“Sometimes one pays most for the things one gets for nothing.” ~ Albert Einstein
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.
Berkowitz is one smart player,i will say that.He knows the market.How many always use the gained moneys to buy back in.Nothing lost.a sure bet. Good luck to all,where ever you stand.
Berkowitz Has been in FnF, since,June 3,2013 ,older news says,So this news is not so NEW. He may of add more.8/14/2013,I guess that was yesterday.
FAIRHOLME ISSUES STATEMENT ON FANNIE MAE AND FREDDIE MAC PREFERRED STOCK Berkowitz bought 7,218,200 shares of Federal Home Loan Mortgage Corp in the second quarter, representing 0.23% of the Fairholme Fund portfolio. The stock’s average price for the quarter was $1.30 per share. June 3,2013.
Berkowitz Has been in FnF, since,June 3,2013 ,older news says,So this news is not so NEW. He may of add more.8/14/2013,I guess that was yesterday.
FAIRHOLME ISSUES STATEMENT ON FANNIE MAE AND FREDDIE MAC PREFERRED STOCK Berkowitz bought 7,218,200 shares of Federal Home Loan Mortgage Corp in the second quarter, representing 0.23% of the Fairholme Fund portfolio. The stock’s average price for the quarter was $1.30 per share. June 3,2013.
Thank you, I hope for a change, this turns out to be the Best Play Ever for all......This would put back some faith in our system......Which seems to have not been for the people.
You may be right,Hope you are...May all who are long make a ton of cash.Get the money back.
This is from CNN Is it true, or Not,dont know I hate to see, anyone get fooled.Many dont like CNN,So make your choice. by By Stephen Gandel, senior editor June 13, 2013: 6:00 AM ET,,,FORTUNE --Ever since the government began bailing out banks and others a few years ago, we have had a debate about who should benefit. The economy? Yes, that's the point. Borrowers? Eventually. Taxpayers? Always, except in the case of small banks and automakers, then no. Executives? Never. Investors? I don't know. Maybe, yes, but we won't like it.
We're headed for another round in the debate. Fannie Mae and Freddie Mac, which had to be bailed out by the government in late 2008, are making some serious money again. And that's raising the prospect that like AIG and others before them, the two giant mortgage guarantors might soon be able to pay back the government and reemerge as fully private companies. Hedge funds and other investors are lining up to ride the government's coattails. Shares of Fannie (FNMA) and Freddie (FNCC), which were de-listed from the NYSE in 2010 and until recently traded for pennies, are up 607% and 523% in the past six months in over-the-counter transactions.
Other investors are suing the government saying the recent turnaround shows that Uncle Sam unfairly seized their shares back in 2008. But that seems to ignore the fact there wouldn't have been a turnaround if not for the government's intervention, so good luck with that one.
MORE: The rebirth of Fannie and Freddie
Between them, Fannie and Freddie now guarantee 80% of the mortgage market in the U.S., or roughly double their combined market share before the housing crash. As Shawn Tully explains in the current Fortune, the government's policy decisions while managing Fannie and Freddie have had the unintended consequence of freezing out private capital.
That hasn't stopped private investors from circling Fannie and Freddie. Earlier this month, Bruce Berkowitz, who runs mutual fund firm Fairholme Capital Management, said that his funds had accumulated preferred shares in the two mortgage giants that are worth $2.4 billion at par value. Those shares now trade for about 20% of that original value, which means Berkowitz has bet around $500 million on the revival of Fannie and Freddie.
Perhaps no other investor has played the bailout trade as often and as successfully as Berkowitz, though even he has mistimed some bets. He made money on AIG (AIG) and Bank of America (BAC). But Berkowitz bought Citigroup (C) too early and sold too soon in early 2012, about five months before the shares' recent climb began. Fairholme had impressive performance in 2012, but only after a lackluster 2011, and Berkowitz lost investors along the way. Still all told, Berkowitz's flagship fund has produced annualized return of 12.6% in the past five years. But in Fannie and Freddie there is some indication that this time Berkowitz's bailout bet has much lower odds of paying off.
MORE: The Fed's other trillion dollar problem
Much of the discussion around Berkowitz and others' bet on Fannie and Freddie has been about whether they really think the government would reprivatize the companies, or whether they are just buying the mortgage guarantors' shares because they have been going up. But another part of the debate is just how much investors should be able to benefit from bailouts.
Berkowitz, through a spokesman, declined to comment on his Fannie and Freddie investment, saying the fund was in a "quiet period."
But Berkowitz appears to believe that Fannie and Freddie will be reborn, or at least should be. In a statement posted on his firm's website, Berkowitz predicted that taxpayer money extended to Fannie and Freddie will be paid back in full. As a result, he argues that there should also be equitable treatment for Fannie and Freddie's "taxpaying" shareholders as well, including "community banks, insurance companies, and mutual funds," which now includes Berkowitz's firm. "It's the American way," says the statement.
Some would disagree. The government put Fannie and Freddie into conservatorship nearly five years ago, eventually pumping $189 billion into the two companies and taking on the risk of any failure. Berkowitz and others have only showed up on the scene in the last few months, now that the companies are minting money again.
Bert Ely, a veteran Washington, D.C.-based banking consultant, says regulators tell him there is no plan to make any payouts to shareholders. So he sees the claims of investors that Fannie and Freddie could soon live off the government's dole as disingenuous. "It's bullshit," says Ely. "I've been told that the terms of the conservatorship are that the perferreds will never have any real value."
Still, Senators Bob Corker (R-Tenn.) and Mark Warner (D-Vir.) have been working on a bill that would wind down the mortgage guarantors, and replace then with a new type of private insurance. Fannie and Freddie's remaining portfolios would be put into what's called run-off, meaning they wouldn't back any new loans, but they would be able to collect a steady stream of profits from what they already have outstanding. As such, some see the plan as paving the way for investors to share in whatever profits are generated by the process.
MORE: Bruce Berkowitz is back
Others argue that Fannie and Freddie shareholders deserve the same treatment as those of AIG, Citigroup, or any of the other banks that got money from the government. Investors, like Berkowitz, who bet on those companies' rebounds have made money. And you could make the case that investors who are buying in now will make it easier for the government to exit Fannie and Freddie, and are therefore serving a useful purpose.
The difference is in all of those other bailouts the benefits to shareholders were more backdoor. They happened because the firms didn't collapse, the economy improved, and the shares that had been left for dead eventually rebounded. In the case of the Fannie and Freddie preferreds, Congress would have to pass a law that would specifically reinstate the dividends, directly and publicly rewarding hedge funds that have bet on the turnaround. And that kind of thing can be palatable if everyone in the economy is doing better. But how long until we can say that?
Putting the politics aside, there's still the question of whether there would be money left for private shareholders once the government is paid back, or at least enough to make a current investment worth it. Fannie got $117 billion from the government. By the middle of this year, the mortgage guarantor expects to have paid the government $95 billion. But a good deal of those payments come because of a one-time $60 billion tax benefit that Fannie got in the first three months of the year. Exclude that and Fannie made just $8 billion in the first quarter.
Originally, Fannie was supposed to pay a 10% dividend to the government on its preferred shares. But the deal was altered last year. The government now gets whatever profits Fannie produces as a divided. So technically, even though Fannie has paid the government 80% of what Fannie received, it still owes Uncle Sam $117 billion.
If Fannie was to go back to the original deal, to consider a hypothetical scenario, and was given a five-year window to repay the government, it would owe roughly $35 million in the first year in dividends and debt repayment. Based on its current profits that wouldn't leave any money left over for preferred shareholders. (It would actually still be in the red a bit, but let's ignore that for now.) By the second year, because its government debt would be reduced, Fannie would break even on its government payments, still leaving no money for a dividend to private shareholders.
By the third year, Fannie would have roughly $1.5 billion to pay out to preferred shares, of which there are roughly 785 million or around $2 a share. The payment would roughly double the next year. By that math, Berkowitz is likely to see a $1 dollar return on his recent $5 dollar investment four years from now, or about 5% a year. Not the type of returns Berkowitz and his investors are looking for.
So Berkowitz must be factoring in an improvement in Fannie's operations in his model, which does make some sense given that the housing market is improving. But, if Fannie is truly put in run-off mode, it's not clear how much it would benefit from the real estate rebound. Still, Berkowitz could be betting on the government refloating the company. But that would have to involve some write-down of Fannie and buildup of capital, which would significantly dilute Berkowitz's shares, if not wipe them out.
"In any assessment that I have done, I don't see how there will be much value left for its shareholders once the government is paid back," says Ed Mills, a Washington policy analyst at FBR Capital Markets.
And neither do I, even if we thought it was OK to do so. And that's a big if.
Posted in: Bruce Berkowitz, Fairholme Fund, Fannie Mae, Freddie Mac, fund managers, housing recovery, mortgage meltdown
At the moment Iam out. Wish you all well.Hope you Go where you want.
Hope you all do fine.I just know,when its to good to be true ,its to good to be true.Some times things look great,yet there are other issues.
Thank you for input,1.32 ? 0.09 (7.32%) up .09 cents is far from $10 $50 $100
How easy the heard is lead to the slaughter house.......This does nothing,for the small investor,just puts the money back to the rich.and Gov.will still wants all moneys back,and some.
NO,I did not get in at .0008. Wish I had.
Xmas is getting close,Going to a dollar they say.Told my Grandmother about NETK and she said,"Go get a JOB."
Enough copper and gold to provide 25% of U.S. needs for the next 50+ years .I spend most of my looking for the best,smaller stocks.LBSR has a great future,when all is up and going, bash if you want,go find another stock,cause your words will not change nothing.There is Gold up there in thoes darn hills.
Sold yesterday, had hard time selling 5000 shares.Took for ever,so thoes who say their buying, beware.
I picked up a small amount today,27000, To add to my others..........I know this my sound crazy,but to hear," waiting for .05 then selling." I feel this will have fuel to go alot better than that.I know if you have millions of shares,that is a lot of cash,guess I cant blame you.I don't flipp for hundreds.If they have a good hit this can hit the teens easy.YE with little faith.
I was selling today and hard time at it.No buyers. Good luck.
Apple ? Wow thats some good smoke.
Is there web site working,went there last week and could not find anything in my area.
You go that right
Could have had mine at 1.20 no takers. Going to keep them and see this play out.
Tryed to sell 5000 at 1.20 no one took it, meant to hold. I guess.So all these buyers are liars. This is going up and many liars on this board.
FNMA keeps running off the road,on us.YES they make money.Yet by the looks of it, we the shareholders see nothing.Bet they sure like the 20 to 50 mill shares selling and buying everyday. They can pay there mortgage. Starting to feel like Else to COW.My utter is getting sore.
Now that Fannie and Freddie are operating as government cash cows, with all their profits going into a general fund that the Treasury may spend as it pleases, it might be harder for the government to give them up.....Could be Quite some time,lots of other things on the plate
Hea ,old news,we know how we have been ROBBED, Now are we getting Robbed again. Looks like it .Feels like it. I dont Trust any of these law makers. This is all a bunch of POOP.
(MoneyWatch) Fannie Mae and Freddie Mac took a lot of money from U.S. taxpayers during the Great Recession, but now they're giving it back.
The two mortgage giants are again reporting record profits this quarter. Fannie Mae (FNMA), the larger of the two, reported an $8.1 billion pretax profit, the largest quarterly pretax income in the company's history. Meanwhile, Freddie Mac (FMCC) took in $4.6 billion, the second largest in its history.
And all that money, along with a $50.6 billion Fannie Mae tax credit from years ago, will be paid to the federal government. That's about $63 billion filling Uncle Sam's coffers so far -- and we're only halfway through the year.
But they still owe us. The question is how much.
There are really two answers.
The short answer is about $65 billion -- Fannie Mae has paid $95 billion of its $117 billion debt, and Freddie Mac has paid $30 billion of its $72 billion debt.
The long answer is that they owe us, and will continue to owe us, all of their profits. That's because through the convoluted agreement struck with the government, the pair agreed that, in exchange for injections of taxpayer money to keep them afloat, they would offer the government premium shares of their companies, paying out 10 percent of their profits in dividends to the Treasury annually. In late 2012 the agreement was amended so that Fannie and Freddie must turn over all profits, regardless of how much or how little, they bring in.
But there's a catch: The profits Fannie and Freddie turn over to the government don't knock out any of their debt.
"What's happening now is a miraculous recovery in the earnings of Fannie and Freddie," says Tim Rood, a former Fannie Mae executive currently with The Collingwood Group, a firm that advises businesses on government-related issues. "While they're paying back the Treasury, there's no provision in the agreement to pay down those debts at all."
In other words, once Fannie has paid $117 billion, and at this rate it could happen within a few years, the company will continue to hand over most of its profit to the Treasury.
Commission recommends killing Fannie and Freddie
Top 10 cities where renting is better than owning
The 5 biggest threats to the housing recovery
"As it stands, they're indentured servants," Rood says. "If we ride this out for at least 10 years without changing any of the agreements, whatever they make is all earnings for the U.S."
So, in fact, the U.S. government stands to potentially make a profit on its massive bailout of the two mortgage giants after they unilaterally failed in the fall of 2008.
This raises a bunch of new questions about the future of Fannie and Freddie. There's been a lot of talk in Washington about shifting the role the two companies have in the mortgage market and bringing private companies back to the secondary-mortgage-market plate. Now that Fannie and Freddie are operating as government cash cows, with all their profits going into a general fund that the Treasury may spend as it pleases, it might be harder for the government to give them up.
© 2013 CBS Interactive Inc.. All Rights Reserved.
9 Comments
/177 Shares/39 Tweets/Stumble/EmailMore +
Ilyce Glink
ON TWITTER »
View all articles by Ilyce Glink on CBS MoneyWatch »
Ilyce R. Glink is an award-winning, nationally syndicated columnist, best-selling book author, and radio talk show host who also hosts "Expert Real Estate Tips," a Internet video show. She owns and operates several websites including ThinkGlink.com, ExpertRealEstateTips.net, LawProblems.com, and HouseTask.com, as well as Think Glink Publishing LLC, a privately held company that provides consulting services as well as editorial content and video for companies and non-profit organizations. An in-demand speaker, she appears frequently on CNN, CNBC, NPR, and in local media outlets across the country.
Iam having a hard time believing every thing here,Lots of new post,not very old. Some only on this stock,very odd. Have seen this alot when one moves.They say they been around and i dont think so........I would like to buy,but cant Ameritrad.Very odd also how the orders of .029 are going,dont like this.If Amreitrad did that they would see it, and zapp ur cash out. at .05.
The Gov.will not let FNMA or Fred Go.....For a long time, they cant and won't....Its your choice to stay or GO. ...
Don't worry the Gov. will buy them back. What price?
I bought yesterday, not by the chart,but what they are about.I know LBSR has alot going for them. Iam in for long term,others can flipp and slide all they want. LBSR has a GREAT Future.Just my take,could be wrong.
This stock is for real investors,thats why not many here,not a Quick buck turn around. Yet when they get sales going,this is going to move fast.
Problem is,there are not many ...true investers here...I would like to see,this one get way past .05. than to a dollar.Than see who buys.
There on the path ... was valued at approximately $2.8 billion in 2010 and it is expected to grow to over $5.4 billion by 2017, according to MarketResearch.com, a research firm based out of Rockville, Md. Make your own choice.
Going to hit the ask, with 50k. see what happens. Well I did ,water is calm, come on in.
Just picked up a few, lets get some power.Going
Ive read,quite a bit of your post.Good to see your not fooled,by many of the plays here in penny land. So of all,the ones to put cash in, What is your BEST pick today.? Also as Far as a real true company and not just a ATM.? I like the fact you do tell the truth.I think.They seem to not like u so much over in neetytech.Truth hurts.
RenuEn is currently building a landfill gas processing facility in St. Cloud, FL that will produce renewable CNG ...IS there any PIC. of this happening.Or just a dream.....Also what seems to be the problem in holding them UP.? Hope this is not just a ATM. So they can play Golf.
Seeking Alpha,are sleeping with the FOOLs board also, They all wear short pants. Smell Funny Too.Kind of like dippers.
Well looks like Iam all alone,on this one,once again.Sleeping beauty stocks are like that.2014 will be here soon and SCIE will be in full force.They seem to know what their doing. At least they have a real GOAL.
My father has been doing this for years,on his cars. He uses an old peanut butter jar.Works Great.Man he needs to start his own company.Well he is 82 now. and does not want to work anymore.Nice Web site they have.
Why not much VOLUME. This FNMA controlled game has been going on way to long, People need to free up funds and move on....Others dont like the bull poop game being played. Great News and Does nothing.But GO RED.
Project Human Power is a project to develop a mobile power device,......WHAT does it look like ?, Where is it ? Hmmmm, odd minds want to Know. Is it smaller than a pencil.? is it bigger than a deck of cards ? hmmmm. I dont Know. Where is it Now ? I got to Know.