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Far from it. Off by a factor of nearly 1000x.
Good luck
This is untrue
In this case i am. Ackman does, however, have more money behind him. But his allocation to this does not inspire much confidence. He can afford to take a loss on commons and make up for it in pfds
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=171569480
your previous advice on the topic regarding common shares and potential dividends.
At least you have a path forward that compiles using logic and reasoning. Good on you for making it that far and having a working thesis. Good luck with this. I like to think that I am conservative by not having to worrry about that angle since the jps cant be diluted and their rights and place in the capital structure persists as long as they stay out of receivership, which they should as they have more money than ever in history and their earnings are 2x what they were since the government jacked up gfees.
the spspa liquidation preference grows, but outside of receivership it can't do anything to the jps to dilute its equity stake. that's the point.
good luck.. sounds like you are going to be too late to understand this one in time.
you are trying to hard man, the point is calabria did all the leg work and had executable capital plans ready to go when he left. look at what sandra thompson has done since she has taken the reigns.... she has been institutionalizing post conservatorship regulatory rules not limited to but including the capital planning rule that now fhfa is overseeing the implementation of capital plans for the enterprises to be able to meet their regulatory capital requirements.
The incentives have changed. Your understanding is pre 2019
Thank you for your question. I understand you are wondering about the security of junior preferred shares in the event of a restructuring. The CBO report correctly states that junior preferred shareholders are in a more secure position compared to common shareholders in such a scenario. This is because junior preferred shareholders have priority over common shareholders in receiving the dividends associated with their shares, as mentioned in the report. https://www.cbo.gov/system/files/2020-08/56496-GSE.pdf
Moreover, the report suggests that junior preferred shareholders may have the power to block a sale of new common stock if they believe that the sale undervalues their shares. This power could reduce the value of new common shares and make recapitalization more difficult. The report also acknowledges that even though the Treasury's preferred shares have seniority over junior preferred shares, the Treasury may be incentivized to consider the value of its common stock holdings when making restructuring arrangements.
In response to your post, I understand that you believe that there is no safety in junior preferred shares and that buying them is similar to buying a lottery ticket. While investing in junior preferred shares does carry risks, it is important to note that they are in a more secure position than common shareholders in the event of a restructuring. The CBO report, which is a government official report, supports this notion.
In conclusion, while investing in junior preferred shares may carry risks, they do offer more security than common shares in a restructuring scenario, as acknowledged by the CBO report.
calabria had plans in place -- all the leg work has been done, just need to update the numbers, fannie mae could do an equity offering in ~90 days if treasury was serious about it.
you are overestimating the complexity here.
but yes, capital plans by fannie and freddie are due to fhfa in less than 30 days. who knows if they are made public. fhfa has been working on them with the companies for years now.
The feeling is mutual.
I have been tracking legal and admin steps that are tracking the path to end the conservatorships since 2014. So far the legal paths have not produced a meaningful outcome. I believe the implication is that the spspa — if materially unchallenged — will convert to common in this restructuring. This is backed by the annual government budget reports and the government cbo report
You believe that — based on your share valuations as far as i can tell
1. Warrants cancelled
2. Spspa unwould
3. Companies given back stolen money
Whereas i think the opposite of those three things is more of the outcome to anticipate.
You get valuations of over $300 on commons. I get worst case scenarios of $0.01 on the commons.
Agree to disagree, but my view is that there really isnt a material reason for the people in charge to facilitate your outcome whereas my outcome or close to it maximizes their position for their purposes more or less
The part i am unclear on is it sounds like there is a difference between spspa and warrants in terms of spendability. They can spend the warrants and not the spspa? That may help you not get completey wiped out. But not a gamble i would recommend
Yep. Curious to see what yentel says
Price movement going in the opposite direction would indicate that the market believes otherwise.
Or something else.
There has been pretty decent selling on the jps the past several months. No one knows the particulars behind who is selling or why or how much they have to sell or when or anything. These securities are illiquid and many market participants are glass half empty with no observable near term catalysts so it sort of amazes me that with this much selling we are not significantly lower because someone is absorbing the shares and buying them.
I think nothing is going to happen until bernstein gets senate confirmed and then there is a small window of opportunity (a few weeks to a few months) where the wh/treasury could start marching onward with locking in its housing finance reform perspective. Sandra thompson has proposed a ton of rules and is finalizing all of them in good time and i expect will want to lock it all into place with consent decree and institutionalize these changes in a post conservatorship world.
I think we need a formalized leader like calhoun to get hired over at treasury to be like a craig phillips and push for this. I think this happens all at once. Time frame would be late april to end of june. Not sure if before or after gse capital plans matters
Not sure if gse capital plans will be made public.
But outside of this, then there is the discounted npv of a trump win and him finishing their reprivatization (but really the next president would have to anyway but no one seems to understand the mechanics there)
People are predicting and anticipating all kinds of different things. That is what makes the market. I am very optimistic in the coming month or two. Cheers
I probably didnt take you seriously. Maybe i did have ai write a response. The man with no name here knows. So does tim howard
Gse prefs will be made whole in a restructuring
No not really. This is just an observation that bernstein based on his old blog was for private capital taking first loss and a paid for government guarantee and that he just had a confirmation hearing to be director of the CEA and that capital plans are due in less than 30 days. In addition sandra thompson has been proposing and finalizing post conservatorship regulatory frameworks for the past 18 months rapidfire.
I think there is no reason to start taking action until after bernstein gets confirmed.
Sounds like this next month we should expect something. Still waiting for confirmation
Go on…
certainly possible. what i do think is that there is a window of opportunity that ends this summer, where if we haven't heard anything progressive then odds of admin reform under this presidental administration would go down.
that said, i think we could definitely start to hear things by may 20th. good things are happening.
congratulations to the common shareholder gains on decent volume today.
I am advocating for recap and release and saving the companies and preserving the 30 year frm
There have been many rulings so far that are against my interpretation of the law, and legal rulings update my investment expectations accordingly.
What you expect is unreasonable in light of how the court cases have been ruling. You seem to be advocating for some sort of vigilante absolute justice. Good luck, I think that is a losing battle.
I am advocating for recap and release and saving the companies and preserving the 30 year frm
There have been many rulings so far that are against my interpretation of the law, and legal rulings update my investment expectations accordingly.
What you expect is unreasonable in light of how the court cases have been ruling. You seem to be advocating for some sort of vigilante absolute justice. Good luck, I think that is a losing battle.
According to familymang i think it is q3
the lawyers are not able to ask for more.
it is unlikely that the jury can rule for more than what is being asked for.
in the meanwhile, you should re-read the government's defense of the 5th circuit arguments.. i've been skimming them now.
they sound like they are winning but idk..
basically what you're requiring is that the 5th circuit en banc overturns its previous interpretation of the law in spite, and specifically to rule in favor of the plaintiffs like they did earlier on different terms.
The government in my view seems to point out quite well that the plaintiffs did not necessarily expect the NWS to be reversed by the Trump admin:
9
The complaint tries to reconcile the irreconcilable by suggesting that rather than
making capital-raising “impossible” as Plaintiffs told the Supreme Court, these
increases in the liquidation preferences instead were “part of the plan to convert
Treasury’s preferred stock, by enabling Treasury to receive more common stock” in
exchange. ROA.1207 (¶ 85). But that is Plaintiffs’ own conjecture, not a wellpleaded allegation of the parties’ actual intent. As Plaintiffs admit, the same Trump
Administration amendments that provided for the massive liquidation preference
increases show on their face that no such plan was in place, only a preliminary
“Commitment to Develop Proposal to Resolve Conservatorship” (Br. 30 (citing
ROA.1377)), which, it was hoped, might ripen into a “proposal” to be submitted to
Congress eight months later.
My understanding, or what I have heard from someone who I don't think is a lawyer --- and haven't bothered to confirm because I don't care enough about the particulars, is that the Collins is going to en banc now I think.
I agree with you in thinking that this collins v yellen case is probably the strongest material case left. I think Lamberth is the strongest case but the damages it amounts to are pennies on the dollar for jps and those damages would have to be appealed on a win, not sure that the funding is there to accomplish that.
Glad you are taking the pending litigation seriously. Cheers.
I will say that I think your post is a high quality response.
Good to consider the mechanics here and how this outcome might be facilitated.
I would argue that the probabilities assigned to these outcomes are higher than what I would expect.
I would warn about the SPSPA conversion scenario, and argue that the SCOTUS has now had two chances to put back the NWS, APA and Takings and has not done it twice now.
Now we get to see if in the en banc appeals court that ruled for shareholders in collins v yellen wants to rule for them in a different way and what that means...
but i dont think we get to see that before admin reform gets rolling and steamrolls with spspa conversion, but what do i know.
I am not paid for hire. If I was then you would probably see me covering promotable securities. There are lots of people who do that sort of thing. I like to think that what differentiates the value that I provide is that I pick and choose what I write about, mostly based on what I determine is worth owning and talking about. To your point, I don't always get it right and on this trade have been wrong on timing dozens of times since it has been 9 years in this trade and I thought it would be a few months at most when I got into it pre-lamberth 2014.
yeah this is something i wonder about myself. i do not really understand how fhfa is an independent agency anymore with the collins v yellen ruling.
how does one depedent agency (Fhfa) run an agreement (pspa) with another dependent agency (treasury)
weird times but i think we are on the way out of conservatorship and strongly believe that the biden white house NEC will get to work on this path in the coming months.
If gse prefs are worthless to common then common would have to get returns wildly exceeding the 20x preferred get if common are worth a single penny. Common would have to go to $100 plus or x200 here.
You would need to unwind the entire conservatorship. Good luck with that. I would put odds close to 0% especially with admin solution inbound
Being pessimistic is healthy and reasonable for predicting outcomes for common shares. They have no security. The government values its warrants at $3.5b on its last budget. No material upside
You are right that the odds are bleak to unfavorable for the cofc lawsuits going forward. But that is just my understanding. My view is all the lawsuits at this point are tough moving forward but admin reform under biden is the next major catalyst. Cheers to tuesday. Ill be watching the senate hearing
I am not saying commons are worthless
There is a space there. Worth less
If you end up making money on common shares it is because you got lucky at this point. Sad tragedy
And then you should be calculating if the spspa are going to get their full valuation in a restructuring and what value that leaves for existing common.
A subpar spspa outcome would imply common has no value.
Calabria in his book pointed out in his conversations with Mark Warner that he did not think the government could get full value for the spspa.
Not looking good for existing common. Psa
You know what you should be asking?
If the government values its warrants at $3.5b what are your common shares worth?
Source document: https://www.fiscal.treasury.gov/files/reports-statements/financial-report/2022/notes-to-the-financial-statements8.pdf
you want my view, the scotus not taking the appeal's court ruling in the cofc basically was the death knell in that court. bryndon likes to pretend his claims are alive and well and moving forward but my view is they are more on life support.
yeah i dont know. i did a test post, it seemed to work. maybe they suspended a different integration that i was not using for this wordpress. no clue
In your interpretation of the APA claims vs the Takings claims, the original thesis is that they both have merit but that at the very least the interpretation of the law should mean that one has a path forward. The idea being that either the NWS is illegal or it is a takings. Your interpretation is that it was always legal. Your interpretation does not reconcile with my interpretation of the law, but I have been wrong on all accounts.
Thus far, both have been dismissed or not taken up by the Supreme court with lower courts ruling in favor of the government.
Cheers on reviving your case which was dismissed by the appeals court and not taken up by SCOTUS. I wish you good luck.
Ackman is mortal. It is april now. Things are shaping up just like you predicted from your sources
My advice would be to hedge more
God speed good sir