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I've switched over to buying AGM tbh. Its the FnF couterpart in agricultural MBS except that they're a monopoly instead of a duopoly.
Their TIER 1 capital is sitting at 15.3%
Amazing stuff... while FnF is struggling to hit even 2.5% let alone 4%
I do have a big glass jar of change, I may follow Ackman and buy 10% of the company's common next year...
Or I might be more sensible and take a gamble on JPS...
Or I might buy something more analyzable lol
I wouldn't say commons would get obliterated in any RnR... it is more like the longer this drags on and the more capital that gets retained. The less they would have to raise. Every quarter that goes by increases the common's value.
Around 50 cents is a great risk:reward ratio for commons IMO but I'd restart buying around 60 cents.
hmmm, my takeaway here is that the chart is meaningless cos the background legal and political context is everything
But then maybe you know how to use charts differently in special situations...
Going to be a drop into Xmas with tax loss selling -- and people are sitting on sizeable losses again...
Question is why would it bounce in the Spring? No news that we know of coming...
JPS gets down to 5% and I will take a gamble -- I won't be buying commons since it looks like it is obliterated in any RnR...
I'm comfortable with my position and will not sell. I will add if the risk:reward increases drastically.
Its around 1.50~ JPS and .66cents for commons
So curious are some of you still buying here or getting out?
Not ripe yet... if you were to do that my target would be 66 cents for commons or lower.
Price for JPS are 10-20% away from 52-wk low. Commons are making new 52-wk low. I am switching some of my JPS to Commons. But more important, we need the court to tell the Administration that NWS is an illegal taking and they need to return the overpayments with interest.
I will immediately place a 50k sell order for 100$/share
Imagine news of dividends reinstated? Or intent to relist.. Brinks trucks lined up on the digital highway..exchanges clawing for shares... Biden will get credit for the market boost too.. we're overdoo...
Commons 66cents or lower... or JPS ~1.75 or so.
Otherwise my capital going to AGM for the week (:
Who is thinking of loading more shares?:)
Guess it ain't happening today since congress is currently on fire.
Is your projection down to 64cents?
Here we go next leg down, BOOM!!!!
Not tasty enough yet. Around ~.66 is when I would restart accumulating.
Bought 1st taste today and around .50 I'd double down and .30 I'd hand over fist this and pass my JPS amount. Would maybe sell 1/4 of my JPS (depending where it's at) to add more common AT THAT TIME. Now I'm good waiting and waiting and waiting. lol
Delicious entry point.
Are you seriously going to take out a reverse mortgage on your house to buy the GSEs? Based on what?
At what entry point? now or 50 cents?
Back up the truck if its @30c
Maybe you should get the CBO to explain to you why it trades at .89 cents. I know you have a valid reason for this, so let's hear it.
PS .30 cents is my opinion based on what's upcoming (specifically...NOTHING). With that in mind if it does get there, I wouldn't buy one share. If I'm wrong...best case scenario, it stays right around here.
Not me. I'm waiting for it to breach the 66c level so I can resume accumulating haha.
2c drop/day keeps the investors away.
So he violated the rule of never gambling money you can't afford to lose? Jeeez
Yes he did, mentioned his daughter's education fund was in prefs so that went up in smoke, plus the rest...
Biden... bro... you really gonna let mad max push you around?!?!?!
Ahahaha
Waters urges Biden to make FHFA nomination
Regulatory News - Monday, September 20, 2021
https://www.respanews.com/RN/ArticlesRN/Waters-urges-Biden-to-make-FHFA-nomination-83313.aspx
House Financial Services Committee Chairwoman Maxine Waters is calling on President Joe Biden to nominate acting Federal Housing Finance Agency (FHFA) Acting Director Sandra Thompson the permanent leader of the agency.
“Appointed on June 23 as acting director, Ms. Thompson has needed little time to show this nation how uniquely qualified she is to serve at the helm of FHFA,” Waters said.
Well if Calhoun is nominated before the bell today, JPS would probably rocket.
Am I suppose to be JB?
But you know what I find the MOST interesting from the CBO report right? Its the fact that the govt acknowledges that they themselves MAY have to take a haircut before the JPS takes a haircut.
"Redemption of Shareholders’ Claims in CBO’s Model
CBO’s model incorporates the judgment that in scenarios in which the GSEs’ common-stock sale did not raise
enough funds to redeem the full face value of both the
senior preferred and junior preferred shares, the Treasury
would take a reduction (known as a haircut) in the value
of its senior preferred stake before requiring junior preferred shareholders to do so.30 That outcome would be
inconsistent with the priority of interest between junior
and senior preferred shares. But it recognizes that changing the GSEs’ commitments to junior preferred shareholders would be difficult outside a receivership scenario,
in which the Treasury, as owner of the senior preferred
shares, also owned the GSEs’ common stock (through its
warrants). "
On the labeled page 13.
Aside from that, they seem to also recognize the fact that the lower the capital requirement, the better off the govt will come out with a windfall... which re-enforces the govt's interest as being somewhat more aligned with the commons that most would think.
JB - Thanks! The CBO has the GSE Valuation at $434 bn at the beginning of 2025 (Table 3 - Page 17 of CBO report) and $ 402 bn at the beginning of 2023 ( Table 2 Page 15). This proves your point !!
The good reason to get this done earlier is take advantage of the low interest rates because the assumed cost of new JPS and debt is 3%. Also - if the GSEs stay in conservatorship then a new admin could change things again.
Thanks for your insight and posts JB!
Gotta give credit to Tim Howard for calling it as he sees it here.
"jtimothyhoward
SEPTEMBER 15, 2021 AT 8:17 PM
My reaction to this re-proposal is that it’s the FHFA bureaucracy, led by Sandra Thompson, saying, “We know former Director Calabria’s capital rule is very unpopular, but we can fix it. See?” With the implication, of course, that there is no need not to keep Ms. Thompson in place."
https://www.housingwire.com/articles/sandra-thompson-should-be-the-permanent-fhfa-director/
They laid out the scenarios in the report. Page 15 (retained earnings until 2023) and Page 17 (retained earnings until 2025).
https://www.cbo.gov/system/files/2020-08/56496-GSE.pdf
if you are tracking - in the approximate
using the remainder of 21 - and all of 22 and 23 (all) - how much capital might Fannie ADD - if it had good (not insanely good) years ?
to a base of ? reaching ?? with a goal of what - about 120B?
I am looking for why - the why have a capital raise ?
what if we went another two years into 24 and 25 ?
thank you
The commentary is just for show. They're going to do whatever the hell they want at the end anyway haha...
But yes they probably started working on it the day Thompson was named acting director.
Also to those thinking the whole thing should be scrapped... I don't think it would happen while Thompson is there since she was an internal placement and not from an external source. She definitely worked on it with catman. She's probably just changing the parts that she doesn't like but overall agrees with most of it. Just my opinion.
Here is the link to the new Rule. Looks like FMCC will need $35 bn less in capital or 2.9%. Seems like the guys at UST have been working on this for a while. See Page 28 for the Table with the changed requirements.
https://www.fhfa.gov/SupervisionRegulation/Rules/RuleDocuments/Capital%20NPR%20-%20PLBA%20and%20CRT%20to%20Fed%20Reg_Website.pdf
Was wondering why haven't heard from holden. Weak sauce. He folded!
I have to admit I have stopped looking at Glen's blog, at least he did not fold like HoldenWalker99 on Twitter...
Is amanda the female carlos?
#DDAmanda Chart on: $FNMA
You can scan for these before they run.
That would be completely in line with the CBO report. They ran through scenarios of 3% capital, 4% capital and 6% capital. It seemed like 3% was the lowest they would be willing to go.
In that case expect retained earnings to continue to 2023 prior to capital raises.
Alec Mazo
@Alec_Mazo
FHFA is proposing to drop Fannie Mae's capital requirement from 4% to 3%.
60 day comment period
JPS gonna hit $5 before the end of the month... Mark my post.
I sold my last batch of FNMAS at $2.15 today. Now it is trading at $2.35. Sucks.
I was done building my FnF common/pref position last week. Not touching these guys anymore unless JPS stays below 1.50 or commons under 50 cents.
Time to start working on next project. FARMER MAC (AGM). Since we all love GSEs so much... lets venture into the agricultural MBS business (:
They currently hold ~6% of market share. Watch them start gobbling everything up... its not even a duopoly, its a monopoly.
You have a well thought out plan
That is what matters
Be careful its not 10 years later and you are saying the same thing - i.e. a plan - when very future action oriented - requires very strong discipline
I'm half your age. I can still dollar cost average into SPY and still end up ok by the time I get to your stage.
The risk to go to zero vs the potential reward is well worth it IMO at least for me.
Well, you should know by now that nothing is ever linear.
If this is going to be happening in 2 years, the jr preferred shares will not be 1.50
Remember that the jr preferred traded between 2x and 6x of common most of the time
There is no alternative. Thats the only fundamental that really matters (:
And percent of overall long term investments - keep in mind all of this can go to zero and is speculation (speculation that makes sense to me but has not yet been rewarding)
There may not be much excitement until 2023. I think either way they will follow that CBO outline. So retained earnings for next 2 years. The court cases will ride out until then as well but this will be an administrative solution.
I'll continue to accumulate a little each week if FNMAT/FMCKJ stays below 1.50... Will do commons if they drop below 50 cents. Whatever is on sale that week. Otherwise, will allocate elsewhere for the week.
my bet
GOV keeps and will use WTS --- and thus wants no SPO -- and will allow profit accumulation to get us our capital level and will not ask for SPS payment as their gain on sale of such shares is large if F and F are healthy
then the PPS for the diluted Fannie (via WTS) still is say 20 bucks a share
For all of those who haven't read the report yet... you probably should.
Based on the CBO timeline, its retained earnings for 3 years 2023 or 5 years 2025. But I think if the current administration wants to book in the windfall they would do it during this term. Although if they feel like they can win the next election, they might punt it back to 2025. It all depends.
Last but not least if you read the recap scenarios they laid out for 2023 vs 2025 and the 3% capital rule vs 4.5% capital rule and 6%.
- The US treasury seems to be WILLING to take a haircut to make the JPS whole (Which I find incredibly interesting)
- The goobermint also seems to acknowledge the fact that with a lower capital % the US GOVT will book a greater windfall. This tells me that if they are strapped for cash they may even lower it to below 3%... perhaps to 2.5% as Tim howard suggests.
- They also seem to acknowledge that there would be multiple scenarios where the govt would not get the full SPS or the full warrants. Which is encouraging. The possibilities!
Hi Robert and Guido - The 2020 CBO Report is what the Raneri and Calhoun opinion piece is based on. You can see the various scenario valuations based on assumed capital requirements.
https://www.cbo.gov/publication/56511
The base recap timelines are a public float in 3 years or 5 years with NO NWS until then. JPS get paid at PAR at some undetermined date and there is some settlement with common.
This is Pelosi's CBO and perhaps there will be an incentive to put part of the GSE stake for public housing? There is no discussion saying that a continuation of the NWS would be the best outcome. There is a paragraph on the bottom of Page 18 which will allow the UST to recognize 50% of expected profits if legislation is just INTRODUCED.
Maybe things have changed post Collins which will prompt JB to go back to the NWS with and indefinite conservatorship? It seems that they could accomplish what they want with a Utility based Recap and Release in line with the CBO analysis?
Thanks again to your both for your continued efforts on behalf of shareholders!!
Well no regrets that I'm more heavily weighted towards freddie~
The growth of Freddie in 2020 versus Fannie was substantial, yet it's selling at a 7% discount. Why?
It's time to move on Bradford. I've managed to build up enough of a position in both commons and jps over the post-scotus ruling that I'm perfectly content with.
Today marks the end of an era in my life. It is time for me to start allocating all future resources (capital and energy) away from FnF and into other ventures.
Since we're so well acquainted with GSEs... could I possibly introduce you to farmer mac. FnF's cousin in the farmland business. 1B market cap but with 5% market share of the farmland secondary mortgage business.
Last but not least... I may be around less often here but I'm never selling. I don't think I'm wrong and I'm going to take this to the grave with me.
i am working on trying to live a more balanced life while i wait for this bird to cook. i've felt obligated to make changes recently and --- who knows where we are in thanksgiving but i hope we both make it that far and i wish us well.
given how low the prices are now, it is not impossible for anything to happen. tax loss selling is one hell of a drug.
My limit is 1.75 for JPS to buy and 0.50 for commons. Anything higher than that I'm allocating elsewhere for the week.
I'm already content with my position size. Anything else is just extra cherries on top. Regardless, I'll probably vanish from this board by the end of Sept and just let time do its job. Its been long enough and its time to move on.
at the moment --- changing by the week - JPS appears more attractive - especially for those not yet diversified (although this is not true diversification)
when JPS gets to 4 it changes again (think 25/4 v 25/1.6 - massive difference in potential gain - huge )
I remember he did an interview back in like 2014/15 when the reporter asked him if he was lobbying hard and etc... he responded nope, none. Absolutely nothing? You're just going to sit there and wait?
He said yes.
Bill Ackmann is too deep in this just like us and has invested lot more money and legal fees to turn back..
Just a richer bag holder than the rest of us...
Doesnt have any stake or influence on the end state..
Just yet another opinion (But a opinion that is heard more than yours and mine),, but valuewise/...doesnt mean much
I knew he wouldn't sell.
Fundamentals:
- TINA
- PERPETUAL NON-EXPIRING OPTION!
https://mobile.twitter.com/JohnDee78791547/status/1430628343771287558/photo/1
I see no reason for dividends to resume for JPS. It will most likely be a conversion offering IMO. Now how favorable or just neutral will depend on common PPS at the time of offering.
Resuming JPS dividends is a drain on cash flow.
Keeping JPS around also requires a larger capital raise.
1 buck common vs 1.5 buck JPS... at the moment JPS is a better value. If commons drop below 50 cents a pop, I'll resume commons accumulation.
In my opinion, the Fisher and Reid derivative claims in the COFC have always been the best for JPS, commons, and the corporations themselves.
If they succeed, JPS should be trading around par. Their dividends should resume once Fannie and Freddie are capitalized. Sky is the limit for commons.
Its interesting how they mentioned a few times in there about retaining earnings and then redeeming the JPS.
A year ago the CBO put out a recap study with a 3 year and 5 year recap process under Calabria leadership at FHFA.
https://www.cbo.gov/publication/56511
Calabria was the best shot in over a decade you hatin on the wrong person bipolar.
Well definitely no action for the next 30 days... labor day weekend... congress out for half of september...
Think we'll drip back down to red again?
Here we go again~ History never fails to repeat itself (:
New Appetite for Mortgage Bonds That Sidestep Fannie and Freddie
Wall Street firms are again packaging and selling mortgages
that the government-backed firms can’t or won’t back
The U.S. mortgage market involves some key players that play important roles in the process. Here’s what investors should understand and what risks they take when investing in the industry.
By Ben Eisen - Aug. 23, 2021 5:30 am ET
You need to double-triple down to make the risk worth it.
i bought it at $4.30 for 23,000 shares back in mid 2014, been insanely waiting ever since, any other dumbass goons out there that did the same, i need hope, even if it is just some other dumbasses, i shoulda bailed when munchkin appealed to scotus, that was a sure telltale that the govt were crooks
Young with steady income sure... This is indeed an investment of a lifetime but unfortunately the price you have to pay for it is far too great for many to bear...
By price I mean ETFs have an expense ratio but for FnF its a 13+ year emotional roller coaster ride.
If you look at the bright side, the investment is getting way more attractive.
1. They can't kill the GSEs. Eventually, they will need to release them. I expect it will come in 1-3 years.
2. You can now expect 15 times return. For example, FNMAS is $1.6 with face value at $25.
3. Many lawsuits are going on. We need to win just one.
4. Congress and FHFA had agreement to look into the matter again in this Sept. I suppose they will at least come up with a plan to finish the last piece of unfinished work from Housing Crisis in 2008.
I am retired. If I were young with steady income, I will invest in the GSEs monthly.