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that's a great goal. if i had the money to buy that much... that would be great. but it would take a lot longer than we have at much lower prices than we've seen the past 2 years.
Oh. You think exercising the warrants is illegal.
They were issued in 2008.
My view is that it would be illegal not to exercise them. The government has to monetize its equity position to its fullest potential in order to protect taxpayers.
It is not the warrants that get the common shareholders as much as it is the spspa that exceeds the market value of the common equity.
The companies are underwater in an equity restructuring and commons have no dilution protection. It is like spilling a glass of milk into the sea. No way to get that milk back. Whereas jps are like a lifevest. They just float on top and are easy to get back.
Study up on your dilution mechanics young man!
Because it is supported by how the government accounts for its spspa+warrant equity position on its own balance sheet
Well that is what is going to happen. They are going to restructure by exercising the warrants and converting the spspa. The govt is going to get like 450b shares in the process. Existing common shares diluted down to current market price. The swipe complete. Good day sir
As soon as possible
she is doing a fine job. she will end the conservatorships under her tenure.
smart man, preferred only.. oh i see.. you say 2024. i thought you said 2023.
my perspective on this is more opportunistic. i see a fragmented illiquid market with a big forced seller.
this too shall pass. specifically and rapidly and i think this year
The companies did not have a liquidity crisis. If anything there was a solvency crisis. Like the svb thing. Fannie and Freddie were apparently debatably insolvent so the government took them over and committed accounting fraud, doubled their income in guarantee fees and then set new capital standards. Took like 15 years.
The courts have been a banana republic and mostly worthless.
There is no secret accounting cookie jar thing.
Carlos vignote asserts that the lawyers defending our rights in court are bad. That is insane.
But he is right about them not retaining regulatory capital. The spspa takes all that. But with a restructuring it gets solved and is reg capital.
Good luck. Commons are basically trash. Preferred are money good. Its simple.
If the price goes lower on jps that just means a lower cost basis for an eventual par value outcome.
The problem with you is you think this is personal. This is just capital structure mechanics. And the market will be the teacher here ultimately and you have been sitting in the back row mouthing off not paying attention to the relevant restructuring lesson.
I hope you and navycmdr have livable outcomes if jps get face and you guys get 50 cents or less for your common shares that have no dilution protection in front of a wave of dilution of biblical proportions.
I will feel bad for the injustice to you both and the rest of my friends who are also unwilling to accept the facts as they are. You spent years making fun of me for trying to help you.
I agree with you that despite them retaining earnings and increasing net worth that they are not increasing regulatory capital because the Pik provision of the nws is still alive and well and is a vehicle for diluting commons to prevent existing common from having any material value.
Glad you figured it out.
Sorry to say. Sad to be the bearer of bad news for commons.
i have been wrong about a lot of things.
but since i've started here:
1. the companies are retaining capital, which keeps them out of receivership (2019)
2. the liquidation preference of the spspa continues to increase PIK which basically wipes common (2021)
you continue to make assertions about me and ad hominum attacks.
i am waiting for you to actually make a fact based argument.
please -- i encourage you and implore you to criticize my facts or perspectives or arguments. i just don't think you're capable.. and would love for you to prove me wrong
an even better price if you are buying than the day before. it's no secret that there has been a big seller of the preferred the first half of this year.
the primary difference is going to be in outcome.
your outcome from here in my view will be disappointment because you only own commons and i'm not expecting a great outcome there based on my analysis.
the probability that you will figure this out in time and update your holdings is near zero.
good luck to you on your adventures and quests
very nice
fairly priced. poor risk reward profile
To lock in their views to prevent the next admin from unwinding them
When it comes to investing it does not really matter what has happened except in so far as laying out the facts in order to determine what will happen. In this case the government is recapping and releasing these companies administratively and since fhfa is now political will do it under Biden.
Commons are dilutable and since the spspa liq pref exceeds the market cap of their post restructured equity valuation — are akin to toilet paper.
Jps have dilution protection and are worth face outside of receivership.
Plan accordingly. Gold plated diapers.
This is correct. And at this point not only have they not done their homework, but if you hear from them on this board then they are actively rejecting thoughtful conversation and advice in the replies to their posts
Yeah. The takings cases have largely been dismissed and have died. Ackman dropped his. What is left is a 4th down 0.01 seconds left play action pass play 99 yards away from the endzone for one of the worst teams in football against one of the best where a touchdown only ties the game
Commons get almost nothing is right. Pfd have significant upside
your conclusion is correct but your logic to getting there needs work.
the facts of the report remain, look at the proposed restructuring mechanics, understand that the only way to destroy the jps is receivership. understand they have retained $100B of net worth.
commons are destroyed.
preferred are going to face value.
you're just incoherently jumping to conclusions without actually studying the mechanics at play here.
god speed, but you seem like you just want to stand around and yell and not learn. my work here in a good faith attempt is complete.
i dont need to pray for anything... but if i was going to, it would be that you would be blessed by a more comprehensive understanding of the actual mechanics of this particular restructuring
note that generally what you say is true --- that when you do restructurings you calculate up the value and the most senior that takes a haircut --- all junior securities get zeroed out.
not so in this case. refer to the cbo report. it explains it all
from the government report:
https://www.cbo.gov/system/files/2020-08/56496-GSE.pdf
"If, however, the Treasury wanted to raise capital through the sale of new common shares without resorting to receivership for the GSEs, the claims of junior preferred shareholders would have to be addressed. In this analysis, those shareholders are paid the full $35 billion face value of their shares from the proceeds of the common-stock sale, if possible, thus retiring their claims on the assets and income of the recapitalized GSEs."
"Junior preferred shareholders are in line to receive the dividends associated with their shares before holders of new or existing common shares. Thus, they might refuse to allow the GSEs to retire their claims on the GSEs’ assets and income at less than the face value of their shares in the lead-up to a sale of new common stock. That refusal would reduce the value of the new common shares, making recapitalization more difficult. Even though the Treasury’s preferred shares have seniority over the preconservatorship preferred shares owned by investors, the Treasury would have an incentive to make an arrangement that took into account its ownership stake in the GSEs’ common stock."
Its not that we are pushing it. We are just explaining to the fools on this board what is going to happen in an attempt to help a brother and sister out before it is too late. We pity the fool.
Well, you have the correct summary notes. Dont let the 20x in jps hit you on the way out. Forget about the insecure commons
that's not true; only common
pfd survive and thrive with spspa conversion
learn your place in the capital structure... in this capital structure, it's basically nothing.
sell your commons and buy preferred
that was cool until mnuchin and calabria turned the nws to pik to drown out the whines of ackman -- which is now up another $100B of liquidation preference (the now net worth of the gses).
by the way that's a great quote from him thanks for sharing.
his angle is just to talk the truth, if you don't like it, tough
So why do you own commons if thats not going to happen?
5 cents seems like a fair valuation. I am curious how low they shake out. I, like you, see no material upside. What still confuses me is that Ackman still owns them. Is he an idiot? Why hasnt he cut his exposure to them? He should fire someone because of this. Someone on his team should have restructuring experience. The fact he is on the wrong side post 2021 PIK common wipedown plan is fascinating to me — but he does only have a 1% position. But even that is too much of a security that has no security especially after dropping his litigation
For me it is simpler. Commons have no security and their lawsuits have been shredded by the courts and so the only path left forward is spspa conversion. Commons are screwed. Sad to say. That is what the facts say. If you are mad, fine. But being mad wont change it. Come to grips with reality and plan accordingly.
And i am being nice to anyone who owns commons by giving them a heads up. Hey guys you are in for nothing amazing, but if you switch to jps, there is 20x. Get on the right side of history.
Smart man. Tides are turning
Commons are limited liability. Worst case is $0 not owing money. Thats a big difference between now and 1929 when bk companies went after their stockholders
The conservatorship will be over by then
yep, this is admin action. sandra thompson will be the last conservator.
commons have no security --- the courts fell on their swords that were supposed to protect shareholder rights.
Bullish for jps
It is funny that you point out this as a point missed by legacy commons. The main point missed by legacy commons is their shares do not offer dilution protection and the government’s spspa liquidation preference exceeds the historical earnings based market capitalization of the companies — which are still undercapitalized. And then there are warrants as well. The common shares thus have no security and only a fool would own them or buy them. So— when talking about common shareholders you have to realize that they do not even understand this— so there is no hope for them to understand the finer points, like yours, that the jps are carried on the balance sheets at face value.
Fair point. I dont know what to expect for common share outcomes. I think around $0.50 seems reasonable to expect based on the government accounting for its balance sheet
$0.001 to $1. Anything higher than the current price is an unnecessary gift by the government to try to help the recap restructuring move along