Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I get that - a press release on something that could have been planned for months in advance could be released. It doesn’t require MC to be in the office ... “If they had a sense for the dramatic ...”
Well, if SM and MC have any sense of the dramatic, we would see something today ...
Virus bill was merged with an omnibus spending bill - they, the swamp, have been extending weekly the KTLO legislation to get a bigger bill done.
JP Morgan and Morgan Stanley are already getting paid probably 10s of millions per year. The sweetner will be the end game for them in 5 years. It’s a win win win for them regardless... good luck with that narrative thinking ...
Take it easy, Holden
Bradford, the wild card is will the warrant terms be amended? How does significantly diluting FnF now help them raise capital? Wouldn’t an updated term sheet/agreement with an anti-dilution clause that is customary of warrant deals be better for the companies, better for the shareholders, and most importantly better for the Treasury so as to execute the warrants at significantly higher share prices, generating higher returns for the gov?
Why execute now? Doesn’t make any sense, nor does it make sense, even at the highest dilutive levels, to execute the warrants at one time.
I suspect this all will be extended over a long period of time. Who knows? Plus, of the 100+ companies that received a bailout, they also received an option to repurchase their warrants at reasonable rates.
Highly doubtful 79.9% of the warrants are executed after the gov generated a huge return. Easier to net the transactions and call it a day. Keep the warrants with updated language regarding insolvency, etc., if that were to ever happen in the future. How does that executing the warrants in full help FnF retain and raise capital? Answer: It doesn’t.
And, yes, further takings claims become ripe with mafia-like terms n the warrants. Can’t sue until they’re executed.
Better hope for that consent decree otherwise even ACG says it’s very bullish for commons.
Good luck!
Take it easy, Holden
I know - but would i be fine with FnF having the PSPA fully amended and have the overpayment settle the warrants for a net 0$ transaction with 5 years of retained earnings then maybe an SPO?
The answer is emphatically yes because $100 per share is possible within 2 to 3 yrs.
I do believe the warrants will be significantly adjusted, or cancelled, but highly doubtful they will be excercised as is as it will open the gov to further litigation. Anyone have the case that was dismissed as premature?
Brooge, from the law360
Mutant strain is covered by vaccine
Fnmas had ~350k shares traded in after hours ... who would be selling JPS on the collective eve of a possible 4th amendment? Those who are rotating to commons because they know without consent order, JPS will be left twisting in the wind for years ...
Big money, e.g., Paulson, is playing JPS ...
JPS get no conversion for years. You want par or potential $200 per share of commons? Quite simple, sell JPS and buy commons ...
ACG analytics has essentially said a PSPA amendment with no consent order is very bullish for commons. All the JPS on this board follow ACG religiously.
Good luck, JPS, you’ll miss out on upside potential with no consent decree.
Golf - consent decree release is not a prerequisite to be added to a real exchange ...
kthomp - we’ve been over this - Mark then goes onto say emphatically that FnF will be responsible for raising capital and how. FnF want 5 years ... maybe they will convert JPS, but they will first retain capital, which makes sense on so many levels of restoring these companies.
Credibility is king ... our JPS friends have lost it in spades ...
Holden, Collins is not looking for only the 3rd amendment to be cancelled. You are incorrect.
Not true, Holden. They want the PSPA deemed paid, the NWS cancelled, and the overpayment returned. If only an injunction on the NWS, the liquidation preference remains. 3rd amendment only is simply not true ...
Holden, Thompson is asking for an injunction on the PSPA, not on the whole FHFA. That is a scalpel ...
Holden, per ACG they are very confident a PSPA amendment alone without consent decree is very bullish for commons. Ackman is bullish on commons ...
The JPS narrative has changed so many times ...
Good luck!
When is the conversion timewise? And what about ACG’s view that a PSPA amendment wout consent order is very bullish for commons?
Holden - when is the conversion? How many years out? What about ACG’s view that a PSPA alone without consent decree is very bullish for commons?
Correction ...
There hasn’t been an answer as to when the JPS conversion happens ... 1 month, 1, 3, or 5 years? What is the rush? There hasn’t been one for 12 years. Why go from 0 to 120? To protect the taxpayer? FnF’s books are squeaky clean. They have the FHFA as regulator. They just survived a significant adverse event in Covid19 and they’re about to rush them to recapitalize? Doubtful ...
Add to that a more conservative administration... JPS better hope for consent decree, otherwise even their ACG buddies say it’s very bullish for commons.
All I see is no JPS answering the timeline question for conversion, nor do I see any JPS answering ACG’s analysis that a PSPA amendment wout consent decree is very bullish for commons. Those specific questions need to be addressed by JPS ...
There hasn’t been an answer as to when the JPS conversion happens ... 1 month, 1, 3, or 5 years? What is the rush? There hasn’t been one for 12 years. Why go from 0 to 120? To protect the taxpayer? FnF’s books are squeaky clean. They have the FHFA as regulator. They just survived a significant adverse event in Covid19 and they’re about to rush them to recapitalize? Doubtful ...
Add to that a more conservative administration... JPS better hope for consent decree, otherwise even their ACG buddies say it’s very bullish for commons.
All I see is no JPS answering the timeline question for conversion, nor do I see any JPS answering ACG’s analysis that a PSPA amendment wout consent decree is very bullish for commons. Those specific questions need to be addressed by JPS ...
JPS_Holden - when? Give me a timeframe? In a month? A year? 3 years? 5 years?
When is the conversion so I can mark my calendar? Give us a straight answer ...
Here he is!
Haha ....
Commitment fee of 25$ billion per year for both FnF? Good luck with that - and if you believe that I have a bridge in Brooklyn for you. Better to keep them in conservatorship for another several years then to charge them $25 billion on a commitment fee. How does that help build first loss capital? It is so outrageous anyone who is honest broker wouldn’t take it seriously.
So over 5 years for Fannie - statutory capital is the key - which is ~$100 billion. Warrants are the wildcard.
Fannie is due to earn ~$15 billion per year plus the $25 billion they already have. Statutory capital can be raised via retained earnings. Full release is done at that point and buffer capital can be raised in several secondary offerings years after that.
This is going to be a slow, methodical build, especially if there is no consent decree in the next 3 weeks, which I don’t think there will be. Yellen and Biden will make sure FnF are conservative in their approach to focus on affordable housing.
Holden - you retain earnings for 3 to 5 years. What if no consent order for 3 years? No JPS conversion for 3 years? PSPA fully amended to help the companies on their way to “retaining” capital and raising capital from “3rd- Parties” per Mnuchin ...
How does that affect JPS? ACG analytics who you closely follow says that is very bullish for commons. That is a legitimate scenario. Comments?
Kid says 10$ to 15$. Bradford doesn’t even contemplate Ackman, why? Not even referenced in his analysis? Why?
Doesn’t push the JPS narrative...
But a new Treasury, CFPB, HUD, and FHFA director, among other presidential appointees who sit on FSOC can amend it ... more spin - 1 step forward on accurate posts, then always a step/bridge too far ...
Navy - couldn't agree more!
Navy, eventual exit after retaining capital for 3 to 5 years. SharePrice still goes up ... Only JPS doesn't get their windfall, it will be a measured approach for retaining and raising capital as it should be for such behemoths ...
Why would Treasury swap one onerous structure (NWS) with another (High commitment fee) right out of gate? How does that help the companies in building capital?
All it does is incentivize a quick recap for what? A quick recap may disrupt mortgage markets.
Why not stay in conservatorship while the companies build capital. The Covid19 pandemic has been very well orchestrated and has been a definite adverse event on FnF. They weathered the storm very nicely and did not need taxpayer money backed by a commitment fee.
Better to write down the PSPA, cancel the NWS, and cancel the warrants for that matter, and allow the companies to retain capital in a measured approach over the next 3 to 5 years, and then raise capital, so the mortgage market has time to adjust, and 3rd-Party entities also have time to assess equity valuations.
Unnecessarily risky actions is not what Mnuchin is thinking, nor is the CBO thinking that is an action that is needed. A write down of the PSPA is about as much risk as I believe the administration is willing to take.
Is stock pattern a classic accumulation then volume spike after lunch into the close?
If you believe everyone that starting today and over the weekend that announcements could be made, holding some commons from your JPS holdings is a solid idea.
Can someone from the JPS crowd tell me why, if a 3 or 5 year capital raise plan is approved (remember, FnF themselves want 5 years), why converting JPS now is better than waiting and retaining capital for 5 years and then converting?
What is the motive for doing it now? How does it help the companies doing it now instead of several years down the road?
If you can't succinctly answer the above, do you think Mnuchin, Yellin, FnF leadership, FHFA, JPM and MS are going to have the same view?
Tutt - everyone should be reading this link. It provides a very conservative view of FnF. The key here is that it does not contemplate deeming the PSPA as being paid.
The key points are it projects a 3 year capital raise plan and a 5 year capital raise plan.
https://www.cbo.gov/publication/56511
Good stuff
My comments - Bradford is knowingly quoting antagonists of FnF who are paid think tank artists to postulate various government narratives for why FnF haven't paid back the Treasury.
None of Pollock's, as far as I know, reasoning was used to defend the NWS in front of SCOTUS.
The whole commitment fee based on an FDIC model (% of total assets) along with the cap rule, plus the proposed liquidity rule that just came out, is a tad over the top, and would be a non-starter for ROI, and everyone knows it. Even if you disagree with the above, rates are going up for the whole mortgage market for globally coveted 30 year fixed rate mortgage. Point being, you can't look at these things in a vacuum. You must factor in the bigger picture.
I think Bradford, et al, are now searching for more narratives as they may not get the consent decree they were looking for, e.g., Big Bang. Bang, yes, but Big Bang, no. A PSPA amendment with retained earnings seems far more likely as it doesn't appear Mnuchin wants to potentially disrupt the mortgage market by amending the PSPA and releasing FnF via consent decree considering FnF would be able to act more independently and possibly make moves that could disrupt the Mortgage Market.
I think Mnuchin and Yellin want to take the big first step of the PSPAs but not take 5 steps. By amending the PSPAs, that sets the stage for a continual ascent to release via hitting retained earnings marks and then once those numbers are reached, a consent order to smooth the transition and then look to raising 3rd-party capital, and everything associated with that.
This is not going to be an even remotely perceived as a reckless big bang. Too much risk. The PSPA amendment is about as much as they can do now.