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What happened Sept/Oct for Ackman to start buying? I'm sure he'd been working the ticker before and planning his huge stake for a while. But can anyone think of why he started buying commons Oct 7? Did some subtle political thing happen that gave him the all clear?
It's the latest APS promo, man! Company's got a lease to explore 10 square miles of Argentina coast for minerals, metals, diamonds. Check out their latest SEC filings and you'll see. It's all there. Ground floor here. CEO issued this statement last week from his home in Nicaragua, "We've got several contracts now that we're excited to exploit this summer. And we're in negotiations for another agreement I can't disclose yet." So, things are really startin' to heat up!
If I confused anyone, please just go read a bunch of other posts on here before you take any action. Go FNMA!
Ha well Jimi stood on some shoulders, too, I guess. Charley Patton, T Bone Walker, Buddy Guy, Charlie Christian, Lonnie Johnson. But he transcended them all combined. Just like we hope FNMA will transcend, say, these other tickers: VZ, WMT, BA someday not too many years from now.
Your info about the rights process was informative. Sounds like it can get pretty hairy and tricky for regular retail joes to navigate.
Question: does Ackman's suggestion that FNMA should adjust its business model to become like a REIT mean that FNMA could somehow remain in existence beyond the run-off time period (in a world where Berkowitz's offer was accepted)? Berkowitz's plan seems to preclude that possibility doesn't it? So can we surmise that Ackman thinks Berk's plan won't fly?
Since warrants can be exercised, and nothing about the Berkowitz deal would change that fact, then it stands to reason that FNMA longs who invested in common stock should consider the minimum estimated pps value of FNMA shares in a run-off scenario. That would seem to me to be a logical minimum price target to keep in mind. I know so many things can happen, but you get my point. (Obit feel free to not reply here for any reason. Trying not to swamp you with questions. I'm really just replying to your post so others can follow the thread.)
Earlier Sam1212 kindly posted an estimated range of commons in a run-off, post Berkowitz deal consummation world. We shouldn't hold Sam to this range bc there are SO many variables in play, but he mentioned around $9 after warrants dilute the float, and around $48 if warrants are not exercised. So, it would seem to me to make sense for anyone who's long FNMA might be a buyer until around $9. My opinion, and I'll probably stop buying before then, paying attention to developments more than hypothetical run-off values. But hopefully my reasoning in this post is sound. Please Feel free to correct or challenge it. If we run to $9 without Berkowitz deal being accepted, it probably means that cship has ended, and voids all the above scenarios.
So you both think warrants can contractually be redeemed after release from cship, but that they will not be redeemed, correct? And the idea in your discussion is that they will not be redeemed because the gvt won't want to add $4trillion to the debt, and also they will not be redeemed bc the courts will (hopefully but not assuredly) not allow the gvt to redeem the warrants?
As we see in Sam1212's estimate, this question and result could be the difference between a potential approximate pps of $9-$48.
Sam, please consider posting your common run-off estimate here on the FNMA common board. Many here would appreciate seeing that estimate (I asked here last night if anyone had put one together), and the time and effort you put into typing it up. Thanks for typing it, and thanks in advance if you decide to post it here at the FNMA board.
Thank Obit, not me. But I'm glad if our discussion helps anyone. Obit's on fire tonight, at his most insightful and helpful. And others like Garden Rose are having helpful discussions with him too. Anyway, Interesting comparison you brought up there. Never thought of that.
And yeah there are a lot of questions for commons.
Anyone hear about the supposed typo in the 3rd amendment that theoretically could be used by courts to render the 3rd void, thus reverting back to the 2nd amendment? I saw something about that maybe 2 months ago here at most. Apparently the 3rd amendment even refers to specific sections in the 1st and 2nd amendments that actually do not exist! I can't verify that right now. But Some wondered if those errors, in such an important document, dealing with such a large entity's fate, might have been intentional. As in, giving the gvt an out that only it knew about or something like that. Who knows? But if courts read it as-is, the typo could cause immediate cut and dried release when a judge reads it.
Partners now competing or colluding? Are they colluding to surround / squeeze gvt into releasing GSEs? If Berkowitz's offer seems focused on preferreds and also seems unlikely to be accepted, and Ackman's holding lots of commons....let's see...Berk has a big lawsuit in one hand and a big offer in the other. He's got carrot and stick covered all by himself it seems. But is Ackman's got his own lawsuit and no offer (i forget, is he named in Berk's offer group?). Is Ackman involved in some kind of coordinated triangulation of pressure scheme with Berkowitz, designed to force gvt into releasing, settling, or producing legislation that's favorable to shareholders? Hm. Or are they just operating entirely independently with their own competing plans? We'll never know. But feel free to speculate here!
Rosen& Obit discussions; like watching Mozart&Beethoven working together. Or maybe Hendrix jamming with Miles Davis. Take your pic. Imagine your own great duet. Thanks you two for helping us all make some sense of this ticker.
Thanks for straightening me out, Obit. I'd read and understood the part in the proposal where NewCo claims all operating activities. But I somehow wasn't perfectly clearly understanding that they are indeed talking about replacing the entirety of Fnf, not just "part of FnF" as many articles keep saying. So I thought the run-off applied only to the legacies of "part" of the GSEs left in operation after Berkowitz buys "part" of them. Ok, that's not the case at all. Wow, this is quite a development for common holders to digest. DC reform becomes moot because as you say, The Berkowitz purchase IS the reform. Got it.
Your posts today were invaluable to me and others.
Berkowitz seems to suggest the run-off of the GSEs could be as good for commons as a simple release from cship might be. With one set of preferred removed from a position ahead of commons in the line of reimbursements, I wonder if it might really be a highly profitable run-off for commons. But there's inherent risk that any run-off will be conducted fairly. If anyone here has roughly estimated what might be left for commons (per share) after running off FNMA, please share (I know it's hard to estimate with so many variables and projecting 5 yrs into the future). But If it's in the $10 pps range or so, it could encourage a lot of common holders to hold throughout the volatile days that are likely ahead as the proposal's adoption is debated and as the run-off period potentially gets underway.
Seems gvt could accomplish that without dissolving GSEs. Tweaking how GSEs will be able to act according to the surrounding economic conditions at any given time, should be possible without going as far as dissolving them. If that quote (thanks for it!) from the President's adviser likely reflects what the president will probably seek, then it's good to know, and provokes some questions.
Makes me wonder: if Berkowitz's proposal goes through, then he's taken away a significant chunk of the GSEs and their business. The remaining portion of the GSEs remain still in c-ship, still subject to congressional reform legislation efforts. So the question then becomes: how will the politicians perceive the smaller GSEs at that point, and how might they hope to reform them AFTER they have been shrunken by Berkowitz's purchase? Will their currently promoted reform proposals (like corker warner crapo) remain relevant? Or will the political will for reform subside because a big part has been privatized?
Berkowitz's plan still doesn't solve the 5th amendment issue, though maybe no one else can afford Olsen to pursue it. Commons would still be under the illegal thumb of gvt. But how do people here imagine Berkowitz's purchase affect the political will and plans for reform. THOSE would remain key questions for commons who don't get to go with the NewCo if the proposal's accepted.
If it's realistic to think the political winds would not change after the Fairholme buys the insurance part of the GSEs, then some owners of commons might want to play this current uptrend as temporary and perhaps one of the last ones. If it's realistic to imagine that the political winds WOULD change and become less risky, then perhaps holders of common share will decide to keep holding through until a final result is reached.
For chartists and others, a gap being filled means the price has gone back to where it "left off". If there's a 10 cent gap up at opening bell, the idea is that eventually the price will or must come back down to where it was before that 10 cent gap. Thus the gap is "filled-in", like someone spackling a hole in a dry wall. It could happen that day or the next week or whenever. There are other details about gap filling that you can read about. And there are other ways one could answer the question "what does it mean". Obviously it could be news-driven movement, or some fundamental-driven movement in pps that results in filling a gap. Or it could be for some other reason. But some people like to trade gaps, basing their entry and exit off of the idea that they "must" eventually get filled. I'm no expert on it. But there are examples of gaps never being filled as well as (i think more) examples of gaps eventually filling. Hope that helps. Let's say today they announced the end of c-ship and even dividends will be restored. Well then Monday we'd see a gap up that would NEVER get filled (until maybe the next housing crisis, thus potentially legitimizing the theory that gaps must be filled).
Yow! Yeah if i had day trading account i'd have sold before the peak in may probably. Hoping to be more careful here. But this run seems different, so maybe it consolidates for a while. Maybe I'll have a finger on the trigger ready to sell a portion if it looks like a significant down day by, say 10:30am. But I'll buy back in soon (after settling) if I do. I'd love to start accumulating shares that way but having to wait 3 days makes flipping risky. I'm not much of a flipper but I've been practicing it via paper trading a bit. Maybe one day.
Receivership's only a topic because it's a way of asking if the most extreme, seemingly illegal case is in any way possible to occur. Given the utter lawlessness of DC (hence the reason we're here in the first place) and the fact that some actual DC bills floating around today actually do screw commons and some politicians do even use the word "receivership" regarding their reform proposals, it's worth at least a pondering if receivership is any kind of risk. Conservatorship under HERA precludes any arbitrary receivership. GSEs are profitable so seemingly safe. GM was in bankruptcy, yes, so their commons were wiped out. But their bond holders were screwed too (illegally, if one reads the law plainly, and it went against investment law precedents that are older than this nation)! And who would've thought the 3rd amendment, which screwed shareholders big time, would ever be drafted, or even considered slightly legal, or even signed by the very man (Demarco) who's legally bound to look after shareholder's interests? So it's realistic to imagine that in some purely political power play, or in some crazy push towards some permanent nationalization, DC might try some way of illegally forcing receivership here. Very unlikely, yes. I'm not worried about it, but I've taken the chance to mention it here just for discussion, because I respect most of the people here. It's fun to consider the extreme possibilities (like $500 pps! let's hope!). And it helps one get a better sense of the boundaries of possibilities here. Most of us are probably not too experienced with tickers that are this political, so it helps to consider such strange possible outcomes, I think. I agree that the Berkowitz plan is more like the start of a negotiation, though. Squeezing the gvt to let the GSEs go. I think that in whatever outcome (from liquidation to release), if commons are protected at all, then we're going up from here. Around $6 could be the absolute worst possible pps in any final result that protects commons. My opinion.
Ha thanks! I'm quite confident in fnma. I'm holding until a clear result for the commons / GSEs (though I'll protect my capital when needed). But I often post in an inquisitive devil's advocate mind set, throwing some things out there for discussion. Not to bash fnma at all, but just to ask what others' opinions are on the same hypothetical scenarios that do seem to be potential risks. Some of those scenarios are more realistic than others. But rest assured, I'm enjoying the ride and will continue to do so. That doesn't mean I'm never confused! And if you ever see me reaching a point of no return, where confusion entirely consumes me and there's not a shred of sense or reason in my posts, feel free to knock me silly! But if you end up seeing me in Vegas, then we both played it right! I hope you make it there for sure. I'll be under the 20k share threshold unless something unforeseen happens.
Ah yes, Ackman 10% stake, 100% in commons. As I thought. Got it. I wanted to just be sure there wasn't some news I missed today about Ackman.
Thought Ackman was 10%, not 100%. I've gotta go look at those reports again now... I hadn't forgotten Ackman though. I had lumped him into the Berkowitz plan whenever i typed "Berkowitz plan" or "hedgies".
Regarding receivership, I know it seems unlikely, due to the terms of HERA. But if Berk plan goes through without taking commons with it, commons are left with GSES, under c-ship, right? They'll wait for DC to get around to resolving their fate. If i have that right (I haven't had time to fully scrutinize the proposal) we all know DC never lets laws (in this case HERA), promises (like "if you like your plan you can keep your plan"), or contracts (like GM bond holders) get in the way of what it wants. So DC could easily find some accounting or policy trick to claim that, as they are running-off the GSEs, they "discovered" that in fact they "need" to place the GSEs into receivership. Screw-job on commons would be complete. Is there anything suggesting that that's extremely unlikely or impossible?
Could you please clarify? "By selling just the insurance portion of FnF will not benefit them for what they are already doing and will leave the rest of the the business in limbo and possibly be left under government control and continued taxpayer risk"
If Berk goes through, GSEs are still left in c-ship, waiting for reform. Still there's no more hint of what might really happen to commons. Agreed that Berk plan seems to be meant to nudge / threaten / encourage DC to release GSEs.
Sounds like you agree with me that the Berkowitz plan doesn't necessarily help commons in the long run (aside from pps bump due to hype), and that commons could end up staying under c-ship, and at risk to political reforms that could harm commons.
The way I see it, DC can't kill the 30 yr (even if in a truly free market, which I always would prefer, there'd probably be no easily affordable 30 yr). DC can shuffle the functions of the GSEs to some new entity that benefits their political donors, though. The courts might get this right, but by then it could be too late for commons. The Berkowitz proposal is at least good for this current uptrend. If it goes through, it could help commons for a while, but ultimately the devil's in the details, which haven't been released (maybe not decided yet). Out of those 3 "checkpoints", only 1 of them needs to go the right way for commons to see huge growth eventually (If DC, courts, or Berkowitz proposal goes well for us, we're gonna be good).
Yet, as far as i can tell, no single point of failure can totally kill our hopes (except maybe if the courts somehow get it wrong). If DC gets it wrong, courts have a chance to correct it. If DC allows Berkowitz proposal to go through, we'll have some kind of pps bump, which could turn into a huge gain if it turns out Berkowitz plan details favor commons (either with a rights issue or simply keeping commons safe and in tact). If Berkowitz plan doesn't go through, the GSEs being net zero and continuing to tighten up their operations could pressure DC to do the right thing, or it could just make a political result beneficial to commons more likely as time drags on and DC gets nothing done at all.
One danger seems to be if the Berkowitz plan goes through without including anything for commons, and then commons ending up staying in c-ship as DC winds down and forces GSEs into receivership. I don't see many friends to commons in all of this (hedgies have more than just commons, and they'll be more interested in the prospects for their NewCo than for protecting their GSE commons during negotiations), but I do see legal obstacles to screwing us as well as some ways to gracefully carve a path forward that does not screw us at all. All my opinion, and I'm sure I need to re-read the Berkowitz plan a few more times to keep refining my understanding.
Apple (in late 1990s) & Ford '08 were 2 of my calls as well. Ford didn't take bailout $, so I was so intrigued by them I almost bought. Didn't buy! Glad you did! At that time I didn't even have an account. So yes it took me a long time to get started in this. Good calls are just part of it. We all know how different it is when you actually have $ riding on a ticker and you're no longer a spectator. Though it's not much related to my work, I've always been interested in business, innovation, and economics. Since about
'07 i've learned a ton about the finance sector from a family member who is on the tech side in that industry, and also his coworkers, all of whom are finance pros. When I was able to understand everything they talked about, and I asked them questions even they (some had become quite wealthy and / or have PhDs) didn't have answers to, I realized this isn't rocket science. It's sometimes complicated and or full of devious people setting traps. But It's not only pros who can be right about trades or trends. I learned almost a grad degree's worth of info from them (again, I'm no expert). When I had enough $ to dabble, I started dabbling in very small amounts. Life is funny, and I ended up in pursuit of an MBA. So even if it is closer to rocket science, I'll soon be a bit more prepared to follow my business instincts and investment ideas. I do think I've had enough of political tickers, though I'm holding this one. The GSEs are such unusual tickers with such opportunity if the right political decisions are made. But i don't trust DC to ever get anything right, and the media is just as bad (and as willing to take $ for favors). However, I don't see how they can adopt any exit strategy here that doesn't somehow help shareholders, because courts can read laws, unlike politicians.
I don't have a day trading account, so I can't reliably flip. And I'm not able to watch tickers all day continuously. I do think the combination of MMs' behavior / tactics, and high frequency trading is one that makes it difficult for people in my situation. I've learned a lot about the current state of algos / hft and it's truly incredible how sophisticated and effective (and even scary) they can be. But there are still fundamental plays to be had out there, which can be less susceptible to those forces if you have a long enough timeline. I have some close contacts in DC & NY who keep me well aware that 90% of politicians (no matter what party) are actually brutal, untrustworthy sociopaths in their personal and professional lives. Sociopaths is really the right word if you look up the definition. We all know that some sociopaths end up in NY on Wall St too. So We're right there in the middle of all of those forces with these GSE tickers!
The way I see it, DC can't kill the 30 yr (even if in a truly free market, which I always would prefer, there'd probably be no easily affordable 30 yr). DC can shuffle the functions of the GSEs to some new entity that benefits their political donors, though. The courts might get this right, but by then it could be too late for commons. The Berkowitz proposal is at least good for this current uptrend. If it goes through, it could help commons for a while, but ultimately the devil's in the details, which haven't been released (maybe not decided yet). Out of those 3 "checkpoints", only 1 of them needs to go the right way for commons to see huge growth eventually (If DC, courts, or Berkowitz proposal goes well for us, we're gonna be good). Yet, as far as i can tell, no single point of failure can totally kill our hopes (except maybe if the courts somehow get it wrong). If DC gets it wrong, courts have a chance to correct it. If DC allows Berkowitz proposal to go through, we'll have some kind of pps bump, which could turn into a huge gain if it turns out Berkowitz plan details favor commons (either with a rights issue or simply keeping commons safe and in tact). If Berkowitz plan doesn't go through, the GSEs being net zero and continuing to tighten up their operations could pressure DC to do the right thing, or it could just make a political result beneficial to commons more likely as time drags on and DC gets nothing done at all. One danger seems to be if the Berkowitz plan goes through without including anything for commons, and then commons ending up staying in c-ship as DC winds down and forces GSEs into receivership. I don't see many friends to commons in all of this (hedgies have more than just commons, and they'll be more interested in the prospects for their NewCo than for protecting their GSE commons during negotiations), but I do see legal obstacles to screwing us as well as some ways to gracefully carve a path forward that does not screw us at all. All my opinion, and I'm sure I need to re-read the Berkowitz plan a few more times to keep refining my understanding.
What does berk's offer do to 30yr? Liquidity? Sure Hedgies buy insurance part, but what about the rest of what the GSEs do? If they get wound down, wouldn't Congress still need to pass some kind of reform even after the Berkowitz deal goes through? (If it does). The NewCo wouldn't quite keep the 30yr mortgage in existence all by itself.
Commons could end up still being stuck with risky gvt reform prospects.
I was in similar boat. But now that you've (it sounds) broken even, you can liquidate and sell some of your holdings if you want to reduce your exposure to the still unpredictable fnma ticker. In one account i was buying in the 50-60 cents range. I'm not rich so i had a very small amount of shares. I basically bought in because I had been thinking about buying fannie since fall 1 yr ago, and wondering when / how if it'll come back, and how could it not? The general Macro picture brought me to it. EZ fed QE to infinity etc, housing prices rising fast. I'm not a very experienced investor but all my life i've noticed some things happening in the biz world or news world before others around me and i've identified tickers that turned out to be huge winners (even though i was never invested in them bc i wasn't into buying and didn't have $ to play with), and I just couldn't see how the gvt could get away with what they did to fannie. I told my parents to buy some AOL in summer of '93, long before that ticker exploded, for instance. $5k invested then would've eventually turned into $500k! They didn't buy! I was talking up Tesla in 2008. I Never bought. There've been quite a few others. I'm by no means an expert but i feel fairly confident in my rare / occasional picks (not that those were all necessarily unique or difficult picks to make).
When i became as curious and intrigued about fannie as i was about all my other previous successful picks, i couldnt take it anymore and bought a bit before the spring 2013 run, just as a way of finally putting my instincts and curiosity-driven research to the test (i'd only dabbled in the market prior). Tiny holdings. But i added. As it spiked I bought some in my retirement account, too. And in that account i couldn't get in and out as easily, and just didn't play it well at all (even though i never anticipated having to try flipping). So in one account I've been holding a bag since May. In another i've been ok. I averaged down using some serious $ (to me anyway) in my retirement, and ended up in the green there again this month. So now i'll be reducing my holdings to be more in line with my originally intended exposure back in May. But i'll hold the rest. Like you, Usmcvet, I've learned a ton since May. I read everything i could, every day. Watched the pps swings. Never really flipped much but added at a few good places. Learned a lot from people here. Paper traded. Developed a better understanding of my own tolerances. Never sold a share. My DD leads me to want to hold all my shares until a final result is determined regarding the GSEs. But I think I will soon reduce to my originally desired exposure. That's my current dilemma; how much greed will I allow myself before I make good on my original plan? From now on, for me and probably for you, diligently protecting my capital has taken a more proper place in my priority list, that's for sure. If this thing goes down near my average again, I'm pulling most of my $ out and waiting the necessary 3 days if I have to, before considering when to re-enter. But i would certainly re-enter, because I'm long fnma for sure. I doubt I'll ever get to the required 20k share min to be invited to Vegas! But I'll be very happy indeed if this ticker reaches a pps anywhere near what it's probably actually worth.
L2 looks weak or full of fakes. Wonder if it's all played out for now. Who's holding over weekend? I am. But i'd love to hear a counter argument as to why it's a risky weekend to hold through.
Pps of treasury declines berkowitz? Then are we back to same old - when is cship release happening and when will corker warner bill die?
Anyone fear that over the weekend we'll hear some gvt official say they've decline berkowitz and the gvt will figure out the GSEs on its own? Then we open at $1.50 monday? All hypothetical. Any predictions?
That suggests commons might wanna play this more like a pump until further definitive info comes out on details of the plan. Or....just let it all ride! The weekend might be risky. Politicians might start yapping on saturday or sunday, killing berko plan's momo.
Gvt doesn't want courts revealing their theft do they? See my post- why wouldnt gvt sell? I agree with your post jayman. Imagine courts revealing the nasty and frankly depressing info about our gvt and how brutally and blatantly it stole people's property. A settlement or a sale would be their logical choice don't you think?
What happens to the GSEs themselves after the sale of insurance portion? Still in cship?
What's your target pps if I may ask? I might take some profits in middle 3s.
Anyone estimate NewCo rights pps value? $52bil for what would become NewCo. No info on number of shares or anything like that right? I didn't see anything like that. There are quite a few uncertainties in the language of the proposal.
Yes but too many unknown quantities in hypothetical liquidation scenario to reliably estimate commons' value in liquidation. Gvt gets paid then commons. Preferreds would be transferred to newco. I'm finding it tricky to estimate to my own satisfaction what commons might get because so many moving parts and it'd take so long.
Anyone know what the short interest was Thurs/Today?
I thought preferreds would be transferred to become stock in the NewCo. is that what you meant by "converted"? or would the preferred be converted into commons (to be commons of which entity? only of the newco right?) I've gotta read that all again.
Why wouldn't gvt sell? Can anyone think of a reason why they wouldn't take this chance to sell and look like heroes and get away from the hot potato? Besides stupidity and all the other flippant things we know about the gvt...really...even they should be able to see this deal (or an even sweeter one) is gonna save them the tough, nasty work they'd need to do on their own in order to sort out housing reform. By selling, it appears they can still regulate a bit (that's correct right? Or did i mis read something in or about berk's proposal?). They'd reap a profit. They'd get influx of steady income taxes from the NewCo. What's not to like if you're a big powerful gvt official?
Fairholme strips "preferred" of "senior claim" on assets in any dissolution. On page 31. Sounds like senior AND junior preferreds would both be stripped of their claim on assets, in exchange for getting a stake in the NewCo. That leaves what, only commons at the head of the line for any potential FNMA dissolution or wind down? If that's a fair interpretation, it sounds like it'd be a good deal for commons. Am I way off base here? Anyone?
President didn't say- "if you like your FNMA you can keep your FNMA" When he spoke today during the run. i was worried he might say that. Then i would've known we were all gonna be screwed!
Great to hear! Keep it up! I'm not in too different a situation but i've been up now for a bit. Wish i had powder to have avrgd down some more but i'm happy at this moment. Hopefully i'll be able to hold or play it safely from here out.
Been thinking bout your pps avrg cost basis Usmc. Are ya feeling much better today or what?
Volume spikes supporting upswings from dips today. Probably frustrating short attempts, but also giving good indication that long buyers are still willing to get in at these levels. Lots of buying the dips going on. Look at volume spike at the 2.86 dip at 12:45p then also the spike at 2.81 at 1:12p. Each spike occurs after the low point.
Pls post if he mentions GSEs / housing at all. Tia
What's obama saying now? Anything on GSEs?
Anyone fearing /sensing short attack? At what pps?