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Freddie Earnings tomorrow. If Sweep confirmed, sell-off continues to new 3-year lows.
Commons got Tricked while Preferreds got Treated.
#AllHallowsEve
Lemmings take a while to digest the news. I imagine there will be a lot more digestion taking place this evening resulting in more selling tomorrow.
Sell the pops. Not a Recco
They're in the same Sea, but not the same Boat. From current price levels, they both offer approximately the same up-side assuming Moelis gets implemented.
However, there are multiple scenarios where Commons do not fair as well and only one where Commons do better than Preferreds. Not to mention, all of the lawsuits brought forth are by Preferred Shareholders, which means they will negotiate a settlement in their favor and not necessarily in Commons' favor.
And in all honesty, I only came here to balance out the extreme bullish sentiment; however, after all the negativity that was thrown at me, I decided to help balance it out even more
#SayNoToAverageJoe
Definitely, I'm a buyer at sub-$1 as well. It's worth the risk at that price even if it does take another 10 years to get this resolved.
But as Joe S. would say ... #NotARecco
Excellent point! Lemmings are very slow to react. I think it's in their nature. They probably huddled up in an attempt to spin this news as positive, but a few of them realized this was absolutely negative and bailed. Once a few Lemmings started to jump, the herd followed. And so did FNMA's price.
Wait until the Lemmings get wind of this news and read the message boards tonight. Cascade / Avalanche Warning in full effect for tomorrow -- Expect a blood bath.
#AverageJoeLemmings
Both Sweeney and Lamberth are 2020+. Lamberth thinks discovery will be done by then, but if you look at Sweeney's case, it took almost 3 years. Lamberth is likely 2021 or 2022. Either way, I wouldn't count on anything happening until the Warrants near expiration (2028). Otherwise, it's likely Dead Money here.
And you should agree with me by now, everyone should. Preferreds are the safest bet you can make on this already ridiculously risky investment. Buying Commons is a pure crap shoot -- 100 million to 1 odds Commons ever see $5 again.
ICYMI, this is the reason for today's sell-off:
https://www.housingwire.com/articles/43778-sp-trump-administrations-gse-reform-plan-wont-happen-for-2-years
#HopeYouSoldThePopBecauseFNMAisGoingToDrop
Looks like Trump is waiting for Lamberth's 2020 Court Trial before doing anything. At least they have until 2028 before the Warrants expire, i'm sure we'll see some action by then!
https://www.housingwire.com/articles/43778-sp-trump-administrations-gse-reform-plan-wont-happen-for-2-years
Warrants Confirmed on US Treasury's website:
https://www.treasury.gov/press-center/press-releases/Pages/hp1131.aspx
Moelis is the answer to your questions/prayers. Moelis shall bring forth the recapitalization of the GSEs.
Those focused on Berkowitz are going to get burned just as those focusing on The Warrants. Those investors are missing the bigger threats -- Sr. Preferred Conversion and Receivership
If Sr. Preferreds Convert to Commons, it will be hard for you to return those certificates and sell your FNMA shares for anything more than a few pennies.
I'd be more concerned with Sr. Preferred Conversion to Commons more than Mr. Angel's lawsuits. That's still a very likely scenario and it would make Commons near worthless. That's some spooky stuff!
#Scary!
Pictures or it isn't true. Let's see The Letter... Show the world!
Otherwise, it's just as imaginary as the Average Joe Plan's $1,000 per share price prediction.
#SayNoToAverageJoe
re-IPO. Interesting! Who here has been discussing that as a highly likely scenario?
If it looks like Moelis, smells like Moelis, and walks like Moelis ... it's likely Moelis
Time to get those umbrellas out, it's going to be raining shares (dilution) soon.
#MoelisConfirmed
Looks more like an Avalanche or Mass Exodus.
The way $FMCC is trading, one would think someone knows the Net Worth Sweep is going to occur again this Quarter
Maybe the Market knows the Net Worth Sweep Continues...!!!!
The Market already knows Fannie & Freddie will not be released!
It was stated last week and repeated over the weekend that the "Market already knows Fannie & Freddie will be released."
I'm surprised that Commons were rejected by the 50-day Moving Average if the Market really knew the Conservatorships were ending.
Maybe it was just another Dead Cat Bounce while the Falling Knife Commons continue their descent towards $1?
#AverageJoesForMoelis
Sr. Preferred Conversion = Game Over for Commons. This should be the biggest fear in every Common shareholder's mind right now.
Yes, the Warrant dilution will hurt, but the Warrants are almost certainly going to be exercised. Yes, dilution from Jr. Preferreds Converting to Commons will also hurt, but it's necessary in order to implement the right measures towards recapitalization. Yes, dilution from the necessary capital raises will hurt, but it's better than the alternative (Receivership). And Yes, we just hit the 10% moment, but that means there are no over-payments so there's nothing for the Treasury to give back.
But if the Government's Sr. Preferreds get Converted into Commons, Commons will quite literally drop like a rock. Upon that announcement, Commons will likely trade below their all-time low of ~$0.20 and you might as well add the dreaded "Q" to the ticker because that would be the knock-out punch for the Average Joes.
#PreferredsForAJP
Most will be happy with 2 Buck Chuck and they'll cut their losses then.
Sad when you think about all the Pumpers claiming $4, $3, and $2 were "cheapies."
Forget $1,000, forget $100, forget $10 ... most just want $2 and they'll be on their way
This might be the most exciting $0.10 Rally in history! And to think, we still have $998.50 to go to get to the AJP's price target of $1,000.
I can only imagine all the excitement we will see on the way to $1k! It will be hard to contain it all.
#PreferredsForAJP
Watch out for the Gap & Trap tomorrow. The MMs are smart. They'll let it gap up in pre-market only to let the Shorts punish it back down.
It's going to take a whole lot of Average Joe Firing Power for $FNMA to break through both the 50-day and 200-day Moving Averages.
#NotARecco
With Lamberth's trial being 18-24 months away, all we can do is wait and hope for something better to happen sooner (Admin Action); otherwise, it's hurry up and wait.
I guess the plus side is, no one will have an excuse to not have long-term capital gains. I wonder if the Traders here are doing LIFO or FIFO
#AverageJoesForMoelis
So you're advocating for Receivership then? Can't get rid of debt without a Receivership.
Calabria should be your vote for FHFA if you want a debt restructuring. I'm curious what that does to Commons though. Please elaborate on your proposal.
Is this the last quarter before the down-turn? The Treasury probably sweeps this quarter's profits regardless of how "stellar" earnings are. I imagine that will be reason to justify another sell-off.
BTW, has anyone else seen this circulating? The Reddit and Google GSE groups are both going bonkers thinking this is the end of Commons as we know it. Maybe the Canadian Frog can reach out to his SEC contacts to get clarification on this.
JPS catching down to Commons? -50% versus -30% ... Interesting that you mention that. It's quite an observation.
So what happens next? Do Commons catch up to Preferreds or do Preferreds set off the landslide collapse of Commons into year-end tax-loss selling?
Rumor is, Treasury is actively buying GSE Preferreds. I don't think they would let the companies buy each other's Preferreds. The GSE's money is the Treasury's money after all, at least until the NWS ends.
Maybe they bought it for a short-term loss? We all know tax-loss selling is going to pick up as we near year-end.
There's probably no stock with a higher likelihood of going down besides FNMA & FMCC. With them being down ~50% YTD, it's a safe bet they will suffer more losses at the end of the year due to tax-loss selling.
#Sub$1Soon
Momentum has waned. Time for the reversal.
Back to $1.20s by end of next week? Seems likely. Sell the pops because FNMA always drops!
#NotARecco
MBA Plan is not good for Common Shareholders. Not to mention, they reference the GSEs as "Our" agencies in reference to the taxpayers, not shareholders.
Spot-on! About as good as it gets. This post basically came true, almost to a T.
Next week the downward spiral continues as $FNMA reverses back to the $1.20s. The irrational exuberance turns back into bag-holder frustration and desperation.
#AverageJoesForMoelis
$1.44 Sell Order placed. Heading back to $1.20s next week
But Sr. Preferreds are what allows the NWS. They can't sell them to anyone else; otherwise, that buyer would be entitled to the GSE's net worth. That makes no sense.
The only thing they could do is force the GSEs to redeem them. There's 1,000,000 Sr. Preferred Shares each with a $1,000 Par Value, so that's another one billion they could force the GSEs to pay and also still want their Warrant money to boot.
Calabria would be savage. Receivership under Calabria seems all but certain based on this revelation.
That is odd, isn't it? Where would the $100B come from if not from the Warrants? The only thing I can think of -- which would be 100x more sinister than the Warrants -- would be if FHFA/Treasury says we still need to pay off the Sr. Preferreds.
That would be awful and devastating to Commons. Preferreds would also not be happy, but i'm sure they would still see more value than where they're trading at today. Commons on the other hand would be wiped out permanently (aka Cancelled).
Freddie Mac's Layton calls GSEs Government's Honey Pot. OMG did you guys see this!? I can only imagine all of the judges will side with us now. This is an easy win for shareholders with this newly revealed information.
"We should be helping affordability; we’re not supposed to be a honey pot for politicians to raid and give money away."
.@FreddieMac's outgoing CEO -- "We should be helping affordability; we’re not supposed to be a honey pot for politicians to raid and give money away." #FannieGate https://t.co/z774Y8qB2d pic.twitter.com/TflGmluW94
— ズüωレภﻉነነ (@kuwlness) October 18, 2018
Utility Model makes the most sense. Most likely scenario, all things considered.
It will cap Commons EPS, but it's probably the best case scenario for Commons at this time. $5-7 is still realistic in a Utility Model.
It sounds funny when someone spins things inversely, doesn't it? However, had the AJ's posted something similar, it would have been heralded as Truth and shouted from the rooftops -- as was the case with Ackman becoming Fannie's next CEO.
It's great the board has a Rock now. Someone to help sink in the truths and dispel the mis-truths that are so prevalent on this board. Even if it has to be spun in a humorous way. I'm glad I was chosen to be a Moderator and help bring out the truth for all of us Fanniegaters.