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FnF are already in bankruptcy. They are trying to get out of it, and the only ways are either receivership (highly unlikely, in my opinion) or recapitalization (which is a form of restructuring, in which placement in the capital stack is of extreme importance).
Thanks. Key word is "incidental." Any benefit to FHFA is exactly that, incidental to the conservator fulfilling the statutory duty of nursing the wards back to health. If FHFA were to somehow benefit from that, so be it. For the conservator to act primarily to benefit FHFA while leaving its wards perpetual paupers is like putting the trailer in front of the truck.
This waiting is driving me nuts, but it can't be too long now. I see an easy smackdown of the NWS, but a potentially divided court where the remedy is concerned. Such cases usually mean lots of concurring and/or dissenting opinions, which adds time. Well, at any rate, good luck to you and to all.
I think the 5th Circuit did a good job dispelling the idea that some legal loophole would permit the conservator to violate the statutory responsibility of preserving and conserving the GSEs' assets.
Statutes are to be read conjunctively, not with one clause or provision detached from the rest. Therefore, any benefit to the FHFA must not come at the expense of the mandate imposed by statute upon the conservator. The En Banc opinion stated this succinctly when it informed the Government, "the statute (HERA) is not at war with itself."
In agreement, but not sure what "significant" [bump in PPS] means.
GSE opinion on 10th-According to Susan Miller astrologer
We've seen lots of numbers thrown around, but honestly, no one knows what PPS we can expect post SCOTUS. All the variables are wild cards. First, and most importantly, is how strong the ruling will be. Based on the tenor of the questions and the Government's inability to assail the 5th Circuit's logic, it appears a virtual certainty the NWS will be voted down, likely by a solid majority or unanimously. NThe big question mark is what remedy will follow. The Justices appeared chilly to retroactive relief, but it could happen.If it does, and especially if news reports of such a stinging rebuke hit the airwaves, we might see a buying frenzy that takes shares to $20. I doubt it, though. This stock is still OTC, the GSEs still in conservatorship, it's not a new commodity, and there have been many false alarms. Commons hit only $4.25 after the en banc, after getting to $5 years prior on Mnuchin's empty promise of making F&F's release "a priority." All these factors are "drags" on the potential share price.
Ackman getting in big years ago created a bubble at around $6.30 or so, so I'm thinking we go over $5, maybe $6, but who knows? With all the debate about "socialism" I'm hoping the ruling gets some publicity, and investors seeing a legitimate chance to one day cash in big start a feeding frenzy.
Just my take. GLTA
Good points all. I hope for a bigger pop than $5 for commons, but that's what I answered a couple weeks back when someone asked for predictions of the share price post SCOTUS.
There have been so many false starts with the supposed deliverance of the GSEs that the public has become wary and gun-shy of buying. I would have thought the 5th Circuit win would have driven commons (in which I'm long) higher than the $4.25 or so where they maxed out in 2019.
I expect I'll keep a core position, because you never know, but I'm tempering my expectations and will be setting some stop-limits when and if SCOTUS starts this stock moving.
Actually, I was quoting. I don't know that the plaintiffs are corrupt, and aren't asserting that they are. I just wish all bases for relief had been advanced. As it stands, I expect a pop after the ruling and then another drop, as the reality sinks in that it's still a long journey. I'm just hoping that POP is a big one.
I hope the Supreme Court Justices will hand down the Ruling in such a way that takes away any foundation for NWS and voids it retroactively and handout a broad victory for all shareholders rather than a narrow ruling that will benefit only the corrupt plaintiffs.
So do I, as such a victory would make me very wealthy. The Supremes, however, are known for ruling on the most narrow of technical legal grounds. From the tenor of their questions, it seems almost a certainty the NWS will be deemed ultra vires. There's no rational basis to argue that it was implemented to make F&F whole, or preserve and conserve their assets. The Third Amendment was a cynical and bad faith move to do the exact opposite, and Justices had eight years of evidence before them to prove it. My concern has always been what remedy they opt for. Justice Breyer asking why this wasn't brought as a takings clause case signals they (at least he) might not opt for a direct remedy like damages for shareholders because that issue is not before them. Maybe we get some language (dicta) saying shareholders would be due a remedy should they being such a claim. If so, that would have the way for more suits, and speculation alone would likely create a bubble in the share price. Trust me, I wish your solution is the one they opt for, and maybe they do because of the bad faith inherent in the NWS,but I'm just not counting on it.
Sadly, I'm somewhat inclined to agree with those who argue these predictions of $200 per share and similar exuberance is premature. I think the SCOTUS ruling is a slam dunk to invalidate the Third Amendment. It's not about counting heads of liberal and conservative justices. None of them like having their intelligence insulted, and the weak GOV arguments got skewered by liberal justices Breyer and Kagan. That being said, ending the NWS doesn't translate to an immediate release from conservatorship or direct damages to shareholders. I'm hoping the ruling kicks off a buying frenzy from which all can benefit. GLTA.
I appreciate your welcome to the boards. I've found these discussions informative. My only reason for criticizing the plaintiffs for not raising the takings issue is that leaving such an argument on the table may be counterproductive.
The Supremes are notorious for deciding hot button issues on the narrowest of technical grounds and issuing rulings that are less than "satisfying" for lack of a better term. I hope that's not the case here, but I tracked the share price during oral argument and it spiked to the 52wk high while the Justices were skewering government counsel over the NWS, then leveled off and sank when they were lukewarm about a remedy. I hope they ride in on a white horse, declare the debt paid and direct the end of the conservatorship and a remand to the lower courts to craft a shareholder remedy for the years of profits taken. If they are contemplating such a remedy, they certainly aren't letting on that they are. We may get an end to the NWS, and little else, which would leave us in a similar position we've experienced several times: a short-term pop and more waiting. I've had common shares since 2007, and have taken some gain along the way, so trust me when I say I wish they would untie this knot, but I'm skeptical.
"The 5 amendment takings vs constitutional separation of powers will be played. Takings 5th amendment provides plaintiffs another avenue …"
Just wondering what constitutes "Will be played." Perhaps in a later lawsuit, but if plaintiffs did not plead it, how does SCOTUS rule on it here? The Supremes don't grant you relief on issues you didn't ask for and raise at the court below.
My concern is that no matter what Justice Gorsuch's or others opinions are of FHFA or HERA, it doesn't necessarily translate to a ruling that frees F&F or gives a specific remedy to shareholders, particularly not a retroactive one. If someone has a framework for how that plays out in a SCOTUS decision, I'm all for it and all ears. I'll check out the cheat sheet you mentioned if.
Thanks. I think my logic is sound, just a few typos (gotta stop posting in the middle of the night), and I neglected to mention that plaintiff's counsel should have brought the 5th Amendment "takings clause" argument in the original pleadings. Once you get to SCOTUS, if you didn't plead it below, they won't rule on it. The best they'll give you is some language (dicta) that won't stand as legal authority, but which might be a good starting point for a future lawsuit. At any rate, I've learned a lot on these boards, even though they have their share of misinformation too. I'm relatively new to posting, but hope I'm contributing something worthwhile. GLTA.
You're right about Breyer being the one who mentioned the 5th Amendment takings clause. I got my Justices mixed up. Sorry. Still concerned that SCOTUS may go light on the remedy, but think it's a no brainer a significant bump is coming.
From the tone of the oral argument, it was clear the Justices considered the NWS ultra vires. Justice Breyer went so far as to prompt the solicitor to admit the USG had nationalized the GSEs rather than attempt to rehabilitate them. Likewise, Justice Kagan asked if the power of a conservator extended to the ability to sell all the company's assets for a dollar.
This line of questioning exposed is what was fatally flawed in the District Court decision. Finding that any action of a conservator can go unchallenged as long as it is taken as part of the management of the company simply ignores the basis of the conservatory's authority: fulfillment of a fiduciary duty to the corporation, and by implication, its as shareholders. A conservator authority to act unchallenged by shareholders is predicated on the idea that the conservator is taking actions necessary to nurse the ward back into sound financial footing. The duty to preserve and conserve is part of the conservator's statutory responsibility, and the en banc hammered government counsel with the simple question, "How does the conservator make the corporation sound and solvent by having the government siphon off all it's profits?" Counsel had no good answer, and tried to dodge by saying this situation was unique. That failed, as one of the 5th Circuit Judges pointed out the similarity to the S&L bailout, which didn't involve the banks giving away all their profits.
Doubtless, the Supremes read all of this before oral arguments last Dec. It seems a virtual certainty the NWS is dead. The only way to defend it is to cite the conservator's authority, while at the same time ignoring the conservator's statutory duty. The Government tried that in Dec, and the Justices weren't buying what the government counsel was selling. I expect the NWS is headed for a 9-0 smackdown.
The more difficult question is what remedy is due shareholders. Retroactivity is disfavored under the law, and in oral argument, the Justices (at least Roberts and Gorsuch) seemed chilly to any idea of such a remedy. Collins v Mnuchin wasn't brought as a 5th Amendment "takings clause" case and CJ Roberts asked why it wasn't (note to the lawyers: when you file a SC brief, cite every basis you can). This is what concerns me. Maybe the majority will opt for some sort of retroactive relief, but I'm not counting on it. If not, while the decision will give us a bump, years worth of potential relief may be lost. I suppose we'll see soon enough, and I'm hoping for the most favorable remedy. Maybe the bump turns into a buying frenzy, and if it comes, I'm thinking it might be a good idea to set a stop-limit on some shares while holding the rest. Just a few thoughts from one who is long in commons, but GLTA.
I'd like to say the share price will be around $10 after SCOTUS, but I don't know what remedy they will deem appropriate. They didn't seem to warm to the idea of retroactivity, which I think would have sent the SP to $15 or even $20, and this stock has been so battered by false starts and empty promises that investors are wary. For those reasons, I'll go $5, but I pray for some language that starts a buying frenzy that takes commons to $10.
Good point. Also, if SCOTUS determines shareholders are due a remedy, any attempt to put the GSEs into bankruptcy thereafter will immediately be recognized as an effort to subvert the ruling. It would beg the question (as well as a demands for an accounting) what happened to the nearly ten years of profits taken and billions of dollars put into the coffers of the U.S. Treasury under the auspices of making F&F "sound and solvent"? I wouldn't want to be on the Government's side of the lawsuits brought in response.