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Agreed. SCOTUS will keep their ruling minimal in scope.
Those expecting a windfall when the ruling comes will be disappointed.
We're at least a year out, probably two. Maybe four.
Worst case 2028.
Unless they extend the Warrant Execution Date.
$2 Magnet has failed. Time for a new one!
Does Alibaba still have them for sale?
Are you familiar with the case in front of Judge Lamberth?
You must not be, otherwise you would know why JPS have much more leverage than Commons.
And that case is against the GSEs themselves. No way recapitalization happens until that case is settled or finalized (2 years of appeals after next year's ruling).
Interesting that the ex-CFO of Fannie Mae is selling his Commons, which he's held near and dear for so long. I don't blame him though.
I think this is the reason we're seeing a Rotation from Commons to Jr. Preferreds today. This Rotation will likely escalate as the smart Average Joes (not the Lemmings) take advantage of these prices and move up one layer from the bottom of the capital stack.
Can't release until after Warrants are exercised also.
Now would be a great time to share your Letter from the SEC re: the Warrants with Janet Yellen.
That way she can remove that requirement to release the GSEs from Conservatorship.
All capital has to come from Common raises. That's correct!
Which is why JPS will likely still need to Convert to Commons as it will alleviate ~$33B in additional capital raises being required (now we know the GSEs are capped at $70B each in raises, this becomes even more important to remember!).
Exceptional FNMA Facts. Sticky worthy!
It's already been answered. YES, it increases.
Correct. The Common shareholder plaintiffs are small in number and can easily be bought off or given a sweetheart deal to drop their cases.
And with the Statute of Limitations having passed, Treasury/FHFA really don't need to worry about new lawsuits any longer.
I'm sure if the Treasury/FHFA throws the Common plaintiffs a small bone (maybe a few thousand shares of FNMAS?), they'll settle and be on their merry way.
Commons are quite literally going to be buried under a mountain of Conversions and Capital Raises.
Today was the day that the Common trade died.
Most just haven't realized it yet.
Agreed. The Commons trade ended officially today -- 1/14/2021.
RIP.
Time to file some lawsuits then!
Because the JPS litigants are going to come to the settlement table quickly so the Capital Raises can begin.
More like 8 if you're counting on Retained Earnings, LOL!
I might buy if it hits sub-$1 tomorrow. But I would quickly Sell any Pop.
Because it's awful for Commons. Anyone that's read the docs should be able to comprehend that.
Warrants are confirmed and will be executed. SPS still alive and rising.
Quick Recap now a priority for everyone since SPS keeps rising.
Slow Recap can be tossed out the window since the GSE's SPS balance would be nearly $400B by the time they have enough capital to get released.
FNMA Commons are now on life support. I would expect sub-$1.50 tomorrow, although even that's over-priced considering their bleak outlook.
It's very good. Basically Guarantees Conversion. JPS Win!!
Commons, on the other hand, lost in a big way today. They are now 100% reliant on SCOTUS throwing them a bone (highly unlikely).
Correct. Everyone needs to read the linked documents at the bottom of the Treasury's press release. They go into all of the real details -- aka, FNMA Facts.
https://home.treasury.gov/news/press-releases/sm1236
Mongo gonna need an umbrella tomorrow.
Sorry FNMA, we warned you
Better file that lawsuit and share the SEC Letter! This is not what the SEC Letter says re: the FNMA Warrants.
"Allow for Common Stock Issuance at Appropriate Time: Treasury will allow each GSE to issue common stock upon the achievement of future conditions: first, Treasury must have exercised in full its warrant to acquire 79.9% of the GSE’s common stock, and second, all material litigation relating to the conservatorship must have been resolved or settled. Treasury will permit up to $70 billion in proceeds of stock issuances by each GSE to be used to build capital."
https://home.treasury.gov/news/press-releases/sm1236
$2 Magnet holding up well still. It hasn't failed us over the last few years.
We'll see what Mnuchin does. That will be the moment the Magnet stops working ... one way or the other.
Let's see what Mnuchin gives us this week. We should know in the next 3 days.
$1.50 tomorrow? Does the $2 Magnet still work?
We'll find out soon!
Everyone down. This is worse news for Commons since Mnuchin is leaving both SPS and Warrants outstanding.
At least according to Bloomberg. The rest of us will find out when it gets announced publicly.
Not good for anyone. -20% tomorrow or more?
Thank goodness for the SEC Letter re: the Warrants!
At least we have that to fall back on if Mnuchin doesn't deliver.
Those were some smart FNMA Pop Sellers!
That's what the smart traders do. They take the $0.05 when they can get it!
Agreed. Pending PSPA Action and no SPS Cramdown, Commons likely come out about equal to Jr. Preferreds from current prices.
Albeit, with a whole lot more risk.
I still think JPS will do better assuming we get the right PSPA Action and JPS Convert right around time of re-IPO.
JPS should be at Par in everyone's eyes already.
Anyone invested here knows that for their FNMA Common shares to have any value, then Jr. Preferreds must be made whole.
Capital Structure 101
Very true! Watch out for the "Q", that's when you know the Shorts are going to win 99% of the time.
Can she make it to sub-$1.70 tomorrow?
Great call. So close!
Two analysts with $0.00 Price Target for Commons.
Sub-$2 tomorrow? Buy the Dip or Run for Hills??
Is this the reason for today's sell off?
Well, they are critically under-capitalized. If FHFA wants Receivership, it's quite easy to obtain regardless of their profitability.
Cheers to getting PSPA Amendment by the 20th. Otherwise, we're in for a lot more pain in the weeks/months ahead.
That's more in the event of Receivership. Treasury cancels SPS, new FHFA Director declares GSE's critically under-capitalized and also declares Receivership, and GSEs should have enough to pay out JPS at ~75% of Par.
I'm not expecting dividends because I assume if things don't completely fall apart in the next two weeks, then my JPS will be Converted to Commons.