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So these are positions built up over the course of the month and only reported now because the trading month ends tomorrow? If so, why do we see the big blocks yesterday and today as opposed to tomorrow?
How can you tell the difference? And were today's big blocks in FMCKM actually settled at the prices listed (5.37, 5.40)?
Another 1,300,000 shares of FMCKM were just bought, on top of the 4,000,000 yesterday.
Did the report include an amount?
On page 13
Good, I'm not the only one who remembered something like this. But given that it's past 9pm EST, if there was something submitted today we will likely have to wait until tomorrow morning to see it.
I thought I saw a (different) recent letter with a requested response date of today (Sep 25). Does someone remember what that one was?
I don't see any way the junior prefs get back dividends. That is cash directly out of the government's pocket and I can't seem them agreeing to any deal involving a cash outflow.
If the junior prefs are to get a sweetened deal it will be in the form of a (voluntary) conversion to common at a favorable ratio.
I can't see a PATH-style bill getting any traction. Not only will it not likely get even a single Democrat vote, it runs contrary to the RNC's resolution they just published. That bill didn't even make it to the floor in 2013, and I think it would be even harder to pass now.
The warrants are neither illegal nor unconstitutional. You don't get to define what those terms mean, the courts do.
I'm glad I don't day trade at all.
Tim Howard agrees.
Moelis would have commons go up 300-400%. Shorting the common would be suicide in that case.
It must be a pretty poor complaint by the plaintiffs if their own exhibits undermine their conclusion. I would imagine that the bar for granting a motion to strike is pretty high given the potentially severe consequences.
Or buy 1 share at $25 to really shake up the market!
On what grounds do you think he will dismiss? The remanded claims have cleared the judicial bar as it were.
It will take a successful lawsuit to get Treasury to give back even a single penny of what they have already taken. Those fines got paid to Treasury via the NWS and I don't see them ever coming back.
That fine money also counts towards the "10% moment" that could be critical in making a release politically palatable.
The NWS is also "illegal" and that hasn't stopped the government from sucking FnF dry. If the government exercises the warrants and sells the stock, good luck ever getting any of that money back. They obviously don't care about legality.
You're right that if the warrants are not exercised, the commons have a ceiling much higher than the $9-13 that Moelis envisions.
But getting that $9-13 is cash in your pocket. There's a reason these stocks trade at under $3 right now, things could still happen that wipe commons out or dilute them into oblivion. Even the junior prefs only trade at 20-25% of par so the market sees a lot of risk there too.
Disfavors the common holders how? Making ~300% on your money (from this moment) is a bad thing?
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Do yourself a favor and check the price once a week, maybe twice if major news comes out. The long thesis here is dependent on big things happening, so as long as they aren't there's no sense keeping up with the price on an hourly or even daily basis. There's even less sense in complaining about it.
The budget sequester was supposed to have the same effect, and it failed as well. It is hard to imagine Congress getting any sweeping housing finance reform done in the next 4.5 months given that tax reform is supposedly a higher priority and even that is going at a snail's pace if even that fast.
If shareholders have no rights whatsoever why did any of the claims get remanded? Breach of contract must be a direct claim or it would have been tossed out with all the other derivative claims.
The Perry opinion specifically remanded claims regarding liquidation preference and dividend rights, which are spelled out in that same document I linked to. The document must mean something.
It was in the link: right here.
A forced conversion would be yet another breach of contract that could cause more litigation. Breach of contract claims have survived the Perry dismissal and appeal so far.
That's because the Perry appeal was the main case on which many longs had based their investment thesis. Just about every investor I read posts from (on this board, Corner of Berkshire & Fairfax, Tim Howard's blog, etc) thought that there was at most a 10% chance of affirmance. Once Perry was mostly dismissed again, many longs just sold and never looked back.
The stocks tanked in 2014 when Lamberth dismissed the original suit as well.
As little as you think the stated value of the junior prefs means, Berkowitz seems to think that it means something and he is a large holder.
Since (Fannie, not sure about Freddie) junior prefs cannot be forcefully converted (see my earlier post) and instead need 2/3 of the holders of every individual preferred series to agree to a conversion, they will have to be offered pretty favorable terms.
Berkowitz is a key player here, he just said in his most recent interview on Bloomberg that the whole saga could take 5-10 years from now to be resolved. He is a major holder of prefs and is in this thing for the long haul, so I don't see him taking an offer he sees as unfavorable.
A share of FNMAS currently trades at a multiple of 2.57 to FNMA (6.97:2.71). Given that a holder of FNMAS can convert at a ratio of 2.57 right now, I can't see any conversion negotiations beginning below that. 3:1 seems reasonable to me.
Shoot, isn't Paulson or Geithner (or some other architect of the conservatorship/PSPAs) on record saying that the very purpose of the warrant was to drive down the share price?
And if you factor in 79.9% dilution via the warrant, preferreds would trade about 2.5 times the common which is about where they are now. So perhaps the market is just assuming that the warrant will eventually be exercised.
Irrelevant at the moment, yes, because the 3rd amendment supersedes the original contract. (I'd have sworn it was spelled 'supercedes'...)
But if a court orders the NWS vacated, or Mnuchin decides to unwind it as he is able to do, the original PSPA would go back into force.
Actually, would the Jumpstart rider prevent Mnuchin from unilaterally ending the NWS because it would cause the senior preferreds to be (retroactively) paid off and retired?
I think a meteor would hit the Earth before 3 happens. 2 is more likely but by a depressingly small margin.
As to 1, would a district court ruling that the NWS did constitute a breach of contract be enough? Or do you think we would have to wait until the case works its way up the appeal chain?
I would prefer if both common and pref holders realize that in nearly all plausible outcomes, what is good for one group is good for the other, and what is bad for one group is bad for the other. We're all in the same boat here.
This is the de facto board for both common and pref holders as far as I can tell. The two classes of shares trade in relative lockstep for the most part, and the news is the same for all involved.
I hold both commons and prefs btw.
I believe that FnF have gotten the proceeds in the past, but then they have been swept at the end of the quarter. If Watt decides to let FnF build capital, this money could go towards it.
Thanks. I'm not sure how important this is but it does seem to be a setback for TBTF.
I view this as a positive. One thing the TBTF contingent would like to do is be involved in the CSP themselves.
Could you please link the tweet?
Tim Howard has said that CSP benefits Freddie at Fannie's expense, assuming the companies are out of conservatorship and allowed to function as private entities.
If CSP gets extended to non-FnF companies it would be pretty bad for us shareholders.