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It is more than the securities require to be restructured. True tragedy that they will get less.
free educational opportunity for you, you don't even have to pay. enjoy!
The price has come down a bit since the original dec 31 note. I think he was tull up to the gunwalls then. The window for action and bringing in change is coming up
Good luck
Read calabrias new book on spspa conversion for treasurys only legal path forward and do the math. Price is not up, at least not bigly.
Strong conviction
Not sure if you saw mark calabrias new book but in his book he describes how the only option for treasury is preferred conversion
Read calabrias book.
He wrote HERA. He said FHFA was supposed to be independent. The supreme court ruled they arent.
He wrote that FHFA can only conserve and preserve. The supreme court ruled they do not have to.
The supreme court in my view has been going out of its way to not rule in our favor.
The meaning of simple words and statutory construction is not lost on these judges as much as it is just a group of people.determining the outcome they want and then issuing the according ruling.
Now we have a spspa between two dependent federal agencies whose heads report directly to the president. Calabrias book sure gives some perspective
Jps would need to agree to convert to common. True. Treasury at the time that agreement is made will effectively own voting majority in commons — it has 80% warrant coverage. Can do whatever it wants. Existing common shareholders vote is not necessary for anything
Keep telling yourself that. Jps can voluntarily convert to common at the discretion of jps holders if we all agree. But i wont be voting to convert until i see terms that get me par in commons. I have no confidence that the current price is the floor for commons especially with spspa conversion and warrants. My view is with those government equity instruments— common is overvalued given its capital requirements
That reason can be found in the cbo report, becUse converting jps helps facilitate the equity offering
question for you... do you think you would have caught this if you were a bonds buyer?
i am in agreement with you that this was written into the contract this way and that this was the outcome that we could have expected in this case.. i'm just wondering how the people buying the bonds were duped into this? did they just not think that this was possible?
calabria's comments on spspa and jps conversion to common confirm my suspicions that existing common have no security... and arguably have no material upside and in fact probably are overvalued but... i wouldn't bet on that.
FHFA director became a political appointee when the Supreme Court ruled on the Collins Case... and Biden wanted to pick his own director so he picked Sandra Thompson. Calabria did good work and stopped the cash sweep.
feel free to disagree but the book outlines that mnuchin at best would spspa convert. a writedown was a non starter..
might want to read calabria's book.
if you own more than $30 in common shares you may want to sell $30 worth of shares and buy a copy to understand what the restructuring would have looked like if calabria and mnuchin could have gotten it done.
the spspa writedown was a non starter
according to his book. they did come up with a few executable options, spspa+jps conversion to common was the one he wrote about.
Hey man, capital structure matters. If you learn one thing from me, make this the thing. It might feel like an expensive lesson this time but it will work out for you if you keep trying as hard as you can to make money in capital markets. Cheers.
The terms of these AT1 securities permitted this outcome. Buyer beware. Read the terms. Know what you own. Let this be a lesson to anyone who owns any securities that they do not understand their rights and how they work out in a distressed situation
right now the capital structure is purposefully locked by us treasury
your proposal doesn't really resolve that aspect of it. does not facilitate the companies access to capital markets to raise 3rd party capital.
keep trying.
They were there and so too were a bunch of others and I have been led to believe that there are behind the scenes happenings although the stock market seems to be clueless to them which is odd given my belief that DC is the city of gossip and that it is impossible to keep a secret there. We are now well into the second half of March. I think a lot of work has been done to get to where we are now and it mostly goes unappreciated in these capital stacks. The equity is as a whole valued as a short dated far out of the money call option, when it is more long dated at worst but I view it as in the money than not, at least the parts of it that are not easily diluted. Plan accordingly
https://www.nar.realtor/newsroom/nar-hosts-policy-forum-on-the-current-housing-market-and-affordability this past thursday sandra thompson and mark calabria
Huge fan of that energy and commitment. In my case when I have that level of conviction— when the price goes down — i re-evaluate my assumption matrix. If things no longer add up the way I thought they would then I revise what I am doing.
Cheers to your commitment to trying to ask good questions and fight the good fight. Wish you well.
Eh well. You are free to disagree with me, the only way they can put the screws to jps is via receivership. That is not an option moving forward. Cheers.
Calabria stopped the cash sweep and the companies are retaining earnings. The only thing left to do is an equity restructuring that enables them to access 3rd party capital. I believe 2023 is ripe for this restructuring. I think news in the coming couple months will set the tone. Cheers.
The govt will take full advantage of its position is all im saying and my view is it is not aligned with common shareholders because it would do better by taking their “upside” for itself. I put upside in quotes because i think it is an illusion
The commons do not need to materially participate in the future of this. They could be diluted out of any material upside via spspa conversion. Good luck on timing too. I am all for 2023.
There is no security in common shares. This sort of thing should be less surprising. You are making what i think is a bad gamble owning them
I miss these kind of timelines
15098/.0512=$294882 position size.
662658 shares
that's more than a quarter million dollars you've got there.
that would be $5.6M in preferred face value.
good luck on making the decision that is best for you. hopefully this is a small (ackman style) percentage of your portfolio if you insist on chilling in commons. (which i've argued have no security)
keep it coming. lower prices for the foreseeable future are not a bad outcome for me.
why?
because these shares have security, unlike the ones you trade/own.
Seems reasonable to me. Note that the Lamberth trial is over peanuts. Like current market value per share for the jps. So the real thing to wIt for is admin action which according to hinds is in the next 7 months or at least should take shape then. My understanding is the official he talked to is no longer in the WH.. but the narrative still compiles. He told his people now is the time to get it done and not getting it done hands the money they could have spent to a republican
Thats not true.
You cant just say whatever you want and for it to be true. You are forgetting about the spspa liq preference
The spspa liq preference is way more than the warrants and that must be reckoned with before commons see a dime.
Like i have been saying, if the spspa is converted to common to maximize the govts pre restructuring common equity ownership — existing common basically are worth less — at best anything they get is a gift from the government.
Is this a tragedy? Yes.
Dude you have 100,000 $50 gse pfds. And you apparently picked them all up in the past year. That had to have cost $250k-400k granted mark to market is like $250k at present.
We are starting to get close to the april-november window. Capital plans due may 20. Still no major news out of WH/Treasury although Bernstein did get put up for confirmation senate banking committee hearing and years ago he said the burn it down guys lost in the presence of jimbo parrott
If you are still buying at the rate you have been — and the prices keep going down, you could end up with more than you thought you might.
Quite the pretty penny
The general consensus among some people i talk to is nothing is going to happen. Nothing at all.
Im optimistic. You have about as much in gse pfds as navy cmdr does in commons — and you are going to outperform him because you are playing it smart
The illiquid jps have gone down the most of all the pfds the past week. Hang in there. Buy more. Get 200k shares. You can do it — maybe.
If you are looking to get in at low prices — they have been going lower for a good while now. Most are at 52 week lows
If you think commons have any value at all, preferred get par eventually. Which is 20x for some of them trading at less than 5% of face value
The jps have been going lower on decent volume the past 10 days or so. I feel like a scuba man going further and further underwater. I think we are close. I wish i could buy more. These prices at 5% of par are 20x to par.
Have you tried sams club. Buy more shares. At 5 cents on the dollar you are at $250k