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HI Amelia - I am rooting for you! By the way what does the fox and shoe icon mean? - I just clicked it to show support hoping it is good. Someone else chose these icons.
Hi Chronic - good insight - I believe someone mentioned this. The open question is whether or not any restructuring will need a fairness opinion under Delaware Law since it has to do with the equity of the GSEs and not the assets?
Thanks Rodney - I am thinking that it should just be factually based and maybe footnoted. Our problem is that the plaintiff's attorney can almost never get in the courtroom with the facts but get shut down on procedural grounds. The one time that only SOME of the facts were presented to a jury - we won 8-0 - IN DC!!. We need to get the facts into the Court of General Opinion and make the Congress think about what is right but probably more importantly what could happen in the future with other public private partnerships and other regulated entities.
Hi JOoa0ky - do the plaintiffs lawyers know who are the holders of FMCC common since they will be receiving a payment? It would be interesting to know if there are other large holders other than Ackman.
Hi Rodney - what do you think about coming up with a Magna Carta like document that lists all the way the USG has screwed all shareholders. Perhaps this is something common and JPS can agree on? We can use this list to remind the FHFA and Congress about the historical facts and have it publicly disseminated so the facts cant be rewritten at the wrong time for shareholders? I gave you my list a couple of days back but I just focused on pre-Conservatorship.
Hi LuLeVan - the question I have is whether the Estate for the Special Conservatorship includes the equity of the GSEs or just the assets. I would argue that the equity of the GSEs is not part of the Conservatorship Estate.
Thank LuLeVan - Collins is gone but I am wondering if the plaintiffs decided that they liked the Opinion enough and see what happens in the CFPB case. I am probabably wrong but the Opinion seems to be plaintiff friendly even though we lost the appeal on procedural issues.
Dont the plaintiffs have to appeal to have the case heard En Banc?
Hi imbellish - it looks like there was not an En Banc Appeal for Collins in the 5th - correct?
Blownaccount9 explained why earlier today This generally aligns with the opinion of Tim Howard also who was the CFO for FNMA.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173771685
The stock is going up for a reason. Mr. Market understands your logic and he disagrees.
Just admit your have been wrong - got to catch a flight but would love to continue.
Great to see you on the bullish side since June 2023. Is that right or were you just being sarcastic when the stock was at 44 cents - about 200% lower?
Hi blownaccount9 - generally agree with you - thanks for sharing.
Assuming this ever happens - my hunch is that the commons trade heavy to start but there will be a significant multiple expansion over time. Institutions and index related funds will be large buyers and will continue to buy because the GSEs will have significant market caps and will have become significant market cap weighted components of the financial subsector of the S&P 500. Multiple expansion may happen as institutions become market weigh holders of the GSEs so not to have tracking error vs the indices. For example - BAC has approximately a 265 bn market cap - it will be like having BAC go public or even bigger
The key will be to hold a core common holdings to participate in multiple expansion without cap gain taxes. Maybe hold a core in a separate taxable account - trade your Roth but hold a core in your taxable account until the UST is long gone.
Hi Rodney - good research. To be fair - No Name called the bottom - especially if he took his own advice about family financing and side family business ventures!
Definitely possible new lawsuits - Dont you think there are some large shareholders ( including Ackman) who have a future litigation strategy? Just too much money on the table. Doesnt mean that Ackman and others will get PAR on their JPS holdings first and then start the litigation strategy.
The Invesment Risk Considerations for the Registration Statement will have to disclose the Operating History of the GSEs. HERA will allow the GSEs to be put in Conservatorship again which could be the result of the change in Capital Requirements in the future - just like what was done in the past - ask First Bank of Oak Park and Mike Kelly. If Collins v Yellen stands any future Admin could Nationalize the GSEs again and wipe shareholder Capital like they did in 2008. Buyer Beware - especially if a future Admin sees political gain in a future Nationalization.
Hi No Name - how do you determine the final structure when there is still outstanding litigation?
Does this help? - definitely not an expert in appellate practice
https://ecf.ca5.uscourts.gov/n/beam/servlet/TransportRoom
Case No is 22-20632
No En Banc Appeal in Collins Yet - looks like final judgement was recorded on December 4th. 60 days should be Monday? If the dont file then no En Banc?
Ultimately the terms of a potential Exit for the GSEs will most likely be driven by politics - highlighting known facts to politicians and investors will help us get a better outcome vs the UST. Rodney asked for a list:
1. The UST and NEC advocated for a Nationalization of the GSEs as early as March of 2008
2. The UST did not disclose their Nationalization efforts to the US Congress before the passage of HERA
3. The UST did not disclose their Nationalization efforts to the 2008 investors who purchased billions in newly issued JPS
4. Some USG regulators encouraged the GSEs to purchased subprime MBS which contributed to the GSE losses
5. The timing of the Barrons Memo in the unstable markets of March 2008 most likely was a primary cause for the failure of Bear Stearns which was the first domino to fall and led to the Conservatorship itself and ultimately the GFC
6. FMCC never recorded a quarter where realized losses exceed cash income and did not need to be put in Conservatorship.
7. The Conservatorship led to the failure of many savings institutions who owned significant amounts of JPS
8. All the issues after Conservatorship - Rodney - you can pick it up from here.
Hi Rodney, Thanks for the reply - No I dont think $ 10 to $ 20 is a fair deal when you factor in the deception that was done and how much money the UST has already made on a Conservatorship that was unnecessary based on the known facts as of today. That being said even DJT has said that the US Taxpayer will make billions on the Exit so he is probably assuming the exercise of the warrants. We also have the CFR 302 issue regarding the Compromise of Debts footnoted in the CBO GSE Restructuring Paper and I am hoping a settlement would be just the exercise of the warrants and cancelling the SPS.
Our best win/win is the Brydon Fisher case and I think the Mike Kelly case also but these are low probability events.
I remember that also Trunkmonk - now we find out that he actually undermined a bailout in March of 2008 with the Barrons Article leak and actively worked to nationalize the GSEs as early as 2008. Regarding Ackman - he too was a short in 2008 but knew the value and went long early in the game. I think Ackman is going to make a lot of money on his JPS first and then make a lot of money on his common next via lawsuits and lobbying around the Exit - if it ever happens.
Wow - I did not realize or remember that the July legislation allowed the UST to buy shares of FNMA and FMCC. Great find - brand new info for me at least.
Do you know if the UST actually bought the common shares? I dont have any recollection to that?
Hi Rodney - I am rooting for common because it is the right thing to do. We all (including you) should be rooting for fair treatment for all GSE JPS and Common shareholders in my opinion. In my opinion it is bad karma and unethical to advocate for the demise of another if you yourself are demanding justice. I believe there are a couple of lines in the Merchant of Venice which speak to this if I remember right - one of the characters demanded justice under the law to advocate demise of another but in the end the law for which the one character demanded to be imposed was actually imposed on the one advocating for the demise of the other. It is an ethical slippery slope to advocate for your own justice and wish for the demise of another. This is why I have continuously challenged some JPS holders when they support the cramdown.
I also MAY have a different perspective than you. I purchased FNMAT on the new issue via my JPM account ( somewhere around $ 20,000 I think) but also invested another $ 500,000 plus primarily in long term deep in the money call options on FNMA and FMCC. Probably owned 60,000 to 80,000 shares via stock and options going into the Conservatorship. One reason I personally expect the UST to remain owners of 80% after exit is because I expected a recap of the GSEs in 2008 and expected to be diluted but still make a lot of money. FNMA was more likely to be diluted and I had hoped that FMCC would not because it was not in trouble financially - but was suffering from the lost confidence in the market place. I also owned about $ 250,000 in the Growth Fund of America which was the largest owner of GSE equity and one of the largest owners of GSE JPS.
After the Conservatorship I had a lot of explaining to do to my wife and felt like a total fool but I decided to sell my common and start buying JPS from October until March. Started buying in the $ 1-2 range and bought some for less than a dollar I believe. I am profitable on most of my JPS currently. I did sell half of my position at 9 to 13 and then started buying back in the 8 range (not profitable on these purchases but profitable overall ) and have been buying a little since then.
What I did not know then which I had suspected but did not know was that the UST and the NEC wanted to Nationalize the GSEs as early as March of 2008 - I remember when the Barrons article was published, and I thought it was a plant by the Banks and GSE Haters - just did not know they controlled the NEC and the UST. Knowing this I believe what you are advocating is entirely just and the upside of common should be much more that what the JPS holders will receive when we get our PAR back. I think we all are very fortunate to have the likes of Brydon Fisher and Mike Kelly pursuing their suits. If these suits are not successful, I think the CBO GSE Recap Paper will control and I do believe the UST will want the JPS to convert since it will mean another $35 in Tier 1 equity. I would hope and expect that common trades in the $ 10 to 20 range and that JPS gets PAR on the Exit.
Hope that perspective explains my participation on this Board. I believe we all should be rooting for justice and fair treatment under the Law for all GSE Shareholders - JPS and Common alike.
Absolutely right LuLeVan. I remember that time period well - I actually had a brokerage account for nearly 10 years at Bear Stearns and held it through the JPM conversion. My broker and all his colleagues lost his job at Bear Stearns - BS had an internal asset management hedge fund group that was investing in sub prime and they had to close it down due to a redemption run. It was a big deal because Hank got to sell all his GS stock tax free before the whole financial sector collapsed after Bear failed.
I also had a friend at Lehman who had intended to retire but was asked to stay to help right the boat. Like Hank he could have cashed out but ended up loosing everything after being with Lehman before it was spun off by AMEX in the early 90's - 20 years or so of employee stock lost.
Crazy summer - still remember being invited to the 2008 MLB All Star game at the newly renovated Yankee Stadium by a brokerage contact and thinking it was ironic that the financial world was melting down while we enjoyed one of the longest All Star games ever.
Good Points LuLeVan - you are exactly right about the public misperception but that is what so powerful about the 8-0 decision from the breach of the implied covenant of good faith. The public does understand what good faith is and the DJT GOP can use this to drive the issues on why the overreach of the Administrative State is so important.
Of course, the Utility Model sounds good and in fact could garner support of many on this Board if JPS is paid out at PAR and common gets a value in the $ 10 to $ 20 Range. If JB is going to get this done in this Term his Admin is going to have to devise a Consent Decree and settle the Litigation - otherwise we will have to wait until the election.
Appreciate the comments LuLeVan - shareholder claims are part of the property right incidental to owning a public security. It doesnt matter who owns the security and when it was purchased. This is a fundamental of the US Securities markets. So far the only claim that has been successful has been the Lamberth judgement but there are still many claims to be resolved albeit low probability outcomes at this point. IMHO the biggest leverage we have right now is to highlight the true facts and how RINOS and the Administrative State screwed public shareholders and why the injustice should not stand.
The right thing is to uphold Constitutional principles and not let the Administrative State misappropriate private property for political gain or the personal wealth of the policy makers and government administrators. I think we are way beyond the hedge fund facade - IMHO I think the politics regarding the need to limit the Administrative State is going to be most impactful going forward. If JB tries to take shareholder equity - it becomes a political issue and seen as the FHFA trying to convert private property for a political purpose.
There will have to be a settlement of the lawsuits to do anything in 2024 - dont see why anyone should agree to haircuts - especially since DJT probably realizes that the Conservatorship were caused by the RINOs in the swamp.
No - he got to sell his assets tax free - right before the 2008 financial crisis that arguably started with the collapse of Bear Stearns after he became UST Secretary. Good tax planning strategy and great timing!
Thanks JoOakly and FFF - How do you see a rights offering structured? Isnt there a money amount difference between the Liquidation Value and the Face Value of the SPS - at a minimum there should be a material reduction in the SPS value which should be allocated to legacy common?
If it is soon how does the UST handle the outstanding litigation? Doesnt there have to be a settlement?
Great Points Skeptic! - but as you said facts matter. The push for Nationalization started as early as March 2008 as documented in the Memo from the NEC to UST and leaked to Barron's the week before Bear Stearns failed.
Here is the FCIC document:
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
The work being done by Rodney and Barron is commendable and potentially very important for shareholder rights at some point in the future. They are highlighting the ways that shareholders are being harmed. We dont know how this will play out but having a deck of legal principles to play in advance could be very important in the future.
Dont you think the primary issue is that the Congressional Intent for HERA was to apply FDIC principles on conservatorships and receiverships.?
SCOTUS turned this upside down with the Special Conservatorship IMHO
Wow! How many years were you on the team?
Hi tutt1126
Do you have information on this? This needs to be verified and disclosed if true. Thanks for your participation but want to have a correct record of facts.
Hank Paulson that is - look who is working with now.
https://en.wikipedia.org/wiki/Henry_Paulson
"Henry "Hank" Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the chairman and chief executive officer (CEO) of major investment bank Goldman Sachs.
He served as Secretary of the Treasury, a key and highly influential Cabinet post, under President George W. Bush. Paulson served through the end of the Bush administration, leaving office on January 20, 2009. He is now the chairman of the Paulson Institute, which he founded in 2011 to promote sustainable economic growth and a cleaner environment around the world, with an initial focus on the United States and China.[1] He also works as executive chairman of the global fund, TPG Rise Climate.[2]"
Thanks Guido - I looked through and could not find what fees were paid and to who? I think there should be some type of underwriting agreement with a detail on what the selling agents get paid. I could not find that and I have not been in EDGAR for some time. Must be a good business - especially the selling group. Dont know if every purchaser has to buy from the selling group and what value they bring to the offering. Seems like a security that could be sold directly or at a very low fee arrangement - the cost is in the legal docs and structuring I would think. The question is whether the selling group is selected because they are connected.
CRT Issuance in June 2023. See the Selling Group.
https://www.fanniemae.com/newsroom/fannie-mae-news/connecticut-avenue-securities-2023-r05-deal
Here is the Offering Memorandum:
https://capitalmarkets.fanniemae.com/media/23791/display
Where is the "looting" that TH mentioned? How is the Selling Group selected and connected?
Thanks Guido - it really struck me that TH said the CRT Underwriters were "looting the GSEs"
He is the FNMA CRT Link:
https://capitalmarkets.fanniemae.com/credit-risk-transfer
Here is the info for a tranche in 2023. You can see big name underwriters but DAV and DEI focused members of the selling group. The selling group members are many of the same firms over and over - most likely a good business.
The question is where the "looting" taking place - is the Underwriter just adding on a payment to the selling group? Seems like something the GSE OIG should look into?
Thanks for the reply and correction!
Wow! - Skeptic7 - are you really confused about who Hank Paulson is and who John Paulson is?
https://en.wikipedia.org/wiki/Henry_Paulson
https://en.wikipedia.org/wiki/John_Paulson