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So I repeat the question I asked yesterday:
I wrote, as you correctly quoted: "What counts for recap/release is CET1."
What you wrote does not refute this statement.
I did NOT write that CET1 > 3% is appropriate, as you incorrectly imply.
I would very much like to see capital requirements lowered to 2.5% (HERA minimum).
As for your other insinuation that I did not understand the capital structure, I will not even comment on that.
Nice that Hamish Hume confirmed we are all still waiting. WTF?
The laws of physics, especially the laws of gravity, are the only ones you can really trust.
Because the law(s) of physics can't be bent.
My father passed away years ago.
I wonder if it is legal for Lamberth to accept the jury trial at all when it is clear from the outset that if the plaintiffs win, the damages will not (or cannot) be paid.
I'm glad you're able to admit a mistake I pointed out to you here:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173070408
Next step would be to remove the 💩 emoji you gave this post yesterday.
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(Many here never admit mistakes.)
So you think a Trump rally in FnF stocks would just be based on false hope? No recap/release with Trump despite his famous and telling letter?
When Lamberth issues the final judgment, JPS and Freddie shareholders will have their first payday in 15 years.
If the plaintiffs appeal, even the original $1.6 billion (+ interest) could be paid.
For FMCKJ (which fell the most the day after the NWS announcement), FnF could ultimately pay out more in damages than you would realize now by selling FMCKJ at the current market price. And you will still own FMCKJ after that.
Selling now is stupid.
You like BS? If the warrants are exercised, the number of shares will increase by a factor of 4. Instead of the current 1.8 billion FnF shares there will be about 9 billion FnF shares. The newly created 7.2 billion shares will go to the government.
Please note that the share price at which the warrants are exercised is completely irrelevant.
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Viking61 wrote:
Warrant exercise gives the government 79.9% of the pre-recap commons, and the share price at that time doesn't matter at all.
Have you ever thought about writing crime novels? You might have more talent in that area than in investing. You already have enough gangsters 👻, only the style would have to become much more fluid
Bill Ackman, who is also the largest individual holder of FnF shares.
There are also situations where a deal depends on what is politically feasible (see my last post). Realistically there is very little hope that the government will finally admit that it defrauded shareholders in 2008.
Tim Howard has only been advocating the exercise of warrants for some time now. He's doing it because he wants to get FnF out of conservatorship. He sees FnF as having an important social and economic function that they cannot perform in conservatorship. In conservatorship the GSEs are not living up to their potential.
The reason he advocates exercising the warrants is that he knows the government needs an incentive to release FnF. Without that incentive, the government (at least the Democrats) would likely keep the GSEs in conservatorship forever. Mike Calhoun had argued similarly in this Jan. 2021 Brookings Institution paper:
https://www.brookings.edu/articles/government-sponsored-enterprises-at-the-crossroads/
So Howard ist putting the public good (well functioning GSEs) ahead of the good of legacy commons who lose 80% by warrants exercise. You can call this "socialism," but you can also call it social responsibility or just Tim Howard's personal "love" for well functioning GSEs.
But even hedge fund managers like Bill Ackman advocate exercising the warrants. In perpetual conservatorship, his commons would remain economically worthless. With warrant exercise (in combination with cancellation of the SPS), he would get about $7 per common share. This would be about three times his average purchase price.
I wrote:
"You will not deny that you think that commons will make everyone rich"
Thinking it does not mean that you posted it here.
There's something to that. But be honest. Didn't you fall for those lies when you invested? Who could have predicted this mess 15 years ago?
Okay, you don't. But you will not deny that you think commons will make everyone rich. I seriously doubt it.
You are free to decide whom you trust. If you only trust yourself and lose, then that's the way it is. Come to terms with it - and don't drag others into your abyss with questionable concepts.
When people have been successful as hedge fund managers for many decades - and that includes Tim Pagliara as well as Gary Hindes and Bill Ackman - I have much more confidence in them than in the bubble blowers on this board, some of whom lack elementary knowledge on almost every level.
What's wrong with talking your book when you're a hedge fund manager?
I like that GB was honest enough to post his losses. Others here, especially the level 2 "specialists", gloat about imaginary profits every day, even though their spreadsheet - if they had the courage to post it publicly - probably looks similarly devastated.
Being right about investment strategy does not preclude being wrong about timing.
Wrong timing has probably been GB's biggest mistake so far.
And that's probably true of 95% of the others here, as commons and JPS are trading near 10-year lows.
Even Bill Ackman, who bought Fannie and Freddie commons at an average of $2.30, is down an estimated 75%. Yet Ackman is still sticking with his investment strategy. And that's professional.
"Contradictory" is the worst and weakest form of being wrong
Because the argument then collapses even without further external intervention.
...because I find the criticism inappropriate, unconstructive, and contradictory.
Moreover, the supposed "counter-arguments" are so stupid that those who post them should blush.
Do you really think that Ackman and Pagliara are idiots? At least they are professionals - which means they make money more often than not.
Level 2 bozos are losers on average. Only 1% of all day traders are profitable.
So does Bill Ackman. And no one on earth owns more FnF commons than Ackman. Think about it.
The decision may take 50 years. The execution will take 0.05 seconds.
CET1 currently sits at appr. -$150B (Tier 1 minus $33B of JPS). SPS cancellation or conversion adds $193B to each of these. Only then would recap/release be possible. The 4th Letter Agreement specifies that the maximum volume for the capital raise is $140 billion (2 x $70 billion).
CET1 is what is relevant for recap/release.
Even Tim Howard would be 100% content if the government only exercises the warrants (and writes off the SPS).
Unfortunately it is much more likely that the government will convert the SPS into commons (and probably skip the exercise of the warrants). This is the worst-case scenario for common shareholders. That's why Howard wants only the warrants exercised (as does Bill Ackman, by the way). In that case, the price of commons would go up to about $7 and they would "get off lightly."
All this (including a reverse split) is likely to be done simultaneously at recap/release, and FnF shares (commons and JPS) are likely to be suspended from trading in the meantime.
It takes appr. 0.05 seconds.
single exception: https://www.otcmarkets.com/stock/FNMFO/overview
It would be $60 for commons if the SPS and the warrants are written down, and with SPS written down and only warrants exercised it would be $12.
Unfortunately, $60 is a pipe dream, and even $12 is highly unlikely.
In a fight, those who are least able to defend themselves (commons have almost no rights in conservatorship) get the worst beating.
Native Americans have lost almost all of their land. They now live on tiny reservations, and many are alcoholics because they were given booze to drive them out of their minds. Just look at the end results. Same thing in Australia. Is that fair trade? If you're looking for injustice against whites, you'll find it in many war veterans.