We're in a short position for only a finite amount of time and we have stops in place. We also only have a portion of our position short, not all of it.

The Bloomberg piece on last Friday was certainly a surprise and we were stopped out on about 30% of our shares and ended up triggering a set of auto sell orders. We recouped through buying the discount on Monday. That news release from Fox Business yesterday afternoon triggered a small shock sell so we exited some of our positions again.

We suspected today it would open down and so we shorted. Why take the loss if we don't have to? We have started covering our shorts and should be done by end of day. We're one of many fish in a big ocean here.

Trunkmonk, I can't give you investment advice but you need to ask yourself why you want to be in this stock long and what is driving your gut feeling and your thesis that it will go the way you expect. There is a reason you're in this stock. As long as that underlying reason and your gut remains the same, you shouldn't be scared out of your shares.

I also do not encourage you to short stocks unless you've done some active trading before. If you plan to short, you need to set a stop loss where you issue a market buy once the price has been triggered to cover out of your short. When this stock takes off you do not want to be in a short position at all.

If you want to buy the dips, I will point you to my prior post. Many people have been making a lot of money buying these dips and doing temporary daily shorts. This is sometimes called recycling. You flip between short and long positions.

There is nothing wrong with trading this daily for profit. What is wrong is the clear price manipulation by the OTC market makers and all the false news.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=149323250

REMEMBER: The En Banc is going to be released any day now.

Stop worrying. Stop stressing yourselves out. Whenever the right thing is about to happen, the forces that do not want that to happen begin to get the loudest. This stock has experienced more seemingly intentional negative news in the last 60 days than in the last 6 years.

There is big money and special interest at stake. If you do not trust our Judicial system and the rule of law, you should sell.

If you have not yet come to realize that Wall Street now understands the only way to unlocking tremendous profit is to ensure the GSEs are preserved and successful, you're not seeing the big picture.

If you've listened to the en banc hearing and followed that case, you will know there is a strong chance of a ruling in favor of Collins.

Everyone needs to stop attacking one another and do what I have suggested time and time again. Contact your elected officials, Treasury relations, FHFA relations, news outlets, and friends. Spread the word. If you unite (Both common and preferred) you can have impact.

The calculation is simple:
A) If En banc rules for Collins, the stock will go to $6 in a flash.
B) If En banc rules for FHFA, the stock will go to $1.50.


Mark Calabria, Steve Mnuchin, Larry Kudlow, and Donald Trump have all called for getting the GSEs out of conservatorship. Do you think they are lying to you? They wouldn't pursue this without thinking it through prior. The plan will never come out before the en banc ruling. Never. They are waiting to find out what the ruling is.

C) If the plan shows a pathway from conservatorship, this is going north of $10.
D) If the plan does not show a pathway out, this stock is dead.

We are betting on A and C. Be patient. Trade it if you want to make some extra money and shares but continue to trust your gut. We will always be bullish on this.

What do I need to be careful of? What question do you have that went unanswered? Glad to answer any questions.

You like that one? Hard to be serious this week. Everyone is very excited. Go watch the stock. Here comes the buy orders.

Be careful what you accuse people of. There is big news dropping and you all know what it is. You know it is going to send this stock up high. But we can't just sit on these positions and watch them lose value. We need to exit positions, reverse them, then get back in when they bottom out for the day. This is letting us accumulate more shares. I think if you review my post history here you will see I have always been very bullish. There is nothing wrong with active trading. We're simply following the OTC market maker. You'll see by close of business today that the shares will have returned to almost their identical level at open. You should be buying more on the dip in my opinion.

Apologies My Guys Are Shorting

Given all the bogus news surrounding this stock, my guys are going to be taking short positions anytime questionable or negative news drops. We'll be shorting around 500k of FNMA and FMCC each time we do it. We will wait for the selling to abate then cover with buy orders. Expect to see this over the next few days until the big news drops for en banc and treasury plan.

This is helping us accumulate more shares.

We remain bullish.

Very weird indeed. It appears his account was either fake or was compromised. He had been posting some interesting and useful items but then vanished. His post about the two letters to the Collins case is spot on. The ability to relist on the NYSE was a good point as well. We're still extremely bullish for a major event this week.

It looks like our favorite GSE stock dumper Charlie has met his match.

Things seem to be heating up and I suspect Charlie will be spending the next few days deleting old tweets.

https://twitter.com/Limulosta234/status/1150885300270510080

In all seriousness, everything starts this week.
I feel terrible for anyone trading this on the short or sitting on the sidelines.

When the news drops and if after normal trading hours, this stock can easily open the next day 50% higher. You won't have time to chase it or get your orders filled.

The best is yet to come.

Suspicious Volume Just Prior To Fox Business News Update

About one minute prior to the Fox Business news today that stated anonymous sources in Treasury want to abandon privatization, there were over 100k shares (just on FNMA alone) that appear to be shorted. Within 2 minutes before trading closed for the day, all those shorts were covered with buy orders which brought the stock back up.

Below shows the orders at 2:43 central (3:43 eastern) just before the news dropped which was immediately followed with additional sell orders that piled on.

FHFA has no excuse not to re-list these shares back to the NYSE. For the conservator to allow these to remain on the OTC when there is nothing preventing them from technically being relisted is unusual (conservatorship status or not). They have been over the minimum share price requirement for almost 6 months now.

With the recent letters to the 5th circuit and these final hit job news reports coming out, we certainly are closing in on major change.

https://video.foxbusiness.com/v/6059461043001/?playlist_id=938507328001#sp=show-clips

YankGhost, I certainly agree. There is no secret Goldilocks shareholder payday plan as some have theorized. Certainly there is orchestration efforts to benefit some of the big firms on Wall Street who want new equity opportunity but its also tied to the political reality of the mortgage market and by its very nature must be balanced and appropriately structured to get off the ground. We're dealing with the machinations of Wall Street and Government Bureaucracy.

To be clear, UST is not keeping billions in a magical escrow account that they plan to surprise reveal and gift back to shareholders. They aren't going to repay anything like some have suggested (e.g. $100 billion). What will happen is the NWS will end, risk capital will be raised over several years, the GSEs will be reformed with some form of explicit government guarantee that is paid for by the GSEs on an ongoing basis. We may see Fannie and Freddie Merge. The 30 year mortgage will be preserved. There may be a new capital raise and some conversion of JPS and commons into a new equity format. There will likely be dilution but dilution that is worth holding through.

However, even if this plan takes a few years to implement, what is exciting is the street will price it into the shares immediately when confidence in the execution of that plan is established. These shares will likely be worth between $12 and maybe up to $25. Potentially in 7 years you will start to see them go north of $40. However, for those who bought in when they were under $1 per share (or even today), you should be very happy with a share price anything north of $10. This is also a great opportunity if they resume dividend yield. How often in the history of the market can you acquire 5%+ coupons for under $10 per share? Amazing really. The investment may just be to hold these and soak up the dividends each year.

For anyone reading this, it is also important to keep in mind there are other tremendous opportunities out there beyond Fannie and Freddie. It is important to maintain a balanced portfolio. Don't put all your eggs in one basket. Don't focus on being right, focus on becoming wealthy.

As an example, we just finished accumulation of another investment. There is a pharma company called Ritter Pharmaceuticals. It currently is $1.04 per share and obtained permission to continue trading on the NASDAQ. They are a low float stock with under 10 million shares outstanding. Because they are a low float stock, they can experience extremely volatile changes in share price due to such few shares outstanding. They recently completed an FDA-approved Phase 3 trial and are going to do the data read out by end of year. We have been slowly accumulating these shares over the last 8 months. By end of the year they will likely announce the first FDA-approved highly effective treatment for Lactose Intolerance. Their symbol is RTTR. We are expecting these to go north of $10 per share by 2Q2020. I am not trying to pump or promote this investment. It is highly risky. I am simply trying to show you there are other options out there as well.

We have sizable positions in Fannie and Freddie (50% common / 50% preferred), RTTR, and a few others we're not disclosing at this time as we're just starting accumulation. These make up the majority of the "risk on" positions on our sheets.

I know some people have been holding GSE shares for many years. If you are patient for just a little while longer, there is a high probability you will end up happy with the outcome. I recommend many of you go live your life and not worry or fret about this on a daily basis.

If you are going to invest mental energy, invest it in repeatedly contacting your elected officials, journalists, attorneys, and drumming up social awareness. That is far more powerful than you realize. People in Washington often want to stay in Washington. We've seen time and time again where they must betray their special interests to ensure they get re-elected. The GSEs are a political "investment" so you need to engage in the politics to move the needle.

HERA Statutory Power Improperly surrendered to Treasury

If you head over to FHFA's website and look at the documents for the Senior Preferred Stock Purchase Agreements you will find something interesting that continues to not yet be specifically litigated. The legal argument relates to if FHFA has the authority to alter the statutory context of HERA (and adherence therein) through a Seller/Purchaser agreement by way of contract law.

The FHFA and US Treasury (UST) agreement documents are located here:
https://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-Purchase-Agreements.aspx

If you look at the original agreement section 5.3 (which does not appear to be altered in subsequent amendments), you will find the following language:
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/2008-9-26_SPSPA_FannieMae_RestatedAgreement_N508.pdf


HERA specifically grants FHFA powers of conservatorship and no other agency. However the SPSPA agreement with UST contractually prevents FHFA from terminating conservatorship without prior written consent from UST, notwithstanding the FHE Act.

Question: Can FHFA legally surrender over to UST its statutory authority under HERA to decide when conservatorship ends? Where in HERA does it permit FHFA to transfer the power to terminate conservatorship from FHFA to another agency? It doesn't. FHFA is not authorized by HERA to "sell off" its powers to another party by way of contract. FHFA, per HERA, is to be an independent regulatory agency.

No one has litigated this, yet. After the En Banc ruling is released, which is likely to be a published opinion that sets precedent, where do you think the next hole will be poked?

FHFA is not authorized by HERA to sell via contract its statutory powers of conservatorship decision making to another agency. Result: This aspect of the FHFA/UST SPSPA contract can be challenged. The house of cards is falling.

FNMA & FMCC Shares Recover After White House Debunks Bloomberg Article

It appears investors and PE firms are wising up to these negative, factually void, and inaccurate Bloomberg articles that seem to be drip released monthly.

This last one was so troubled that the White House Deputy Press Secretary sent out a note reconfirming their very serious plans to address the GSEs and get them out of conservatorship.

The official white house response:
“The president earlier this year instructed the Department of Treasury to develop a comprehensive plan for bold reform,” White House spokesman Judd Deere said in an email statement. The National Economic Council, Treasury, Federal Housing Finance Agency and others “continue to work together on this presidential priority and anything to suggest otherwise is false,” Deere said.


We're now seeing buy volume coming back in even as we approach the close of the trading day. There may be a small dip in the next few minutes as day traders who bought in at the dip around 08:55am central time are now exiting their position. They made an easy 20 cent gain. However, the majority of the volume today was clearly share accumulation and appears to be held long into the weekend. Investors saw through the bogus article and reacted positively.

Dow Jones Newswire: Height Analytics FNMA/FMCC Coverage

This just came over the news wire at 09:21am central:

One Washington analyst thinks the two companies will need about $140 billion of new capital, well short of some earlier forecasts.

Height Analytics on Friday initiated coverage of shares of Freddie Mac and Fannie Mae , citing expectations of "several positive events over the next six months" that will settle the thorny questions of ownership and control over the two mortgage giants.

Freddie(FMCC) and Fannie(FNMA) were swept into federal conservatorship as the housing finance system melted down in 2008, and have remained in limbo ever since. But the stars may have finally aligned for their release. A business- friendly White House has just installed a new regulator who's a fan of small government to oversee the two enterprises by working with a Treasury secretary with a professional background in housing finance.
The new regulator, Mark Calabria , was sworn in as head of the Federal Housing Finance Agency (http:// www.marketwatch.com/story/senate-confirms-mark-calabria-as-head-of-fannie-freddie-regulator-2019-04-04)in April and has begun working with Treasury to plot Fannie and Freddie's next steps. Among them: Treasury is expected to shortly deliver to the White House a plan for the two companies. Height analyst Ed Groshans expects that to occur by the end of July, and for the two companies to start to retain their capital (http://www.marketwatch.com/story/fannie-freddie-will-now- keep-some-capital-reserves-2017-12-21), rather than sweeping it back to Treasury every quarter, soon thereafter.

Related:Fannie Mae to turn to taxpayers after $6.5 billion loss (http://www.marketwatch.com/story/fannie-mae-to-turn- to-taxpayers-after-65-billion-loss-2018-02-14)
As part of the 2008 conservatorship arrangement, Treasury owns about 80% of the preferred shares of Fannie and Freddie. Groshans wrote that he expects Treasury "to deem its senior preferred shares to be repaid."
After that, he said, he expects Freddie to raise $52 billion of new common stock shares, and projects that holders of junior preferred shares will be converted into common shares at a value that is equal to 75% of par or more, increasing the value of those junior preferred shares over 45%. Similarly, he expects Fannie to raise $87 billion of new common stock, with a junior preferred-common conversion like Freddie's, helping them gain over 40%.
Read: Fannie-Freddie shareholders may get a payout after a decade of uncertainty (http://www.marketwatch.com/story/ fannie-freddie-shareholder-payout-is-part-of-the-reform-discussion-regulator-says-in-surprise-move-2019-05-21)
Since the two companies will be issuing more stock, and converting the status of junior preferred shares to common, that will "dilute" the value of the common shares outstanding, by 30-35% or more, Groshans wrote.

For that reason, he's initiating coverage with a buy rating on the preferred shares and a sell rating on the common. Freddie and Fannie's common shares have already surged 155% and 166%, respectively, since the start of the year on speculation about the end of the conservatorship.
See:As Fannie-Freddie reform gets underway, here are the three big questions for the housing market (http:// www.marketwatch.com/story/as-fannie-freddie-reform-gets-underway-here-are-the-three-big-questions-for-the-housing- market-2019-01-29)
- Andrea Riquier ; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires
07-12-19 1021ET
Copyright (c) 2019 Dow Jones & Company, Inc.

Saleha Mohsin The Bloomberg Stock Manipulator

On 6/10 she released a bogus article.
On 7/12 she released another bogus article.
Fake Sources. Fake News. With Intent to Manipulate.

Both days caused a 30 cent drop. Both days will recover as the investor community sees that it is a nonfactual hitjob.

If you want to tell her how you feel about her false reporting: smohsin2@bloomberg.net

Get to twitter and let her know how you feel.
If you do not act, she will continue.
Like I said last night, today is the last day to buy cheap.

Original hit job: https://www.bloomberg.com/news/articles/2019-06-10/mnuchin-dashes-investor-dreams-of-quick-fannie-freddie-windfall

Today's hit job: https://finance.yahoo.com/news/trump-team-grows-wary-fannie-080000602.html?soc_src=social-sh&soc_trk=tw

This Friday Is Your Last Chance To Buy Cheap.

We haven't posted here in a while. This Friday will be your last day to buy shares cheap. If you're a trader and in a short position, you should not hold it through the weekend.

Big news is going to drop early next week. Don't miss out.
You will see some unusual volumes on Friday.
What you all have been waiting for is about to come to pass.

I am qualified to speak on this subject.
I have knowledge of the plan.

Freddie Mac CEO Perspective Email July 1st, 2019

Please leave a comment below this article to notify the CEO of your opinion as a shareholder.

http://www.freddiemac.com/perspectives/david_brickman/20190701_next_chapter.page

Perspectives
July 01, 2019
Our Next Chapter
By David Brickman, CEO


When I first walked in the doors of Freddie Mac over 20 years ago it was to lead a few targeted consulting engagements and try to help the firm I was working for grow its business. Back then I could not have imagined how profound of an impact this company, its people and its mission would have on me. And ultimately, instead of selling Freddie Mac on my old firm, I was sold on Freddie Mac. That is why today, it is with great pride, humility and a firm appreciation for the hard work and dedication of all our employees that I take the helm as Chief Executive Officer.

It’s been nearly 50 years since Freddie Mac first opened its doors and during those years we have made home possible more than 80 million times. We have witnessed major changes both in our markets and our structure, but throughout it all our mission has been at the heart of our work. It’s a mission that I know matters to every employee at the company. What we do is important; helping to provide safe, decent, affordable housing is critical for building and sustaining strong families and communities. Our mission is part of our DNA as a company and it is deeply personal to me.
A Transformed Company

I have witnessed significant change at Freddie Mac over the past 20 years, and many of the most positive have occurred during the last 11 years of conservatorship. So while we are not the same company that we were when I started, certain aspects of who we are and what we stand for remain. In addition to our commitment to the mission, we have retained our focus on innovation, adaption and technological advancement for the company and the housing industry. And there is no greater example of our constant evolution than the last decade of progress.

We’ve said a great deal about the series of reforms that Freddie Mac implemented following the financial crisis, which spurred the transformation of the company and the housing finance system as a whole. Among those reforms, we moved from a “buy-and-hold” to a “distribute-and-protect” company by pioneering credit risk transfer and new, innovative forms of securitization. We invested heavily in technology to make the mortgage process easier, faster and less expensive. And we leveled the playing field for lenders of all sizes, which helps us support more lenders in providing families with a quality home. We have also become a more market-oriented, customer-centric company that is able and eager to compete. By any measure, we are today a well-run financial institution that is innovative, competitive and mission-driven.
Continuing our Progress

As CEO of Freddie Mac, my top priority is to capitalize on our transformation and bring us into the next chapter — ready and able to meet a rising number of new challenges in a rapidly changing environment. And to get us there, I will focus on three key areas:

First, continue to establish Freddie Mac as the housing industry leader. We will be looking to enhance the company’s leadership and leverage our research, analytics and innovation to do more to meet the needs of, and create value in, the housing market.

We will continue to pioneer advances that bring new products, processes and technology to the housing market. These will help us create more opportunities for borrowers and renters. And more importantly, it will help us envision the future and build our business in a way that furthers our role as an innovator and leader.

Last month’s successful launch of the Uniform Mortgage-Backed Security – a collaborative effort that merged Freddie Mac’s and Fannie Mae’s To-Be-Announced markets into one $5 trillion market – is one of the most significant examples of this. Truly game-changing, it standardizes securities and brings greater liquidity to the market, while lowering costs for borrowers, taxpayers and investors.

We will also explore additional avenues of credit risk transfer to further reduce our risk exposure, make the housing finance system more resilient and protect the U.S. taxpayer. Leading the development of the K-Deal was a personal milestone for me, but, more importantly, it fundamentally changed the way the housing market is funded. Since its inception just 10 years ago, we’ve grown our risk transfer offerings dramatically, introducing nearly 20 products that have transferred a portion of risk on over $1.6 trillion in underlying single-family and multifamily mortgages.

And importantly, we will continue our digital transformation to ensure doing business with us is as fast and efficient as possible.

Second, redouble our efforts to embrace our mission. Our mission remains paramount and we are striving to find new ways to tackle housing affordability including, but well beyond, access to credit. As an industry, we must be more innovative to help lower the cost of construction, preserve existing housing and address the shortage of housing supply.

For our part, we will continue to focus on developing offerings that help put borrowers and renters in homes they can afford. We’ve already brought to market many key products to meet this need. But we must responsibly expand these programs and look for new opportunities to make a lasting impact, particularly in some of the most challenged and underserved housing markets in the country.

Third, prepare to move beyond conservatorship. Given the current conversation in Washington and the expected release of the Administration’s Housing Finance Reform Plan, we must prepare for our future and be ready to follow the path set by the plan and by FHFA’s new Director, Mark Calabria. Over the last several years our company has consistently performed well with stable earnings, strong credit quality and a growing credit risk transfer program that is key to our business model. As we embark on our next chapter, we are eager and ready for whatever framework policymakers outline as a pathway out of conservatorship.
Tomorrow Starts Today

These are the building blocks for the future of Freddie Mac. By relentlessly focusing on those three principles, bringing the same adaptability and resiliency we’ve brought to every fundamental change the company has seen, and continuing to innovate to better serve our customers and the industry, we will succeed in the next chapter of our story.

I am excited to join with our employees, customers and industry partners in building that future. The opportunity has never been greater.

"He owns Fannie Mae and Freddie Mac" was just mentioned by commentator on CNBC and then they switched to another person on the panel right away. They are discussing Bill Ackman's comeback.

Bill Ackman about to talk on CNBC after commercial. This might be the delayed discussion about Fannie/Freddie.

Sorry, it went from 2.76 to 2.81 on FNMA right when CNBC made the statement. It then quickly went back down.

TRCPA no they didn't mention anything interesting. They just said they would be discussing the largest IPO in history after the break. We all turned to the big screen and after the commercials nothing happened. They went on with other segments as if it had never been brought up. 100% they said this and then didn't follow up. Extremely strange.

Extremely strange. At 09:59am eastern they said "After the break we have news for you on an upcoming IPO, potentially the largest in history." FNMA and FMCC both climbed 8 cents instantly and are now trending down. After the break, they never followed up.

CNBC about 60 seconds away from mentioning Fannie/Freddie IPO potential. Will be interesting.

Never forget what was done to the common shareholders of Fannie and Freddie. You should all be calling FHFA, Treasury, and your elected officials. You should tell them how you are still hurt. Your retirements and life savings have been stolen. You must be restored.

Remember there are thousands and thousands of private investors like you who were harmed. Remember some of their stories:

https://www.fhfa.gov//SupervisionRegulation/Rules/Pages/Comment-Detail.aspx?CommentId=15320

https://www.fhfa.gov//SupervisionRegulation/Rules/Pages/Comment-Detail.aspx?CommentId=15323

It always hurts the worst as you approach the finish line. I bring you a simple truth: Soon these stocks will soar.

Call to Action: Phone Call to Senator Mike Crapo

Tell him how you feel about Fannie and Freddie and what you'd like to see. Set the record straight on what happened. Call his offices and tell them you'd like to leave a statement for him.

https://www.crapo.senate.gov/contact/office-locations

Washington, DC
239 Dirksen Senate Building
Washington, DC 20510
Phone: (202) 224-6142
Fax: (202) 228-1375

Wonderful day to pick up more shares. We just bought up more FNMA and FMCC at a discount. This will likely be the last week to get these under $3.00.

Large FNMAK Volume: 1 million shares exchanged on FNMAK at 12:14 eastern today with less than 10 cents price movement. Largest single day volume in 5 years.

25 June Senate Hearing on Fannie/Freddie

Here is your chance to protest live as a shareholder and make the news.

https://www.banking.senate.gov/hearings/should-fannie-mae-and-freddie-mac-be-designated-as-systemically-important-financial-institutions

Date: Tuesday, June 25, 2019
Time: 10:00 AM
Location: Dirksen Senate Office Building 538

Should Fannie Mae and Freddie Mac be Designated as Systemically Important Financial Institutions?

THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS will meet in OPEN SESSION to conduct a hearing entitled “Should Fannie Mae and Freddie Mac be Designated as Systemically Important Financial Institutions?” The witnesses will be: Mr. Alex J. Pollock, Distinguished Senior Fellow, R Street Institute; Dr. Douglas Holtz-Eakin, President, American Action Forum; and The Honorable Susan M. Wachter, Sussman Professor of Real Estate and Professor of Finance, The Wharton School of the University of Pennsylvania.

All hearings are webcast live and will not be available until the hearing starts. Individuals with disabilities who require an auxiliary aid or service, including closed captioning service for webcast hearings, should contact the committee clerk at 202-224-7391 at least three business days in advance of the hearing date

Try it with 1,000+ people.

Start Contacting Journalists

Private firms cannot bring truth to the public on our own and through litigation alone. It requires all of you as individual investors to contact your local news outlets, legislators, and friends to share the message of the 2008 GSE Stick-Up.

You need to share how you were and are being financially harmed. You need to share how the bond of trust and fairness was broken between you the shareholder, the GSEs, and the government.

We encourage all of you to spend some time researching how to get in contact with journalists to share your story.

In support of this effort, below is a publicly available email list of some influential writers on staff at the Wall Street Journal. Send them an email. Make sure the email is professional, courteous, and factual. State your concern and your opinion.

Let them know there is a story and that story is about the harmed shareholders. Also open a twitter account and make one post each day supporting proper GSE reform that treats shareholders fairly.

Look at what the citizens of Hong Kong did when they stood together. What could all of you do if you used your collective voices and pens?

moderator@wsj.com,
ben.eisen@wsj.com,
laura.kusisto@wsj.com,
jerry.seib@wsj.com,
jess.bravin@wsj.com,
chunhan.wong@wsj.com,
patience.haggin@wsj.com,
kimberly.chin@wsj.com,
Patrick.Thomas@wsj.com,
nick.timiraos@wsj.com,
nick.kostov@wsj.comj,
sam.schechner@wsj.com,
micah.maidenberg@wsj.com,
dave.michaels@wsj.com,
justin.lahart@wsj.com,

How can big funds get into the GSE equity if they can't pick it up directly off OTC?

Good question. Consider this:
Big Firm/Fund picks up the phone and calls (as example) Pershing Square and says "We're looking to park some money for a few cycles can you spin up a fund for us. Make sure it has GSE stock in it, a lot of it." New shares of new fund are issued with a baseline NAV that trends to the common and preferred stocks. They even make an inverse based on shorting. It's directly correlated but not directly owned.

Big Firm/Fund says to Pershing Square "I'm feeling like your fund isn't balanced in a way we are comfortable with. We need you to pick up some more preferred. Oh by the way, we also want you to join the auction to buy some of the reperforming loans that Fannie/Freddie are selling out of their retained mortgage portfolio."

Best of both worlds. They get to help drain Fannie/Freddie's portfolio and they get to own their shares. They can't lose at this point.

This speaks to my broader suggestion earlier that Wall Street wants Fannie and Freddie to survive. They want them as the model for other charters and to rebirth them as a means to de-risk and create standardized mortgage liquidity processing infrastructure. Once those new charters begin doing what Fannie/Freddie do today, you will see lobbying to gut Fannie/Freddie into a utility platform. There is a reason they are already working on Common Securitization Platform and the Universal Mortgage Backed Security. These have now launched. Banks are looking well beyond the ability to have their own charters to compete with Fannie and Freddie. They are looking deep into the future at new and exotic financial instruments and derivatives based on the UMBS that can be bundled, packaged, traded, leveraged, and more.

The GSE companies will always exist, will always be vital to the US housing market, will always be reasonably profitable, and will eventually provide dividends back to shareholders. However, if the banks have it their way, the GSEs will slowly be boxed into a utility company for processing, bundling, and flowing securitizations.

If you want Fannie and Freddie to be the #1 company in the world, you will be disappointed. If you can be happy with a $25 to $100 share price and dividends of $1.5 to $2.5 per year, and to reach this possibly in a 3-5 year horizon, than this stock is for you.

But make no mistake, it is an almost inescapable destiny for the GSEs to eventually be morphed into back-end boring financial infrastructures to support other charters. This isn't scary or bad as long as the pps and the divs keep on rolling down to shareholders and private ownership rights are restored and protected.

OTC Prevents True Price Action Ranges

There is a mountain of fund money out there sitting on the table that simply is not allowed to buy into this while it remains on OTC with its price levels and fluctuation.

People talk about how the price action reflects the collective knowledge of the market and all the future models in play. They say that news is "already priced in" and typically they are correct.

Unfortunately, as long as these remain on the OTC much of that is actually not priced in because the perspectives of the participants cannot manifest in actual orders.

Imagine a horse auction of 1,000 buyers. Only 10 are allowed inside the actual auction house while the rest are barred from entering at the front door. The 10 inside may have some great insight into horses and consulted with experts but statistically their collective market knowledge is far less than the 990 buyers who can't join them.

Beware if people tell you that all the news, information, and models are priced into the GSE stocks. It's not. It can't be. All the quants, analysts, numbers guys, and strategists at all the big shops aren't being baked in. Their models are not feeding strategy which manifests as orders and ultimately price action. Believe me, they have their plans and their models but they are not sitting at the table running their orders through. Again, most are not allowed while these trade OTC.

If Calabria were to get these stocks relisted on a major exchange (even in provisional status) it would allow true market price action to take place. There is a wave of decisions about buying and selling that are caged at the moment. Once they are allowed to be participants again, you may see some powerful changes in the price per share. This whole situation is a keg of powder. En banc and the plan, if favored for shareholders, will likely be very satisfying.

Exodus of The Preferred?

Unusual stock behavior today. While SPX did fade down today (now recovering but still did impact) the divergence between the commons and the preferred is not consistent with historical patterns.

It appears people are exiting some of the higher volume preferred and potentially going into commons.

HowTo Instantly Be Updated on En Banc Decision

Historically people had to login to pacer.gov after getting an authentication token to activate case search privileges. They would then repeatedly check the docket entries of the case in question for $0.10 a look. Long ago it was one penny per page. The individual court RSS feeds and website posts of opinions are delayed as RuudG said. The website that lists the opinions is below and this is only updated twice a day. Because of this, you will find out later than everyone else.

http://www.ca5.uscourts.gov/electronic-case-filing/case-information/current-opinions

There are a handful of other methods to get new docket entries almost immediately when they are posted for a case into the pacer database with the same speed the news outlets will get them.

We will list two of them below:
1) Get a pacer account and have your IT guy setup a simple web script to check the following website every 5 minutes throughout the day. It costs $0.10 per check so if you do it from 6am to 6pm that will be about $14.40 per day. This was the old way of doing it. If you want to check it just a few times throughout the day, the link below works if you have a pacer account.

https://ecf.ca5.uscourts.gov/n/beam/servlet/TransportRoom?servlet=CaseSummary.jsp&caseNum=17-20364&incOrigDkt=Y&incDktEntries=Y

2) Sign up for a Court Listener account and setup an alert for "Patrick Collins v. Steven Mnuchin, Secretary (17-20364)" for the Docket Entry tracker link below. You can also install their RECAP browser plug-in they offer. This will give you a browser popup as well as an email alert anytime this docket is updated. If you make a donation to their foundation of $10 or more, you can receive unlimited alerts. Otherwise I think you only get 5 or 10 alerts which should be sufficient for this case. Journalists use this service intensely, as does our firm.

https://www.courtlistener.com/docket/6179579/patrick-collins-v-steven-mnuchin-secretary/

Rest assured, when the en banc ruling drops, it will make it into the news within 5 minutes. You can also setup twitter monitoring with tweetdeck.twitter.com and search for 'en banc collins' or '17-20364'. We have a fairly sophisticated social media and news gathering operation tailored to our strategies that feeds some of our automated trading.

But to be candid, knowing about this ruling instantly when the docket updates is only going to benefit you if you want to exit your position before the stock starts to drop in the event the opinion favors the Government or unfavorably remands back down to the prior court.

You can get the same profit save by just setting a downward price alert with a trailing market stop loss order.

Hope this rules for the Plaintiffs.
Back to $5 or $7 if so? Maybe.

We always like to error more on the conservative side when estimating future price per share.

But take a moment and think about this. Just imagine the regular guy who decided to pickup 40,000 to 80,000 shares last year or in prior years after the price crash. There are a lot of us boomers coming up near retirement where that is a drop in the bucket if you look at their retirement/investment portfolio balance. Think about if dividends are restored and each common brings in $1.4 annually. In 3-5 years your $100,000 investment is now worth over $5 million and you get $112k annually in dividends. Not bad.

Now think of the small to mid-size firms out there doing this on a 10x to 100x scale who manage money for their friends and local businesses. This is good for everyone.

If this goes the wrong way, millions of hard working voters and a lot of small businesses are going to get hurt. They will begin to thunder loudly if the Treasury Plan is designed to cause them financial pain.

The politics surrounding the entire situation is not lost on those in positions of power. They are more aware than we give them credit.

We think en banc will be released prior to July 18th and favor Plaintiffs. This will open additional legal maneuvering for shareholder lawsuits.

We think the Treasury plan will be released internally to FHFA by end of June and then undergo internal negotiations between FHFA, Treasury, and Kudlow. Kudlow will release in late August after Trump reviews. Net Worth Sweep won't happen in October.

The recap and release plan will have a longer horizon than most people want to see (probably up to 3 years but definitely initiated next year).

I'd expect listing to NYSE as early as 3Q2020 and full release in 2021 but wouldn't be shocked if it bled a little into 2022. Republicans and Democrats will negotiate a bipartisan housing reform package that gives additional powers to FHFA (Calabria/Economist Gang), creates some type of ongoing guarantee from Treasury (Swamp Gang), protects the 30 year mortgage (Consumer Protection Gang), and creates an opportunity for additional charters to be issued beyond Fannie and Freddie (Wall Street/Banker Gang).

That being said it is not unreasonable to assume en banc will push this to $5/s, the plan to push it to $7-12/s, and eventually Fannie and Freddie to be trading between $50 and $100 with all dividends restored in the next 3-5 years.

We may see some kind of conversion and dilution but no one is going to end up holding a bag. Everyone is going to walk away with at least 2x upside. And, it just may happen that all this talk of IPO, re-IPO, or secondary offering to raise capital is just garbage and FHFA/Treasury work something out that is much simpler.

We wouldn't be doing this if we believed otherwise and I have some very smart guys on my team.

Everyone has been very patient. It always gets hard right near the end. Stay strong and be patient just a little longer.

The idea that there will never be a release of the court's opinion (ruling) from the Collins vs. Mnuchin en banc hearing is an exceptional and extraordinary thought. But let us entertain it. Let's say we get to 18 months and there is still no ruling. Why would the court do this? What is their reason? They are subject to Judicial procedures and not exempt.

If it went on for too long, the plaintiff has the ability under the Administrative Procedure Act (APA) to file a writ of mandamus to the Supreme Court to compel the lesser court (in this case the 5th Court of Appeals) to render a decision.

If this actually went to the Supreme Court it would be a wonderful thing. And, if the 5th rules against Collins that is exactly where it will go.

The judges in the 5th will need to use some extremely contorted legal theory to justify how a conservator required by HERA to preserve the entity is acting in the best interests of Fannie and Freddie by perpetually preventing them from retaining capital. Preventing them from retaining capital is a power only allowed under HERA if the FHFA designated receivership and not conservatorship. In essence, FHFA is not executing their statutory powers properly. They are mixing up and cherry picking between receivership and conservatorship powers and doing what they want.

The Government doesn't get to cherry pick Statutes. Follow the law or change the law to what you want via Congress. I am confident the Judicial branch will set this straight. This will force FHFA and Treasury to pivot. We may not like their pivot but pivot they must. And hopefully, that pivot is consistent with what Calabria and Mnuchin have been vocally calling for over the past few years.

Time to recap and release the GSEs and let them go back to being private companies with a board of directors obligated to the shareholders.

Right now there are thousands of investors, multiple large firms, and over 500 million shares out there held with a belief that the rule of law will be followed and shareholders have rights.

We'll see what the future brings!

If you doubt the routing games they play go ahead and read what they are barred from doing with Interpositioning and Pre-Time Stamping based on FINRA. Then look at how OTCQX, OTCQB, and Pink flow it on their ATS with all their extreme order fill delays. See the loophole?

http://finra.complinet.com/en/display/display.html?rbid=2403&record_id=14301&element_id=10455

Why do you think the big firms typically forbid floors to trade OTC except when they meet a very limited risk exemption? The OTC is the wild west.

The best thing for Fannie and Freddie will be going back to a real exchange and getting off OTC entirely. One would think a person charged as Conservator would make that a priority along with capital retention.

We are Pro Commons and Pro Preferred and right now are balanced at about 60% common and 40% preferred. We see good upside potential to both and have no overwhelming preference for either. We like them all except for FNMFO with its interesting option to convert to commons. In our opinion it is too illiquid and has already priced too close to the liquidation preference to have meaningful upside as compared to the other preferred.