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I like that - JPS Bang Bang!
He is sort've like bam bam from the flintstones ...
It won't help JPS when SCOTUS rules. The Big Bang is fading with only a Bang that will not lead to a lightening fast recap. Responsibly build capital and exit conservatorship.
Good luck JPS!
Ouch! - JPS beginning to hemorrhage ...
Funny ... what a waste of analysis ... Truly a waste ... If anything is in the driver’s seat it’s SCOTUS. The spectrum of possibilities is vast and I honestly don’t see some big bang event that is going to reward JPS. They are so caught up in a restructuring that they forget about timing, along with SCOTUS leverage with a conservative court writing down the liquidation pref which by default all but kills the warrants. For the non-believers, go to pages 98 and 99 of the oral arguments and read Thompon’s request on remedy.
On the timing front a cap raise under Biden with a new FHFA director after a SCOTUS ruling? The time for JPS to sell was when Trump lost, but they got soo caught up in the weeds with their desire to be right on a big bang plan with restructuring that they forgot about timing. Timing is everything ... and a condensed window is no friend of the big bang theory ...
SCOTUS vs Lamberth contract claims is no contest. Either JPS is comforting themselves in their echo chamber, or it’s just a marketing campaign to pump JPS. If SCOTUS allows for direct claims, there will be no cap raise for an eternity due to a flood of new legal claims and appeals delaying the cap raise. Possibly class action resurrected from the dead due to lower court dismissals.
Even without direct claims, derivative claims help the company and commons appreciate. Anything from $124 Billion with damages to just the liquidatIon pref to 0 (by default the warrants xled also) has commons appreciate at high single digit multiples or higher.
Once that is done then you can discuss CRPs publicly = more time. How I will relish the public comments on the capital restoration plans. That will be must see TV/reading. I hope for a midas comment letter - more amateur hour ...
Stockprofiter - pure finance guys ... lack imagination on the bigger picture aka SCOTUS.
They’re all capitalists. Write down the liquidation preference and lets plan for responsibly exiting conservatorship ...
I say Bang - no Big Bang ...
JPS Converted - 100% False
They don’t need to do anything for a long time in terms of capital raise. Liquidation pref down to 0 is as much as we can hope for. Worst case is they let FnF retain more profits.
Biden certainly isn’t going to give JPS some cushy conversion.
Geez, only a couple months ago you were doing ur touchdown dance. Recall? “I’m better than yoooouuu ...” was basically what u were saying.
Don’t worry, you’ll have your day in court in 2022.
Sleep well!
haha! That was good ...
What do you think his password is?
My gues is GSRich2016@
Or The MnuchMan1@
Navy, no Big Bang ... The reason JPS are bleeding ... No quick recap ...
SCOTUS delays everything for a while, and more importantly, Trump lost. JPS should've sold that pop then.
Now a Liquidaiton Pref to 0 would be the best option for us and then it is a long haul to retaining capital with the SP stabilizing around $10 per share while further uncertainty is resolved, then could be many multiples from there.
Calabria is gone soon ...
JPS under a lot of pressure since they may be left twisting in the wind for 5 years ... no conversion.
It's a long way to the top if you wanna rock'n'roll!
Good Luck, JPS, and talk about illiquid assets! Could start to exacerbate the bleeding to hemorrhaging very, very quickly.
Sleep tight, JPS!
Good thing it will be all but solved by SCOTUS. May even be fully solved by SCOTUS. What an opportunity for SCOTUS to knock the legislative branch back into their lane.
Pretty sure Schwartz will have plenty of SCOTUS guidance for him to follow. Plus, Sweeney will advise also based on SCOTUS guidance.
Thompson is asking for the PSPA to be written down to 0. He said it directly to Amy Comey Barret. Pages 98 to 99 of the oral argument transcript. Been posted here several times. You're welcome!
And you are a 100% wrong!
Good luck!
There is hope for commons in SCOTUS, especially with a lopsided conservative court that doesn't even need the moderate Chief Justice Roberts as a swing vote.
No big bang, no warrants, just a nice pspa liquidation pref written down with the potential of a lot of money returned to help with capital raise.
Did I mentioned also that Calabria's cap rule could come way down?
Did I also mention that most likely there will only be a bang, meaning FnF will be able to keep significantly more capital? Maybe even a liquidation preference write down but NO release?
That bodes very well for more retained earnings ...
Good luck JPS!
Haha - False - SCOTUS can overturn any contract it likes. JPS toast - long haul capital retention so much easier.
Good luck, JPS!
Navy, exactly. And if the warrants are repriced at reasonable rate on an amended term sheet, the net proceeds need to go to pay off the liquidation preference. But if the liquidation preference is deemed paid, you can't do it.
Intent is 9/10s of the law. The warrants were defined so Treasury could recoup more money if things went horribly south on FnF.
They didn't go south. PSPA is paid via comments from Treasury, Calabria, and now we wait for SCOTUS to rule.
Do the right thing, Mnuchie ...
Rob - congress tried for years to change housing. Housing looks partisan in committee - get it to the whole congress and nothing happens ... blowing it way out of proportion...
Bradford, Biden has said he is not in favor of packing the court. Even if he wanted to, doubtful it’s done by June. Plus, oral arguments are done. Current court makeup rules on Collins.
Bradford, ur retail - unless u count your parent’s money as a fund ... took me a while but I eventually got there ...
Not looking good for JPS per Gasparino’s interview- looks like exactly what Gaby said would happen is going to happen. A Bang only - no Big Bang - retained earnings ...
It’s a long way to the top if u wanna rock n roll!
And who he is trying to get a job. Jacobs is unemployed ...
Donot - once you exercise, you hold the warrants. It would be a lot of work to walk back the exercise of the warrants, especially if SCOTUS deems the PSPA paid.
lunch break - go look at section 2.2 Net Exercise of the warrant doc here.
https://www.fhfa.gov/Conservatorship/Documents/Senior-Preferred-Stock-Agree/FNM/warrant/Fannie-Mae-Warrant.pdf
That is what is meant by net proceeds in the Treasury FY2012 doc here.
Page 8 https://www.treasury.gov/about/budget-performance/Documents/CJ_FY2012_GSE_508.pdf
Admittedly, the verbiage is not straight forward but it is what is referenced. Currently, the PSPA is not deemed paid, i.e., the liquidation preference is not written down to 0. If SCOTUS does say it is paid, then the warrants die on the vine. It is that simple.
Executing the warrants now is a problem and currently they are toxic due to the pending SCOTUS decision.
Navy, agreed
Holden - CoCo are big in the insurance industry and a perfect example are cat bonds. EQ, HU, TR events at certain thresholds kickin and the purchasers, typically reinsurers loss inure to the benefit of the primary catastrophic reinsurance stack.
There are plenty of convertible debt examples where a ratio equivalent to the face value is converted into equity. The defined equity amount is not set upfront, but models based on SP easily predict expected float at future dates.
Inaccurate Convertible debt understanding, Unaware of a Collins injunction request and how it affects warrants, NWS reestablished immediately on jan 20th being false, not understanding SCOTUS needing to be heeded, the list goes on and on ...
Calabria is gone in 6 months or less. Bank on it ...
Nats - from Scotus oral arguments in response to a question from Justice ACB on what Collins wants - pages 98 and 99.
Holden - “limits common dilution” because before conversion, the maturity date on the converted debt can be pushed out typically up to 3 years, FnF retain more and more earnings with higher SP and less conversion. Not front loaded ... quite obvious
Navy, he repeated the exact options from the document the Treasury put out there in 2019. It is the last bullet point and everyone agrees that will not happen. Click on the link he references at the bottom of his page. I wouldn’t read to much into that ...
Any money made by Treasury = the delta between the execution price (.0001 per share) and the market price = $2.40 is essentially all profit = your big pot.
That big pot must be used to pay down the liquidation preference of the sr preferred shares.
There will need to be a significant update to the warrants to avoid serious future litigation on a takings claim. The cynic in me almost feels the warrants have been used publicly as a threat to keep the price down, with no intention of executing even close to all of the warrants.
Also, executing the warrants now would be foolhardy as you miss significant upside potential on SP appreciation. At these levels, the Treasury would make ~15 billion. FnF would gladly add the $15 billion to their account over time to avoid dilution, and, what many of us have been saying for a while, one net transaction to wash the $30 billion overpayment with the warrants. There are creative ways to get this done but the lawsuits would need to be settled first and ACG was also hoping for that outcome.
JPS were also pushing that narrative hard - the cynic in me also feels the JPS marketing campaign is there to sell the JPS at all times, almost as if Paulson is trying to unwind his position and buy commons ... but I digress ...
Let’s see what happens ... Significant litigation risk until Scotus rules = no capital raise for a long time ...
kthomp - if the proceeds from the warrant sale must be used to pay down the liquidation pref, and the warrants are executed before Jan 20th, then if SCOTUS approves an injunction on the PSPA deeming it paid, then the warrants that were executed were done prematurely and set the stage for a large takings claim.
The way I read the below quote is that the warrants, if executed, must be used to pay down the liquidation preference of the sr preferred. But, if Collins wins their request for an injunction on the PSPA to deem it paid, e.g., the liquidation preference is written down to 0, then the warrants become worthless because the liquidation preference is already 0.
Per the PSPA the warrants must be used to write down the liquidation preference. If Scotus grants Collins’ remedy, i.e., injunction on the PSPA deeming it paid, the NWS cancelled, and the $30B overpayment returned, then warrants can’t be used to payoff the liquidation preference since it’s already paid off.
Of course, this was stated by Treasury before the August 2012 NWS. Treasury never believed in maximizing profits off of the GSEs, they were only looking to use the warrants as a vehicle to recover their investment. There is your takings claim ...
Mr Chrisman seems to think convertible debt may be the key instrument to raising capital for FnF. Providing the maturity date is a couple years out, that would seem reasonable, and is customary of such deals. This limits common dilution.
But, again, Scotus could torpedo much of these plans ...
Burlinggame - i assume you own JPS only
Fire, Thompson has to stay within the arguments that are strongest and, as importantly, most reasonable for SCOTUS to act (an unfortunate reality). SCOTUS can go beyond what we are asking for and Thompson has told the court he is fine if the court decides to vacate the entire FHFA.
Thompson is cutting directly to what is most reasonable for the court to act upon. An injunction from Scotus puts the liquidation preference and warrants in play for “cancellation.”
I think we get some kind of PSPA amendment that will at minimum be de facto irreversible by Dems. Biden winning from an FnF perspective only could be the best thing happening for commons.
Rob Chrisman seems like a logical person. To Big Bang, or not to Big Bang and just Bang, that is the question.
kthomp - and the 5th circuit is a notoriously conservative court, and fortunately for shareholders, at least for most shareholders I should say, SCOTUS is probably more conservative leaning than the 5th circuit given its current makeup. There are some heavy conservative hitters on the bench.
Bodes well for common shareholders and delays any potential capital raise. What happens in the other venues even if the PSPA is amended but it’s not to the satisfaction of all plaintiffs? Some plaintiffs joined with Fairholme by Sweeney may continue to fight. How do you rush a cap raise when significant litigation risk is on the horizon?
What if Scotus allows for direct claims? Say hello to a barrage of possible new legal claims?
Nothing can happen until Scotus rules. JPS was hoping for a settlement before oral arguments. No dice.
3rd party capital raise is on hold for a while. This may be why the CRP in the APP says Fiscal Year 2021, and not Q1 2021 like virtually all other major regulatory rules. Can’t finalize and execute until Scotus is known. Also, and this cannot be understated given Trump’s loss, a Dem administration with a Dem FHFA director will not allow Wall St investment banks and merchant bankers to get rich manipulating any PO.
Fascinating you are essentially taking the government’s stance on the NWS, talk about cutting off the nose to spite the moneymaker ...
Donot - per the PSPA and any legal injunction
Donot - the below are on the table in front of Scotus.
- Conservatorship null and void and the greatest award to companies ever (long odds)
- NWS null and void from inception - $124 billion paid back to FnF (could happen and can’t be discounted)
- NWS null and void from first confirmed director in 2014. Take off 1.5 yrs from NWS $124 billion
- NWS allowed but only the %10 overpayment repaid
All of the above include an injunction to deem the pspa repaid
Or SCOTUS could say it is all legal and fine ... i think those odds are about as long as the while conservatorship being deemed void
Any injunction on the PSPA is huge ...