatti plaintiffs also ask for a complete write down of the SPS since they have been completely paid off? It seems you are ignoring the substance of text of the Trump Letter which stated that the FHFA is trying to" steal the retirement savings of hardworking Americans.."
If you truly believe in your personal estimate your downside risk is about 90% and your upside potential is about 400-700%.
In other words you can lose everything in commons or make about 550%.
hypothetical:
Are you willing to make this bet? You put X dollars on the table. I will pay you 550% on a coin flip if its heads. If its tails, you lose.
I think both that Treasury cramming down all but $1B of the senior pref liquidation preference into common would push the per-share price to $0.10 or lower, and that the probability of this happening is at least 15% at this point. That alone makes the commons uninvestable to me, even if their upside is greater than I estimate ($4-7 or so).
You should note that both the takings cases and the constitutional/appointments clause cases, which comprise basically all the ones outstanding other than Lamberth, allow for the possibility that the plaintiffs win but Treasury gets to keep the seniors anyway, so the cramdown remains on the table even if all the cases are victories for the plaintiffs.
I will buy large blocks at 40 cents and pay the transfer cost. Anything 50K and up. Reply if interested.
Russian legislation is being finalized to remove these shares from the US market. In other words, you will never be able to trade these again, OTC or not.
They could pay a gift, either way there is absolutely no likely upside in commons.
Seems like some are content flipping for a few bucks and posting endless emojis.
tim howard suggests that if the spspa conversion obliterates common then it impedes their ability to raise capital.
I'm not going to give you advice but my opinion, for what it's worth, isn't what this board wants to hear.
Setting aside your numerous questions:
Forget about equitable principles. To give you an analogy, Treasury is the senior creditor. If the GSEs aren't worth more than Treasury is owed, that means you don't get any recovery. None. This is why I sometimes refer to Enterprise Value instead of Equity Value (not to get into the unique aspects of valuing the GSEs). Preferreds are equity but in reality they have a contractual debt component, which is why they are senior to commons. This is priority. Who gets paid first to who gets paid last. If the seniors aren't satisfied, juniors and commons get zilch.
Upon release, liquidation preference matters. Once again, the overall value of the GSEs will determine the value of the JPS and commons. I believe Treasury, who holds all the cards, will structure a deal that gives them the most combined value of their SPS and warrants, while at the same time limiting or eliminating any perceived or actual legal liability. Because of the JPS's rights (more or less the same as the SPS rights), a deal will likely be struck that moots the $33B+ liability, which leaves a nominal amount of liability for commons.
How is this done? With conversion of SPS and JPS. Or further amendment of SPS into convertible shares and conversion of JPS. In either scenario warrants come into play. It's not so much the warrants have a lot of value, it's they can be used as a tool to meet a desired result.
Eliminating commons altogether creates a (weak) legal argument. Diluting commons 99.999% does not.
I believe the Ropp Case? is the case where you will likely hear about equitable doctrines. I think it's a great legal case and the only case that could get the 3rd amendment tossed. But even if the plaintiffs are correct, I believe the courts won't have the stones to rule correctly and will rely on some form of equitable mootness (sort of like how SCOTUS wouldn't touch the last Presidential election). In other words, the 'equity' remedy isn't one you'll like.
To play devil's advocate, why would Treasury be charitable to the juniors but not the common?
I agree with this, except perhaps the 8% part. I can't see the juniors agreeing to any conversion that gives them less than $33B of post-conversion value, which is 13.2% of an assumed market cap of $250B.
Market cap after capital raise will be around $250 billion. 8% of that is $20 billion. There are about 1.3 billion JPS shares (all series).
This would give the JPS a final (average) value of $20 billion divided by 1.3 billion shares = $15.38.
This is less than Glen Bradford and KThomp19 expect. Both expect JPS to reach at least par value ($25).
So who is wrong here?
How would this work technically? Senior conversion leads to a dilution by factor 170. Warrants exercise adds another factor of 5. Makes a total factor 850.
This would mean that commons would drop from around 85 cents now to 0.1 cents.
If - afterwards - the JPS are converted at par value of $25, each JPS holder would have to receive 25,000 commons per JPS.
Because 25,000 x 0.1 cents = $25.
Is this a realistic expectation?
Hey, I just wanted to double check how you thought the order of things would happen.
1. Senior conversion
2. Warrants exercised
3. JPS conversion
4. Newco equity raise
5. Possibly new JPS to top off
Is that correct?
You seem a little upset. Personally I think Mr. Bradford is an optimist. I wouldn't be surprised if commons come in at a nickel.
Throw your draft in the trash and stay off twitter. If your commentary has done anything, it has been to the detriment of shareholders.
You
are
not
helping
Perhaps you and others should realize an offhand comment by one Judge does not mean a damn thing. Breyer made 'nationalized' comments at SCOTUS, did you get paid?? Did he rule in your favor?
Literally the easiest thing for Treasury to do is write down the SPS liquidation preference to zero. Has that happened? NO. Why? Because they aren't going to do it for free.
How are they going to get paid? By taking equity.
now the "for instance 7B" shares can legally be executed?
Glen, I appreciate all the info you provide on the various platforms.
In regards to option of converting the senior preferred to common, what are your thoughts that Tim Howard mentions on his blog… “would truly nationalize Fannie and Freddie, and, with nearly 100 percent government ownership (compared with “just” 79.9 percent with the warrants), put their $7 trillion of assets on the federal balance sheet”.
Wouldn’t having $7 trillion of assets on the balance sheet make them think twice about converting the senior preferred shares?
There is probably no holder of JPS who would not be satisfied with a "call" (payout at par). In this context, it does not matter whether the JPS are equity or not (they are equity, of course).
What are they going to 'take', 72 cents?
Big whoop. They make off with 99% of the legacy common's 20.1% for less than $2B. That sounds like a no brainer.
"Conversion could come at any time." Are you making stuff up?
If SPS are written off for nothing in exchange? If the warrants are cancelled for nothing in exchange?
Of course yes, the benefit flows to equity.
But never ever ever in my life have I ever seen or heard of a senior holder in the capital stack walk away for nothing. Because it's not reality.
So you are saying JPS will be redeemed (a taxable event) instead of converted (a non-taxable event)?
If the Plaintiffs are asking for an Injunction, wouldnt they have cause to ask for a TRO for any crampdown/conversion by the UST and FHFA? Doesn't Bhatta now make any move to cramdown and conversion off the table until this case is resolved? A SPS conversion would definitely inflict irrepable harm as you have made clear so unless this case is dismissed isnt any move toward a conversion not possible especially by a regulatory agency. Sandra Thompson does not strike me as a rogue regulator.
Another question - doesnt Bhatti just increase the option value of FMCC and FNMA equity since this probably takes any conversion off the table for 1 to 2 years while this case is resolved. Only a settlement would make the time to resolution shorter and no one is settling for 10 cents.
Apparently you do.
No, next question.
This board of course.
Is reality finally setting in? Seems to be a lot of talk about dilution. It'll be total meltdown if Bradford is proven right.
No he didn't. Maybe the light will come on sooner or later. 99% dilution is a real possibility.
SCOTUS said FHFA/Gov can take it, remain silent on just compensation because Plaintiffs never had taking claim at SCOTUS even though judges mentioned several times that it's taking case, Nationalization case.
Plaintiff never asked for just compensation for taking claim at SCOTUS.
presumably the government would like to zero out all jr equity, if it could i presume it would want to zero out jps and commons and forego the capital structure and just keep 100% of the ipo proceeds for itself.
Goad, not ‘GOAT’
goad
verb: goad; 3rd person present: goads; past tense: goaded; past participle: goaded; gerund or present participle: goading
noun
noun: goad; plural noun: goads
a spiked stick used for driving cattle.
Def: provoke or annoy (someone) so as to stimulate some action or reaction.
"he goaded her on to more daring revelations"