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Its like the sale that never ends...
The GSEs were used to bail out his bank positions. He was going to win either way, no need to directly mess with the GSEs.
Also to shoot down any conspiracy theories about buffet being part of the SPO for FnF. The USG will not put the entire mortgage market on a silver platter for buffet.
NWS cannot resume. If biden could've restarted it, he would've already but yet the earnings remain retained with the recent earnings report.
Reason being, SCOTUS denied prospective relief because 4th amendment already fulfilled stopping the NWS in SCOTUS's eyes and there is nothing more for them to do. If NWS was restarted then it will be going against SCOTUS decision.
Now the longer it takes the biden admin to move forward, the more advantageous it becomes for the commons. But at the same time at the current price point for JPS, it really is too irresistable. I've been accumulating only JPS since SCOTUS. I'll switch back to commons if JPS starts rising again... I'll buy whatever is on a better sale.
Just run the numbers... JPS right now if get to par is about 15x. That means if this whole circus resolves in 15 years at 2036... It would still work out to 100% return per year. Not too shabby.
That's some low volume today. Everyone got tired by the end of the week? Waiting for pay check next week?
Whats up with the JPS bounce... I need another 2 months to finish accumulating.
That just means that the pref holders cannot convert at will. It does not stop FnF from extending the offer of their own accord.
The prefs will most likely not have their divs restarted... The most likely scenario would be to convert to commons near par value. The amount of exchange is up in the wind... Anyone's guess is as good as mine.
IMO, the conversion is very likely because it lessens the amount the fork lift of a capital raise has to do.
When a company issues pref shares, they pocket the money and then record a liability for the exact amount they issued. This is a networth neutral transaction. Unfortunately due to the NWS, the liability is still there but the asset is now gone. Therefore keeping the prefs around right now is contributing to a 30 something billion deficit.
Of course they could always opt to not convert the prefs and leave the deficit but you would have to IPO an additional 30B+ to make up for it. The conversion is just 'easier' IMO.
Prior to SCOTUS the price of the prefs were not worth the risk IMO because it would be like a 4x return... but right now with them floating around 1.50 each its about a 16x return. Its currently a better 'value' at the moment.
Yes... people keep ignoring it. It all makes sense as to how SCOTUS turned out if they read Arkham's comments.
Over 120 different SL banks filed APA claims using different reasons and they all LOST over the course of 19 years. BUT they did win the breach of contract and TAKINGS. Takings are from effective nationalizations... Guess what SCOTUS kept mentioning during oral arguments? Nationalization. Therefore it was them saying you guys should be duking it out in the court of federal claims.
I mean there was already over 120 precedents of denying APA claims... it is un-turn-overable.
Your guess is as good as mine :\
In that forbes article by epstein: "For many years, I worked as an advisor to a number of hedge funds with positions in preferred and common stock of Fannie and Freddie. But no longer."
He gave up.
You guys should really read all the comments by Arkham on Bradford's most recent SA article. Very compelling argument.
Basically what the govt is doing now... ain't exactly their first rodeo. The same thing happened with the RTC saga where a similar situation happened with a lot of the SL banks. Over 120 different lawsuits for different banks filed and they ALL lost on the APA claims over the course of 19 years. What they DID win was the takings and breach of contract aka sweeney/swartz and lamberth respectively.
So the question isnt a matter of if we will win for the takings and breach of contract but rather WHEN it will happen.
The fine print kicker is that those two legal avenues can still be mooted if Biden proceeds with recap/release.
They got caught up and the timeline caught up to them so they weren't able to fully capitlize on FnF.
Your friend Arkham on your SA article makes a very compelling argument.
Recap and Release before the end of Biden's Term.
Likewise. JPS on a better sale atm.
When they own 80%
That's the precise reason they made it 79.99%
The rating agencies were contributors to the 08/09 financial catastrophe but for some reason they were never penalized nor called out on it.
In summary, they don't actually know what they're doing. This is way above their pay grade.
Because of TINA.
In fact, the business model is so successful that even Saudi Arabia created their own FnF.
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/saudi-arabia-s-fannie-mae-to-boost-portfolio-issue-mortgage-backed-securities-64480064
You think the Saudis got the memo about what happened to FnF? Hehe.
At least I'm glad we no longer have to check SCOTUSBLOG. Haha...
The case in the court of federal claims IS a takings suit and has been in progress since the dawn of time. No need to start anew.
Is 40 even realistic? Most people don't even start to purchase a home until well into their 30s... They definitely ain't working until 70s.
The near 0% interest rate ones scare me... They seem like a good value to par but IMO, if I were FnF I would never ever redeem them since the interest rate is close to 0%... Therefore I cannot convince myself to buy any. FNMAT or FMCKJ only.
Would you ever pay off a mortgage that had a .15% interest rate?
As I've repeated quite a few times before... the narrative where FnF SPO via private capital and then the GOVT exercises warrants netting 100B profit is FALSE or rather impossible. The valuation is not there.
The only way the GOVT will achieve their 100B valuation for the warrants is IF FNF recap via full retained earnings.
It makes sense if you think about it from a valuation stand point. Although if the biden/harris need money NOW, that ain't gonna happen unless they just abolish the capital standards to like .5% requirement... then exercise the warrants to unlock the true value.
With cap requirements at 4% the current retained capital to valuation is non-existent.
Agreed. Definitely going to be action prior to warrant expiration 2028... Although we may see something before the end of Biden's term if he or his holders want to drive the ship.
That depends on where your JPS starting point was... At the current price of JPS, its actually quite attractive IMO. You have a solid 10-12 years for 100% gain each year if they get released by the end of that time frame.
The sentiment that I am getting from everyone involved is that our attention turns to the Fairholme Funds v. the United States which is in the US Court of Federal Claims. That is where the "takings" claim will be battled over.
SCOTUS basically said that prospective relief was moot due to the 4th letter amendment but at the same time it also validated the fact that the FHFA is not independent and that it is a govt actor. The NWS was "legal" because they may take actions that are in the best interest of the entity in conservatorship or themselves, the agency because it is an extension of the public it serves.
Conclusion: The "Takings Clause", the last clause of the Fifth Amendment, limits the power of eminent domain by requiring "just compensation" be paid if private property is taken for public use.
They are sweeping on behalf of the public.
JUST COMPENSATION.
Last but not least: After all these shennanigans... my confidence in cryptocurrency has skyrocketed. If govts can behave this way... then THERE IS NO ALTERNATIVE if not crypto...
If you remain confident, I'll most likely start adding a large chunk of JPS. The price currently is way more attractive than a few months ago.
I am sort of still fishing for the bottom though.
I wouldn't say that JPS is toast. They will still get PAR or somewhere at least near it at SOME point in time.
They just won't get the PAR PLUS with a fast recap conversion.
Although with the current JPS pricing, it is becoming more attractive IMO.
Yeah, are you ok?
Actually, am I OK? LOL
I don't think they care for a public offering. The decision is retained earnings all the way and then maximize warrant value for pet peeve projects.
The narrative that they need to be recapitalized quickly with private capital is bogus. They've been reformed in such a way that they already have more than enough capital to whether any crises.
FYI COVID was a crisis and zero bailout was needed. That already proved the point.
I'll be scooping up a lot if they all go sub $1. I still have another 30 years of working life left in me. I'm sure something will come about then.
Since the GOVT is allowed to just take whatever it wants... assuming that they won't move BACKWARDS and just flounders along forward.
The GOVT will be trying to maximize their warrants value. As I've said before, the idea everyone keeps throwing around that the warrants are worth 100B+ is actually a false narrative if FnF gets recapped via private capital.
Now that we are for certain going retained earnings route. The warrant value will be realized to be well beyond 100B.
The warrants and the commons value are technically aligned. The warrants are set to expire in 2028 so if they make a move to release FnF before expiration then all of the above would be true.
Because their paychecks are signed by Treasury. Better not bite the hand that feeds it.
Been 7 years... I need to move on.
I'm going to continue accumulating as normal until end of Sept then I'm going to just open a new brokerage account and pretend like this one doesn't exist... I'll check back on FnF in 2030.
I also noticed that they did not offer prospective relief because of the 4th amendment. But my question is, is it possible for FHFA to go back on their word and restart the NWS?
If that is the case then this is done. If they don't then I am still willing.
Well at least I no longer have to check the scotusblog.
Aberlour Abunadh for me.
Actually just picked up 1k of JPS since it was on sale. Trying to decide how much I should buy for commons or would JPS be a better bargain atm.