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Capital rule does not tell us final share count and hence common value, so I find it hard to believe it breaks 5 without such news
But this market is crazy so who knows?
On the other hand, rips always decay after initial news and run - so maybe it does not reach 4? Or even 3?
2.13 FART!
In the saddle, Stinkie, but riding with the Four Riders of Apocalypse, aka the preferred holders. I see an apocalypse of dilution possibly coming for common - but what do I know? Virtually nothing ??
Lol Stinkie - Happy to drool all the way to the Bank
Happy Memorial weekend my friend, remember to turn those commons into cash...
Yes. It gets ugly, repetitive and divorced from what should be commonly accepted facts here... oh well,
Three Trains ALERT! There goes the SP for Tuesday...
Yank, think we disagree on warrants, but at $20 a bottle (!) you cannot be wrong on the red wine. Thanks for the info on that, potty
Even Ackman is sure the warrants are here to stay, that Layer cake is stronger than you realize... ;)
RPS, a quick response, I can do the math and many of the roads, for example remaining senior pref converted to common, lead to massive dilution of common. In contrast, the face value of the pref is a fixed number, if the companies are back to going concern they owe me the contracted face value of my pref. That remains even if RnR goes tits up.
So, thank you for your concern, but the preffered offers me more safety than common.
On the JPS, the case in Lamberth's court looks like a roadblock to any capital raise, right? So how to resolve that case? I think Bradford mentioned in an early post here that conversion is one settlement option...
Kthomp, I reread your earlier message and your inferences about Calabria's preferences were bang-on. Taking "bank-like" requirements, following Basel, to focus on CET1 leads us to the focus on common. Converting JPS to common immediately increases the CET1 by 33billion -- and hence lessens the new to issue new common by 33 billion in order to meet the all important CET1 target.
I think this alone suggest a conversion.
I agree about the mindset of new investors re existing JPS.
We should also remember that even the FHFA director, and Secretary of the Treasury, lack the power to FORCE a conversion since the the JPS contracts fix when conversion can take place. So any such conversion has to be sweet enough for 2/3's of the holders of each class to take the conversion. (Maybe in concert with the unappetizing nature of holding unconverted legacy JPS...).
Thank you for sharing your past, and present, insights. I continue to learn from them. I bought back into the prefs last week through FNMFO. Now I am thinking I may buy more of the other issues, best, Potty
DJ, it will depend on the terms of the conversion, and/or what the option for non-converted pref looks like... I think you might expect a carrot and a stick.
The price of newly issued common has to be attractive to induce new investors to buy it, so if you offer to convert JPS at the price of the new common then that will be an attractive price - and an incentive to convert.
PLUS, if the existing pref is looking at some years with no divvies, then that might be an incentive too -- or something more devious as a stick
Just quick and obvious thoughts
Guido, I can see three things that conversion of JPS achieves (but I hope others add to the list):
First, conversion can be offered as part of a settlement to get JPS plaintiffs to end their lawsuits in Lamberth etc;
Second, converting JPS to common moves capital to the bucket in capital rule which includes common (CETI1?), hence reducing amount of new common needed to be issued;
Third, it facilitates issuing new securities since new pref don't have any pref ahead of them in the capital structure, and/or new common don;t have pref ahead of them in the capital structure, hence making them more attractive to investors.
There may be other reasons...
Trump people missed the chance in 2019 to get this done and dusted, but perhaps the crisis was needed to show FnF are reformed and indispensable.
But now NOTHING happens till November unless a court ruling provides cover, since Trump campaign is fighting for its life (support amongst Christian voters cratered in last week’s polls!) so they will take no risks.
So it is after the the election when Trump will be unconstrained (win or lose)
Lamberth will never hold a trial, let alone give a ruling, if all goes well.
Part of the Big Bang, SPSA amendments, settlement, consent decree, will be a conversion of JPS to move RnR forward and clear deck for new pref and common.
Calabria, as Conservator (and with all powers of board and common holders) will ok the conversion of JPS to settle suits and move RnR forward - alongside Treasury paying back overage...
Lamberth is beside the point, the Conservator is the one who can okay conversion - and Calabria will do that to effect an RnR benefiting all FnF holders whether they understand how they are helped or not
Have a happy memorial weekend...
Food sounds great, especially desert... I will stick to my beer tho the cake name is awesome lol
Yeah, the pain of regret if it runs on you after you sell out would not be fun...
I admit I am generally confused by FnF and their price movements, I think they break $2 today -- but I may be confused about that...
Like Craig Stevens, lots of experience, got a plan crafted, high integrity -- did the job and goodbye
It does help that these guys get paid many times their government salaries in the private sector, but still compare Otting and Philips to creatues like Parrot, Stevens, etc.
Dropping like a stone... wow
Triple trains took this down over two days -- amazing
Yeah, it seems that the capital rule implies a greater likliehood of Treasury going for an option involving greater common dilution...
I cannot figure out why people don;t buy the protection of contract, and face value, of preferred...
But I am happy to be in FNMFO at a decent price with, like you say, 4x to par from here - if RnR fails then Lamberth goes to trial, Collins finally has a judgement and Sweeney does her thing (something!) in 2021
IF FnF get released under consent decree, then I think a new FHFA director may well make the capital rule less punitive... I am also do not so concerned that Biden is an FnF hater, Dems have long been supportive outside a few corrupt Dem senators
Quickest rally and fade ever seen?
What is the nasty secret buried in the Capital rule?
Just trying to help the common folk ;)
It is a Friday before a long weekend, looks like a red day for the markets, so... not much action today
The negative PR machine has started with the Bove peice, but I expect more -- think potential mortgage losses etc get trotted out
Seilia law could bottle rocket this, tho...
Brooke, thanks, it is good to reread it... reminds one of the thesis
Last thing Ackman bought here was pref - explicitly because he was worried how the process might favor pref's. That is due to two words: conversion and dilution.
Just imho
Ackman is sitting on a mountain of cash so he does not need to sell anything to buy something else
I can see him as a buyer of MORE pref
Got you a $2.20 close rather than $2.50...
Who knows what goes on here - was this profit taking or shorting? I tend to think shorting...
FFF , the higher yield options cost a lot more. And it is an expensive hassle chasing down volume of shares. This was a quick way to load face value without the hassle - and I am fine with the price. Equivalent to $6.5 for $25 and $13 for the $50’s
I also don’t want to get locked out by a price jump...
BX bought 7% of ET too - a huge vote of confidence to the area. I like CQP as well but don’t own it for obvious reasons.
The risk reward here looks a whole lot better and with these potential catalysts coming up you note. I would still be nervous of the common given there is a lot of dilution with a number of obvious options. So pref face value for me.
Happy to diversify into a Special Situation story not so connected to the general marlet
Yanks, the capital rule looks a lot better when you work through the details - looks crafted to get an RnR done
I bought the FNFMO today, since the price was decent and actually had some for sale. I had profits to take in ET, it became 30% of my holding, so I moved some over to FNMA. (I still love ET for the next few years... KW will be proven right imho)
A positive ruling from SCOTUS, and then Judge Atlas, would be very welcome now, lol
I am planning on the long run to November with this, always got Lamberth and Sweeney if they mess-up the RnR
Fingers crossed
I think that arrangement might be the other way around, or perhaps they all work for the same group? Who knows...
You just need to know who paying him as an adviser...
Just means volatility on a penny stock, cockroaches crawl all over penny stocks with high volatility - I am seen him on quite a few other stories. I would not trust him an inch FYI
May not be proper, but it is true -- Commander Pump...
If mr.Joseph bought his pref at 25 cents, then he already had more than a couple of windfalls, BTW
Someone is selling prefs this morning -- 5 FNMFO at $26k, but maybe that was good?
JPS putting on a show, 7%+
Three trains alert! Bearish indicator...