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Correct, it wasn't a test "per se".
However, it WAS. If you don't understand the nuance of this then you are hopeless.
All systems are go except a few EU issues which I'm sure "they" are working out.
Forwarded to me: CSNY post.
Sorry if this had been posted here already but even so it's worth seeing again. great post.
I replied about timing in another post.
As for next steps, this is what I expect to happen if we're right about the FDIC returning significant real estate assets:
First Transaction (Between WMIH and its wholly-owned subsidiary, WMIIC)
WMIH
Upstream (a) $550MM (estim. price for 80% of WMIH at current prices + 20%) and (b) $768MM price for 80% of WMIIC;
much or all of this money will come from IOUs WMIIC holds against WMIH)
Downstreams (c) 2.9B WMIH Shares (< 80% of its shares ) and (d) 80% of WMIIC to WMIIC
Second Transaction
M&A: WMIH buys a company ((probably insurance) to team up with WMRRC)
Third Transaction
WMIH capitalizes itself; commensurate price rise
Fourth Transaction (WMIIC and the LT transact business; WMIIC gives 80% of itself (formerly held by WMIH) to the LT and the LT gives it ~$35B in real estate assets it got from the FDIC*
WMIIC -------> WMILT: 80% of WMIIC to LT (owns illiquid property in WMIIC's custody)
*I discussed the potential value of illiquid assets (and consequences for legacy shareholders) some time ago, but here's a refresher:
Value of RE Interests in WMIIC
If you consider that a person usually puts down 20% on a mortgage, that $35B can be conservatively leveraged 4x (i.e., WMIIC borrows a $140B mortgage). That provides $175B in assets. If WMIIC makes 10% on that it's $17B on $35B in hard assets (that 49% return is an example of the power of leverage). Let's say KKR gets $2B as its investment management fee, leaving $15B. Deducting out, say, $5B as fees and expenses, it's left with $10B in the first year.
The LT gets 80% of that $10B or $8B. For each P that's $800 in income – per year. Not bad. (Each K gets $20 and each Q $2.00; MW would get $2MM annually.) At the end, when it sells the enterprise the $35B in assets may have doubled, and it disburses that $70B to LT interest holders. That would yield $7K per P, $175.50 per K, and $17.50 per Q (MW would get $17.5MM).
Value of WMIH
The 20% ($2B) the LT doesn't keep goes to WMIH. There are no taxes thanks to the NOLs and ignoring expenses (nominal) at $2B/3.5B that's $.57 per share. I calculate just under $12 per share, minimum. I say minimum because WMIH will have another business and I'm assuming it will own 100% of it. If that business generates, say, $1B annually, then there would be a corresponding increase in share price, so I guesstimate $18 per share.
WMIIC holds 80% of the 3.5B shares of WMIH, so it absorbs the value of the profits through the 2.9B shares. If you transitioned 1K Ps, you get about 290K WMIH shares (290 WMIH per P or 14.5x the number you got at transition (approx. 20)) as a result of the 2.9B shares WMIH issued to WMIIC. At $18 per share those 290K shares would be worth $5.22MM. WMIIC will hold on to those shares, so they won't be liquid for some time. Moreover, as I don't believe WMIH will pay dividends the gains will be reflected through price appreciation.
The remaining 600MM shares of WMIH belong to various shareholders, including Citi and KKR. Legacy retail shareholders are included in this group, of course. Such legacy shareholders of the original 200MM WMIH shares will sustain dilution, but they're compensated through (a) their LTIs and (b) the 2.9B WMIH shares held by WMIIC, as I explained. My hypothetical legacy shareholder who transitioned 1K Ps has 20K of these free trading shares and they are worth just under $400K.
Disclaimer
Of course, I don't know for certain that this is what is in the works, but if I were MW and Gene Davis, the foregoing represents what I would want to do rather than simply sell off $35B in assets. I think if they can get the IRS to go along, they will. The foregoing is an example of a scheme that would make the players (some of whom, like Citi, have friends in Washington) the most money, so I think something similar to what I've described will occur."
Forwarded to me: CSNY post.
Sorry if this had been posted here already but even so it's worth seeing again. great post.
I replied about timing in another post.
As for next steps, this is what I expect to happen if we're right about the FDIC returning significant real estate assets:
First Transaction (Between WMIH and its wholly-owned subsidiary, WMIIC)
WMIH
Upstream (a) $550MM (estim. price for 80% of WMIH at current prices + 20%) and (b) $768MM price for 80% of WMIIC;
much or all of this money will come from IOUs WMIIC holds against WMIH)
Downstreams (c) 2.9B WMIH Shares (< 80% of its shares ) and (d) 80% of WMIIC to WMIIC
Second Transaction
M&A: WMIH buys a company ((probably insurance) to team up with WMRRC)
Third Transaction
WMIH capitalizes itself; commensurate price rise
Fourth Transaction (WMIIC and the LT transact business; WMIIC gives 80% of itself (formerly held by WMIH) to the LT and the LT gives it ~$35B in real estate assets it got from the FDIC*
WMIIC -------> WMILT: 80% of WMIIC to LT (owns illiquid property in WMIIC's custody)
*I discussed the potential value of illiquid assets (and consequences for legacy shareholders) some time ago, but here's a refresher:
Value of RE Interests in WMIIC
If you consider that a person usually puts down 20% on a mortgage, that $35B can be conservatively leveraged 4x (i.e., WMIIC borrows a $140B mortgage). That provides $175B in assets. If WMIIC makes 10% on that it's $17B on $35B in hard assets (that 49% return is an example of the power of leverage). Let's say KKR gets $2B as its investment management fee, leaving $15B. Deducting out, say, $5B as fees and expenses, it's left with $10B in the first year.
The LT gets 80% of that $10B or $8B. For each P that's $800 in income – per year. Not bad. (Each K gets $20 and each Q $2.00; MW would get $2MM annually.) At the end, when it sells the enterprise the $35B in assets may have doubled, and it disburses that $70B to LT interest holders. That would yield $7K per P, $175.50 per K, and $17.50 per Q (MW would get $17.5MM).
Value of WMIH
The 20% ($2B) the LT doesn't keep goes to WMIH. There are no taxes thanks to the NOLs and ignoring expenses (nominal) at $2B/3.5B that's $.57 per share. I calculate just under $12 per share, minimum. I say minimum because WMIH will have another business and I'm assuming it will own 100% of it. If that business generates, say, $1B annually, then there would be a corresponding increase in share price, so I guesstimate $18 per share.
WMIIC holds 80% of the 3.5B shares of WMIH, so it absorbs the value of the profits through the 2.9B shares. If you transitioned 1K Ps, you get about 290K WMIH shares (290 WMIH per P or 14.5x the number you got at transition (approx. 20)) as a result of the 2.9B shares WMIH issued to WMIIC. At $18 per share those 290K shares would be worth $5.22MM. WMIIC will hold on to those shares, so they won't be liquid for some time. Moreover, as I don't believe WMIH will pay dividends the gains will be reflected through price appreciation.
The remaining 600MM shares of WMIH belong to various shareholders, including Citi and KKR. Legacy retail shareholders are included in this group, of course. Such legacy shareholders of the original 200MM WMIH shares will sustain dilution, but they're compensated through (a) their LTIs and (b) the 2.9B WMIH shares held by WMIIC, as I explained. My hypothetical legacy shareholder who transitioned 1K Ps has 20K of these free trading shares and they are worth just under $400K.
Disclaimer
Of course, I don't know for certain that this is what is in the works, but if I were MW and Gene Davis, the foregoing represents what I would want to do rather than simply sell off $35B in assets. I think if they can get the IRS to go along, they will. The foregoing is an example of a scheme that would make the players (some of whom, like Citi, have friends in Washington) the most money, so I think something similar to what I've described will occur."
Watch September. Remember I said end of July too and was right on the share test run.
We will see nice activity in Sept.
If you've followed this saga closely you know why.
September.
I predicted end of July something would happen.
And it did, suddenly we got some shares. Surprise!
Watch Sept.
Sept will not be THE month.
But there will be significant movement of some type.
I agree that we have a ways to go before the BIG resolution of this case, but next month will prove to be significant.
Sept will be a big month as I said.
We will finally see some movement. Watch for volume and price rise.
escrows are indeed golden. Very.
Billions are "hundreds of millions".
And, it WILL be billions.....no doubt.
All systems are go.
Do you really think the hedgies will wait? No way. The impediments are gone and the assets will be distributed soon. If anyone things these hedgies are going to sit back and wait for their $$$ you are crazy.
They have the money and legal power to make this happen now very soon. We are lucky to be riding their coattails.
Escrows et al are subject to 3.9% obama tax.
All investment gains now get the 3.9% obamacare tax. This includes the escrows, which will be taxed as long term cap gains.....
I get that scriv, but still......
Do they think "we" are that powerful that we can sway a multi billion dollar result?
Yep, you betcha! We are not going away, in case "you people" think we can be discouraged by the rhetoric.
Escrows are golden. Indeed.
Does anyone really think the FDIC wants to go to battle with the hedgies' lawyers? What a ludicrous thought.
This is a done deal and will no way go to court. Expect an unfolding process to begin any time now.
muyuan: I am conservative in my escrow estimates.
I think we could see up to $165B or maybe more over time but initially the amounts will be small, maybe $10B-45B. This will take time to play out IMO.
but very soon an initial payout will happen now that their test grant went so smoothly and they know they have systems in place.
Escrow payout = long term cap gains for tax purposes. That's what my CPA determined after close scrutiny of the facts. This is huge for us because the diff between long term cap gains and ordinary income is enormous. Now let's hope we get the disbursements so we have to pay that tax. I think we will. I'll gladly pay the 20% tax!
The first $420,000 is taxed at 15%. In other words, if you have $120,000 of income, the next $300,000 would be taxed at 15%. Any amount over $420,000 would be taxed at the top 20%. Let's hope we get our payout before they increase the cap gains tax....which Obama is talking about...
Good one boarddork! Amazing how many just don't get it! Or maybe they do and are scared sh**less because they hold JPM and are afraid their stock will tank when JPM turns over the cashola to us.
I am in touch with a CPA re: escrows tax.
Should have an opinion tomorrow on how that will be treated. Oh and BTW, we will get paid.
LOL. Now that's funny Reptile!
Question for tax experts on escrow gains.
Since we've had escrows for 3 years would the disbursements be classified as cap gains? Or ordinary income? Or non taxable as an insurance type settlement. many theories on this. Serious knowledgeable replies only please!
scrivener, I still contend Sept, something big will happen. I know I have thought this before, as have many others, but this Sept seems to be a crucial month for many reasons for those who have followed this fiasco closely.
Now...I do not think Sept will be THE BIG ONE. But, there will be some light shed on what's to come with the lti's, WMI, etc.
We are indeed golden. Keep your eye on September.....not far off now.
Thanks for your continued summaries and input scrivener.
You get it!
4.5 x par is conservative because there are 165B in assets. A portion will be cash, likely 10B. So even at a 50% discount selling the assets would equal around $80B, so 45 is conservative.
Like I said September will be a telling month. JPM wants this mess off their books by EOY and Sept will show some signs of just how this will unfold. It could be a great month......
The hedgies have THE best lawyers around.
Don't think for a minute that they are not on this like white on rice. they want their escrow $ just like us, and we have the luxury of riding along on their coattails for free. They will not fail. They know the assets are there and they are OURS!!
Scrivener, hard to believe they can't see this.
There is a ton of info out there all pointing in the same direction >>>>>>escrow payments.
I still say there will be an initial blast of about $10B in cash coming back quickly with the rest coming back over time. The majority over the next two years. The gift that keeps on giving.
It's our money and they MUST give it back, no question about it. One good thing about Lynch now going after Hillary is people like Dimon have been put on notice. Or else!! Holder is gone and its a new day. Surely Dimon must be loading his pants about now!
scrivener, you are tenacious, and right.
It baffles me as well how so many don't see the proof is in the docs. I think many of these posters are JPM holders and don't even have skin in the WMI game. "nurse' herself admitted such, statements which I bet she regrets making here! there are many here and on other boards that also hold JPM stock and feel that maligning WMI will somehow have an effect. Too funny!!!
Escrows are indeed golden.
The assets are NOT GONE.
They just didn't go poof into thin air.
They are reality and will be revealed soon.
As scrivener and AZ and many others have said expect at least $150-165B to suddenly appear. keep in mind that the FDIC and our entire current administration is corrupt and incompetent. however they cannot hide the assets any longer. And no, JPM did not get a $350B company for $1.88B despite what the JPM shareholders on these boards claim!!!!
Taking out the stops today.
Never ever put stops on a stock like this unless you are desperate! They'll get them every time.
Big things in the offing, rest assured.
Personally I think we should stop bugging the powers that be about these matters.
I don't think the board particularly wants us to be meddling in very sensitive ongoing affairs they are working on,and we could be causing harm to the process by these intrusions.
Just my two cents. Let them do what they have to do and stop being a pain in the ass. be patient instead. It's coming soon. Take a chill pill. They want their money too!
You obviously have NOT read the docs.
JPM in its filing said they do not have the assets. Duh!
Good work as always AZ. Thanks.
Agree 100% I've yet to see anything you posit to be questionable.
of course everyone says these theories are nonsense because they have not happened, YET. When they do then they will all say, "wow that AZ guy was right after all". LOL
Keep the faith.
for those disbelievers,if you can't take the heat do yourselves a favor and sell. I hear gold and silver are good deals now!
Walrath intimated "posit". She said it!
Look bk, you cannot deny she said that. It's in the record. Do you read the documents, ever, bk?
Walrath referred to it as "posit", $10B, which is par. I contend there is far more than 10B.
September will be a big month.
I was right when I said end of July would be the next event. now we will see some major activity/announcements in Sept,possibly some smaller but important news in Aug yet.
there are things going on behind the scenes that will be made public soon IMO. Everything is pointing to an imminent PR. Patience is the watchword now. Patience.
>>>>>>we are soooo close.<<<<<<<< Mark this post.
I don't think WMI would have gotten Computershare involved in this unless they thought there was big money to be distributed. Why bother?
I'll tell you why....>>>there is a lot more than we all realize behind the veil.<<<<
CSNY alluded to them again today on BP.
I had heard about them a year ago as a confidential thing and they are here for a reason. We will see their role come into play in the next share rollout,which trust me, will be much bigger than this last one....which was just a systems test.
AIMHO. We held our breath long enough. almost time to exhale.
I still contend this share release was a test of systems.
Once the big asset announcement hits all systems are now "go".
I suspected for a year now that they would do such a test prior to any major asset announcement and I was right. I said that would happen by end of July, and again, I was right.
I expect the next announcement of any magnitude will be Aug or Sept.
The share releases (totaling 3.5B, yes that's BILLIONS) will happen in stages over time, not in one lump sum.
Very few bugs in the distribution test.
You better believe WMI is contacting the couple of brokers who had problems. Next time things will be smoother.
overall it was a good first run.
Now we may see why 3.5B shares authorized.
WMI anticipates a share price of $3 soon. 3.5 x 3 = $10B (par). this will pay all escrows at par, which has been my anticipated first cash payment. They must "know" there is enough to pay par. After that dividends will be disbursed to escrow holders as illiquid assets are confirmed and sold.
If this scenario is true, AZ is right. The assets are the target. The question remains,when will this next large payment occur? Based on many factors,moving up the SH meeting,this latest test disbursement, recent smart money leaks, etc. I would say something very large could happen soon.
Did you release? If so good things are coming. Did you not release, or are you just an owner of WMIH stock? You TOO will do well. This will be the story stock of the year.
Something VERY BIG is happening.
We knew a couple weeks ago when all those 100K blocks were trading that it was a leak. I suspect there will soon be an announcement of escrow payouts on a much larger scale with a major announcement. those 3.5B shares are ready to be distributed. very nice news coming for our little WMI.
All systems are go.
WMI will wait for any possible negative confirmations. systems are in place. My accounts received nice chunks of shares today so I know I am in their little black book now. Did you release? Well,did you?
10-9-8-7-6-5-4-3-2-1. soon,we have liftoff.