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It hit $5.
My bad. Switching back and forth between screens too fast. Thanks for the correction.
Run Forrest. Run!
$4.7 billion in 75 days
My math was a bit off in the previous post.
FNMA common shares: 1.11 billion
March 13 market cap.: $.30 x 1.11 billion = $330,000,000
May 29 market cap.: $4.65 x 1.11 billion = $5.18 billion.
In 75 days $4.7 billion have been poured into FNMA's common shares alone. This does NOT include the billions poured into the junior preferred shares by the hedge funds.
The market is forward looking. This doesn't look like only retail buying to me. We'll have to wait for the next 10Q to find out.
In the meantime, let's enjoy the ride...
The only thing we know is that about $2.7 billion have been poured into FMCC's common shares in 2.5 months. We don't know who bought them.
Google Finance shows 1% institutional ownership as of last 10Q. We'll have to wait until the next 10Q (around August 8) to see if the number will change.
But my hunch is that $2.7 billion is a lot of money for retail investors alone for an OTC stock. There could be more to it, we'll have to wait and see...
Over $5 billion have been poured into FMCC in 2.5 months and you think I'm going to take the advice of some "Tom Dorsey" who has a 40+ year old car?
He doesn't even own shares in FMCC. Sounds like someone who missed out on the run and is now livid about it. Poor guy.
DD for FMCC newbies
Reminders on what common shareholders have going for them. Big Money is all over this one. If AAMRQ's market cap. is $2 billion, using he similar financial metrics, FMCC's market cap. should easily be $30+ billion.
--In 2.5 months (March 12 - May 28): Over $2.7 billion have been poured into FMCC common shares alone. A similar amount have been poured into FMCC's junior preferred shares by hedge funds.
--the precise 79.9% (the 80% threshold would have made FMCC a federal government owned business and not a GSE) was designed on purpose that left the door open to possible future privatization.
--politicians will decide the fate of FMCC. Two things we know about politicians: 1) They appease those who contribute to their campaign funds, 2) They badly want to get re-elected.
John Paulson (net worth $11.2 billion) and hedge funds lobbying for privatization
"Hedge funds including John Paulson’s Paulson & Co. are lobbying for a privatization of Fannie Mae and Freddie Mac that could benefit preferred shares they’ve bought."
http://www.bloomberg.com/news/2013-05-24/fannie-mae-winning-at-the-alamo-prompts-lender-angst.html
Ralph Nader advocating privatization
"Famous consumer advocate and former presidential candidate Ralph Nader has renewed his efforts on behalf of common shareholders of bailed out mortgage giants Fannie Mae and Freddie Mac."
http://www.cnbc.com/id/100765505
Taxpayers will benefit more if FMCC privatized: former treasury official
"Hedge fund lobbyists are arriving at Capitol Hill meetings with detailed financial analyses contending that selling off the government’s shares and recapitalizing the companies could make taxpayers an even larger profit, the people said. That also would boost chances that investors in preferred shares would benefit. The funds are making it clear they would be interested in buying the shares now held by Treasury, the people said.
Millstein Plan
The funds’ proposal is similar to one being circulated by James Millstein, the former Treasury official who oversaw the restructuring of bailed-out insurer American International Group (AIG). Millstein’s multiple-step blueprint calls for recapitalizing the two mortgage companies, eliminating their implicit government backing and selling off the Treasury stake. He would also create a new U.S. agency to reinsure loans. Millstein said his plan could leave taxpayers with $100 billion to $190 billion in profit.
Millstein, now chief executive officer of his own turnaround advisory firm, Millstein & Co., said that would be better than liquidating Fannie Mae and Freddie Mac.
“If policy makers get the size or pace of a forced wind- down wrong, we will suffer a credit contraction, house prices will fall and the U.S. economy will once again be at risk for a recession,” he told the House Financial Services Committee April 24.
Millstein said he holds some of Fannie Mae’s preferred shares himself.
Paulson Leads Hedge-Fund Lobby Push to Privatize Fannie
"Hedge funds including Paulson & Co. Inc. are pushing Congress to abandon plans to liquidate Fannie Mae (FNMA) and Freddie Mac (FMCC) as investors buy up preferred stock that has long been considered worthless, according to people with knowledge of the discussions."
http://www.bloomberg.com/news/2013-04-30/paulson-leads-hedge-fund-lobby-push-to-privatize-fannie.html
U.S. Government faces civil lawsuits if it seizes FMCC
"Under our constitution, the government cannot seize personal property without just compensation. If the government exercizes the warrant fot 80-% of the common, they are in fact saying that they want to control the gse's. Why would they do that if there was no value. On the preferred side, the original preferreds are senior to the proposed government common stake, and will have to be eventually redeemed from the individuals that own the securities at par plus unpaid divs." --DGFURR
Grass roots movement to privatize FNMA and FMCC
Privatize Fannie Mae (Freddie Mac in the same situation)
http://www.ipetitions.com/petition/freedom-for-fannie/
AIG, C, BAC, MS, GS were all privatized, why not FMCC?
Because it makes too much money for the U.S government? More reason the billionaires and hedge funds want to be compensated for their loss.
Is FMCC a buy?
Do your own DD and make up your own mind
Reminders on what common shareholders have going for them. Big Money is all over this one. If AAMRQ's market cap. is $2 billion, using he similar financial metrics, FMCC's market cap. should be $30+ billion.
"Hedge funds including John Paulson’s Paulson & Co. [Paulson's net worth is $11.2 billion] are lobbying for a privatization of Fannie Mae and Freddie Mac that could benefit preferred shares they’ve bought."
http://www.bloomberg.com/news/2013-05-24/fannie-mae-winning-at-the-alamo-prompts-lender-angst.html
"Famous consumer advocate and former presidential candidate Ralph Nader has renewed his efforts on behalf of common shareholders of bailed out mortgage giants Fannie Mae and Freddie Mac."
http://www.cnbc.com/id/100765505
"Hedge fund lobbyists are arriving at Capitol Hill meetings with detailed financial analyses contending that selling off the government’s shares and recapitalizing the companies could make taxpayers an even larger profit, the people said. That also would boost chances that investors in preferred shares would benefit. The funds are making it clear they would be interested in buying the shares now held by Treasury, the people said.
Millstein Plan
The funds’ proposal is similar to one being circulated by James Millstein, the former Treasury official who oversaw the restructuring of bailed-out insurer American International Group (AIG). Millstein’s multiple-step blueprint calls for recapitalizing the two mortgage companies, eliminating their implicit government backing and selling off the Treasury stake. He would also create a new U.S. agency to reinsure loans. Millstein said his plan could leave taxpayers with $100 billion to $190 billion in profit.
Millstein, now chief executive officer of his own turnaround advisory firm, Millstein & Co., said that would be better than liquidating Fannie Mae and Freddie Mac.
“If policy makers get the size or pace of a forced wind- down wrong, we will suffer a credit contraction, house prices will fall and the U.S. economy will once again be at risk for a recession,” he told the House Financial Services Committee April 24.
Millstein said he holds some of Fannie Mae’s preferred shares himself.
Paulson Leads Hedge-Fund Lobby Push to Privatize Fannie
"Hedge funds including Paulson & Co. Inc. are pushing Congress to abandon plans to liquidate Fannie Mae (FNMA) and Freddie Mac (FMCC) as investors buy up preferred stock that has long been considered worthless, according to people with knowledge of the discussions."
http://www.bloomberg.com/news/2013-04-30/paulson-leads-hedge-fund-lobby-push-to-privatize-fannie.html
Around the world, around the world, around the world, around the world, around the world, around the world, around the world, around the world, around the world, around the world...
Anytime, bro.
1. Massive short-covering. Good for short-term play.
2. People in the know are scooping up whatever is being sold. Excellent long-term play.
3. A combination of both. Crazy pps spikes.
4. ?
It's going to be exciting to see how it unfolds leading up to the next 10Q.
Freddi Mac Berlin up 47% to close the gap with Stuttgart.
http://finance.yahoo.com/q?s=FHL.BE&ql=0
The U.S. price "should" closely mirror Germany's closing, otherwise an arbitrage situation exists whereby an investor can buy from one market and dump into another for a quick, risk-free profit.
If privatized and FMCC's profit continues to grow, the common shareholders will benefit the most. Preferred shares have a ceiling (limit) as to how high they can go based on their yield, par value, and dividends in arrears. I think (please look it up yourself) the original yield was 5-8%. Right now, the yield is around 20% and the preferred sharess' pps are increasing. Once the pps of the preferred shares reach their original par value and dividends in arrears are taken into consideration, they won't go much higher.
The common shares are also the riskiest to own at the moment.
If (a matter of when according to most) FMCC fulfills its obligation to the senior preferred shareholders (government) AND it's privatized, it will have to address dividends in arrears for the junior preferred shareholders. I'm not sure what the amount is but it could be in the billions since the preferred shareholders haven't been paid in over 4 years.
When Apple and Microsoft issued billions in bonds with yields lower than 2.5%, they were sold out. Retirement funds and insurance companies would love to get their hands on FMCC's 5-8% yield (at par value). Again, I'm not sure the exact yields but at par value they're significantly higher than treasury bonds.
A person like Paulson would want to convert some or all of his junior preferred shares to common shares because he takes risks, but there are entities that are content with a high fixed income. The middle ground (IF, IF, FMCC is privatized) is a 30-50% dilution and the government unloads some its senior preferred shares to retirement funds and insurance companies or other funds looking for fixed income.
This is new territory for me. All we're betting on as common shareholders is that FMCC will be privatized.
GLTA.
To the best of my knowledge (you may want to verify it yourself) the government owns 79.9% of the senior preferred shares and most of the junior preferred shares are owned by the hedge funds. The junior preferred shares had their dividends suspended when FMCC went into conservatorship status in 2008.
The “79.9%” owned by the government was designed on purpose--with 80% or more, FMCC would be considered a federal government owned business and not a GSE or in conservatorship status. Paulson, who made a bulk of his fortune on the housing collapse, had a hand in designing FMCC’s 79.9% conservatorship status. The 79.9% left the door open for possible future privatization—this is what we’re betting on.
Paulson made a fortune on the housing collapse and if he gets his way he’ll make another fortune on its recovery.
The 90% dilution figure I used is a “rough” and conservative estimate. Please do your own DD and let me know if you find anything different.
Very good analysis and I agree with you that the balance sheet might have been updated and those in the know might have dumped.
There are two schools of thought right now:
--XIDE going to $.10
--XIDE going to $2.00
I sold and took a 50% loss.
--If XIDE goes to $.10, it's imminent BK and hard to make it back.
--If XIDE does go to $2.00, it needs to get to $.90 first, at which point I may get back in.
All the best.
I wish I knew. Long-term, it's a strong possibility.
I'd be ecstatic with $7-$10 before the next 10Q.
"...also with the finances reported...what should the current pps be?"
At today's pps a rough estimate would be:
--all senior preferred shares converted to common shares.
--all junior preferred shares converted to common shares.
--all extra/extraordinary items would be wiped off the income statement once those preferred shares are converted.
--there would be about a 90% dilution.
--market cap. would be about $33 billion.
FMCC would be a company with roughly:
--$33 billion in market cap.
--$ 80 billion in revenue
--$20 billion in profit (projected next 4 quarters if pace continues)
Of course there are other factors than just pure numbers.
Excluding extra/extraordinary items, FMCC is on pace to become one of the top 5 most profitable companies in the U.S. Even with the 80-90% dilution after the senior and junior preferred shares are converted if the company is privatized, it's still significantly undervalued, IMO.
FMCC's OPERATING income for the last 4 quarters.
(in millions of dollars)
4,546.00
3,312.00
2,626.00
2,944.00
563.00
In the battle of billionaires vs. politicians, who usually wins?
One good sign:
"Many investors and funds have already been on Capitol Hill, lobbying lawmakers. Jim Millstein, a former Treasury officer involved with the restructuring and recapitalizing of AIG, has bought shares of Fannie Mae through his company, according to Inside Mortgage Finance."
Yes. FMCC's last quarter ended March 31. The next quarter ends around June 30. They have 45 days to file the 10Q after the quarter ends. The latest we can expect the next 10Q is the week of Aug. 8th, unless they file an extension.
The U.S. housing market has improved quarter over quarter, so results should be better than the previous quarter.
SIAF for my China play for sure and holding for a very long time based on the Forbes article I previously posted. I'll get back in SIAF soon enough.
I took a big gamble and went all-in (not all-in money set aside for one stock but all-in with all my capital) on FMCC. I bought in tranches of $.86, $1.50, and $2.70.
After I get out of FMCC:
SIAF: China play.
DDD: Future industry play. I've looked at 3D printing and IMO and those of others, it's the industry of the future. With these types of stock, in the right market condition, PE could be 1,000+.
IAG (IAM gold): gold play. IAG is profitable every quarter, selling at about 60% of total equity, near its 52-week low. Want to see how their next quarter will be affected by drop in gold price.
And throw about 20% around at stinky pinkies to see what sticks.
I really like SIAF, but IMO:
Right company, wrong time= dead money.
I figure if it's worth $10-$20 in 5 years, it has to get to $1 first.
--------------------------------
Feeding China's Population
Food — providing enough of it at acceptable levels of quality and at an affordable cost is shaping up to be one of China’s most challenging problems. Lax quality control, production shortcuts, urbanization and rising consumer spending are all combining to turn the spotlight on China’s food supply chain, creating problems — but also opportunities — for international companies doing business in the country.
Let’s start with the sheer quantity of food the country needs to feed its population. In 1978, China embarked on a policy of achieving self-sufficiency in food. As the country’s economic reform program began to take hold and productivity in its agricultural sector increased, China managed to achieve this goal by the end of the last century. In fact, China surprised many observers when it became a net exporter of agricultural products in 2002, its first year as a member of the World Trade Organization (WTO).
A great deal has changed since then, however. In 2012, WTO said that China had surpassed the United States to become the world’s largest importer of agricultural products. Even with 500 million farmers, China has been unable to meet the country’s growing demand for grains, soy beans and other commodities. And it’s about to get worse.
In January, Chen Xiwen, Director of the Chinese Communist Party’s top policy making body for rural affairs, said that China has decided to stop pursuing its goal of self-sufficiency in food. Chen said that food supplies would come under increasing pressure as incomes improved, admitting that the country could not “turn back the clock” when it comes to imports. In early April, President Xi Jinping told a group of foreign leaders and businessmen that China’s imports of commodities, goods and services will hit a value of $10 trillion annually in the next five years, up from $1.8 trillion in 2012.
Rising incomes and consumption are part of the reason why China is now an importer of agricultural products. Another is urbanization. In the greatest urbanization movement the world has ever seen, approximately 260 million farmers have moved to the cities since 1978, and another 260 million are expected to move off the farms in the coming years.
The safety of China’s food supply is another big concern, with the most recent victim being Yum! Brands, Inc. (NYSE:YUM), the Kentucky-based operator of the KFC and Pizza Hut fast-food chains. Yum was one of the first food service companies to enter the China market and is the leading Western restaurant company in the country. China now accounts for 45 percent of Yum’s revenues and nearly a third of its total operating profits.
This week, Yum reported a 26 percent drop in first-quarter earnings, as food safety concerns continued to hurt its Chinese business. Allegations in December that Yum’s suppliers had injected chicken with antiviral drugs and growth hormones beyond food safety limits caused some customers to call for a boycott of the company’s restaurants. The recent outbreak of bird flu will likely lead to a 30 percent decline in same-store sales in April, according to the company. As of Tuesday, there have been 108 cases and 22 deaths from the new flu, which has now spread to Taiwan.
Not a week goes by, it seems, without at least one story about the safety of China’s food and water supplies, with bird flu being only the latest. In early April, it was reported that 292 children in Ziyang city, in Southwest China’s Sichuan Province, were sent to the hospital after eating contaminated food in their school canteen and showing diarrhea symptoms, including fever and vomiting. In recent weeks, dead fish and dead pigs found in rivers near Shanghai have prompted safety fears.
Concerns about food safety have caused consumers in China to be much more cautious about what they eat and where it comes from. In January, the first “Prepackaging Nutrition Label Principles” in China were established, providing standard food nutrition information for consumers. Carrefour SA, the French retail giant which now has 200 stores in 60 cities throughout China, launched what it called a “Nutrition Knowledge Promotion Activity” in Beijing in early March to provide food transparency to its Chinese customers.
Reacting to infant formula and milk scares in 2008 and 2011, Chinese consumers have turned to imports. In fact, the demand for imported milk and infant formula in China is so great that Hong Kong recently passed an amendment to its export regulations to prevent an influx of traders who buy milk powder in Hong Kong and resell it elsewhere in China for a profit, mainly to families who have no faith in mainland-produced infant formula. Under the amendment, a person can carry only two cans, or 1.8 kilograms, of baby formula out of Hong Kong, and the person must be at least 16 years old. Violators face fines of up to HK$500,000 ($64,500) and two years in jail.
China’s middle class is increasingly turning to imported products in all food categories, not just milk. At Wal-Mart China’s e-commerce site, sales of imported products increased fivefold in 2012. While imported food used to be rare and expensive, the recent surge in domestic commodity prices, driven by inflation and higher costs, has made foreign food products more affordable. Moreover, the government’s efforts to lower tariffs on imported food has also made such items more accessible to Chinese consumers, said Zhao Ping, Deputy Director of the Department of Consumer Economics at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce.
With China resolved to being an importer of agricultural products, look for even more favorable policies in the future. Food generally accounts for two-thirds of price inflation in China, and it hits hardest those Chinese who are the least able to afford increases in their food budgets.
In this context, investors will not have difficulty identifying beneficiaries of the food challenges faced in China today. For example, international retailers like Carrefour and Wal-Mart should benefit as consumers place a higher premium on the reliability of the food they buy. Likewise, international food companies will find growing demand in China for their products, at the same time that import tariffs and barriers are being eased. The American farmer will benefit from China’s increasing food imports, as will companies with products, services and management systems that can improve the productivity of China’s agricultural sector. A large and growing market for safe, reliable food products in China is the silver lining in this cloud for international companies.
http://www.forbes.com/sites/jackperkowski/2013/04/25/feeding-chinas-population/
I'm out of SIAF for now. The only stock I'm holding at the moment is FMCC.
I'll be watching SIAF and the FN listing progress.
Viking for SIAF PR rep. petition.
Stick a SIAF decal somewhere in the picture.
http://aftercheese.files.wordpress.com/2008/11/106-conan.jpg
This is shaping up to be an interesting play. I'm out but wish longs all the best. I can only think of these scenarios:
--sophisticated, coordinated bear raid and the Debtwire piece was planted by those behind it.
--massive legal and/or environmental obligations we're not yet aware of.
--incompetent management.
In plays like these, the bondholders can sometimes force the company into bankruptcy and wipe out common shareholders. I don't see this being the case because the company has a lot of assets and cash on hand it can sell to meet its $57(?) million obligation in September.
Just going by the income statement and balance sheet alone, bankruptcy shouldn't be an option.
Always something new to learn in the market.
All the best to all longs...
I'm out. Putting everything in FMCC.
GLTA.
Looks like I'm SOL. Thank god for my FMCC.
You could be right.
I'm just thinking worst case scenario:
--$3 billion in revenue.
--Plant closed and doesn't reopen (-$700 million, wild guess since there's no info on how much revenue the plant contributes)
--$2.3 billion revenue company, cash flow positive.
--$50 million market cap.
--most debt isn't due until 2018.
--environmental clean-up cost?
--what if plant re-opens?
It's still a good speculative play, IMO.
The MMs may have taken out those on margin and who placed stop loss orders.
This is what the stock market is about, baby. It's not for the faint of heart. I'm XIDE all-in.
I don't think the company is in receivership but it's in conservatorship. As long as the company is in convervatorship, common shareholders don't get paid dividends, only the preferred shareholders.
There are two types of preferred shares right now:
--those held by private investors (hedge funds), who want to convert their preferred shares to common shares.
--those held by the government. I think if all preferred shares were converted to common shares the government (tax payers) would own about 80% of the company (not sure the exact number but it's high).
The hedge funds want to privatize the company and take the preferred shares off the government. If that happens, then common shareholders get paid dividends.
John Paulson is worth $11.2 B according to Forbes. He and other hedge fund managers may not be satisfied with the 5-8% the preferred shares are paying and want to convert them to common shares.
http://www.forbes.com/profile/john-paulson/
"Hedge funds including John Paulson’s Paulson & Co. are lobbying for a privatization of Fannie Mae and Freddie Mac that could benefit preferred shares they’ve bought."
If John Paulson can do with FMCC what he did with Dex One, we're golden.
http://www.bloomberg.com/news/2013-05-24/fannie-mae-winning-at-the-alamo-prompts-lender-angst.html
"...the company will eventually go BK but till then there will be pleny of opportunities on the long and short side..."
IMO, XIDE won't be filing for bankruptcy any time soon. One of its plants got shutdown and the market over-reacted. Other than that, nothing has fundamentally changed about the company.
And all those "class action" lawsuits, those ambulance chasers are still looking for lead plaintiffs. Lawyers only go after companies with money and asset.
Today I saw a Ford commercial and Exide's battery was prominently displayed.
I could be wrong but I like my chances.
I think if the Fed scale's down its QE, FMCC may be a better hedge than gold and silver.
I haven't been keeping up with the board but as I remembered it, FN was supposed to be in March. I'm putting my money elsewhere until they confirm a firm date for the listing.
Best of luck to you. I'll rejoin the SIAF merry band soon enough.
True. Time will tell, buddy. I'm just thinking they may be diluting all the way to FN and start with a clean slate once on FN. Just my opinion.
I wish everyone the best. I'll rejoin you guys when the picture becomes more clear. I really like the company and the sector it's in but I don't like holding dead money.
"Food — providing enough of it at acceptable levels of quality and at an affordable cost is shaping up to be one of China’s most challenging problems. Lax quality control, production shortcuts, urbanization and rising consumer spending are all combining to turn the spotlight on China’s food supply chain, creating problems — but also opportunities — for international companies doing business in the country."
http://www.forbes.com/sites/jackperkowski/2013/04/25/feeding-chinas-population/
I think they may have ran into a snafu with the FN listing. Time will tell.
All the best to you, RealDutch.
Xide's situation and trading pattern reminds me of Suntech about two months ago. One of STP's primary operating subsidiary filed for bankruptcy and the stock tanked. I bought STP at $.46, it went down to $.36, languished there for awhile, ran to $1.00, back to $.60s, now it's back to $1.00.
Xide has better fundamentals than STP, so I think it's a waiting game at this point.
I'm out for now. Management's silence on the FN listing is deafening.
I hope to rejoin you all before the FN listing.
All the best, everyone.
I managed to get out with about a 150% gain. I'm completely out of stinky pinkie land.
All the best, everyone.
All the best to you, HSmith.
A clear pattern has been established, IMO. I sincerely hope I'm wrong and things work out for the die-hard longs.
All the best to everyone.
All the best to you, Bgrass. Just one too many broken promises for me from management.