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In this case, they are being used and referred to as one and the same. There will not be a bk liquidation anyway. Not possible at this point.
I guess we disagree what the retirement of the MBS portfolio(letting it run down at 10%+) is.
I say it is a winddown/liquidation of the MBS portion and that it is one and the same.
I understand that a bk liquidation is different. Business liquidate all the time without going bankrupt.
They are actually more essential than SLM(IMO)
Everyone acts like they hate them.
I understand what you mean, though....
If they transferred, it would have to be like SLM. It could happen, but they wouldn't liquidate.(IMO) They would put new regulations/controls/safeties in place for the new entity.
It's all a guess. My guess.... 4-8 bucks a share for the common if liquidated in a non fire sale way over 6-12 months. I think the preferred would get full value. Reason being, the gov't would have to guarantee the MBS while liquidating the portfolio slowly. they can't treat the MBS paper with deference w/o giving preferreds full value. It would take years to do it in a safe way and it would still shock the housing market if the gov't backing of the 15 and 30 year were removed. In the 1920's(before Fannie Mae), they had to put something like 50% down and it was a maximum ten year note if you could even get financing. It(liquidation) can't happen, though. It would cause a violent reaction to the housing and stock markets. It is totally hypothetical and not possible.
The gloves are off. Pragmatism is now at hand.
http://www.valuewalk.com/2014/03/fannie-mae-freddie-mac-govt/
I just put it on there because I am not telling anyone to do anything. they need to buy/sell on their own fruition.
80-140 bucks. Yes I know that is a huge range.....
i was kidding when I said I was sure you were not referring to him.(da devil) still waiting for the money robot....
NOT A BUY OR SELL RECCO.
I have no idea what will ultimately happen and am just guessing based on experience.
Also. When I was referring to the gov't "forcing" I meant the courts.... they may assess punitive damages if they can show recklessness or negligence in regards to the 8-17-12 deal....
The price is a guess based on normalized earnings and zero one time events. I own zero common. I do own the preferred stock.
again....
NOT A BUY OR SELL RECCO.
Did you guys see the article where the prez is demanding 1 billion for affordable housing?
http://finance.yahoo.com/news/white-house-wants-1-billion-163000013.html
I got the link off the commons board. This is actually huge because it shows that even the executive branch is re-thinking some of this.(IMO)
Someone said it right, this is the beginning of the end of c-ship.
No reasonable person would say that an "insolvent" company aka a hobo company living off the handouts given, would be forced to give to the poor.
A payment for affordable housing would be in direct contravention to putting them in a safe, sound condition.
Unless of course, they are already considered to be in safe, sound condition.....
The preferred dividends (and common divvies, too) need to be declared before "gifts" and "charitable contributions".
not a buy or sell recco.
Although it is a legitimate question, so many things can happen. the gov't can force the 10% deal and cancel the warrants. I actually think it is likely.....
Not a recco to buy or sell.
I own zero commons. Only preferred.
Berkowitz is actually ok with paying twice. He doesn't care. there is enough money to go around fairness be dam@ed....
I am sure you are not referring to da devil.
Go figure....
Plus the fact that the executive branch(Treasury) has imposed a "winddown" of the portfolio, aka liquidation. Congress didn't oppose it. I am not saying that it is legal or illegal, just that they were/are doing it to dome degree.
It could be "wound down" without r-ship. Not legal in my opinion, but people do illegal things all the time.
I think the only legal way to do it is thru r-ship. That would be devastating to housing(25% of the u.s, economy) and hence will not happen. It would be Lehman times 10.....
Again, I know we all know this stuff, just re-stating.
No. There are so many factors that would go into the stock price. If the courts cancel the warrants and force an immediate release with only a 10% divvy and anything else returned is principal reduction.... FNMA is worth 80-130 bucks. Those are a lot of "what ifs". I like to deal with reality and risk/reward. I would rather get in my time machine and buy more preferred than touch the common at 29 cents. Just my nature even though the commons are up more.
If they get released with the warrants and the funds paid back don't count as principal repayment 15-20 bucks.
If they get released with the warrants and all of it counts as repayment over the 10%, 30-40 bucks.
If they drop the divvies to 5% with the warrants in tact and payments over 5 are principal paydown, 40-50 bucks.
These are all guesses. Of course there could be some spinoff where the gov't says"they are released but with no gov't backing and only the underwriting software, staff, etc...."(the bruce proposal where that goes to the preferred and the commons get the leftover runoff....)
In that scenario, it may be worth 8-10 bucks.
not a buy or sell recco. I own zero common and only preferred shares.
Calling James Millstein!!
He is the person needed for pragmatism, here. Given that he got out of the preferreds between 10-12 per share and has experience in restructuring/recapitalizing via AIG, he fits the bill. He has connections to treasury and knows how they work. He knows business and how it works. He will be willing to tell everyone what is needed and run it properly regardless of pressure from both sides.
If they get relisted, they may have options again. Until that time, FNMA and FMCC are your "call options"
there are no options on bb stocks. never have been.
As we all know, this is purely a legal move to prove self dealing between treasury and fhfa and that the executive branch of the govt effectively controls both...
let more fireworks begin. retro dividends may be in play now.
I think in a liquidation/wind down scenario, the commons end up with less than 5 bucks if done right now over 6 months. Of course, that is not even possible. If wound down over 5 years, I think it is 5-10 bucks, once you start winding it longer, (meaning they are adding to the guaranteed mortgages, while winding the mbs's) it can get to 15.
I don't think they will lose in court, I just won't risk it. I don't need to risk it, regardless of what I believe will happen.
If they lose in court, I may buy the common and preferred....
they would lose on the premise that "a taking hadn't occurred" since the common was not officially wiped.
of course that is ridiculous, since taking all earnings into perpetuity is a taking.
not a buy or sell recco.
i own zero common and do own preferred's
Although you are probably correct, the common is more spec than the preferred. Think about Bear Streans. They got something like 10 bucks. If they don't release them from c-ship through the courts, the common may not have an additional "takings" claim until/unless the commons are "wiped out" with zero compensation. If they are given anything and it is ultimately wound down through liquidation of the portfolio and then the business, it is worth less than 20 bucks. They may only get 3-4-5 bucks out of it. If the commons get a penny, the preferreds should be made whole per the cap structure. Now I truly believe that a court win will happen(just my opinion) and the companies will be released. What if it doesn't, though? Which would you rather have?
All about risk/reward. I feel pretty good about a 1.35 cost basis on 50.00 preferreds. I feel good about risk/reward, here. If things happen bad, the 50.00 preferreds go to 10 waiting on congress. I don't see a court in america ruling against release...
But if they do rule against the litigants, I doubt they say that the gov't can wind it down and cancel the common and preferred with zero compensation. I would rather be higher in the cap structure.
Given that, I realize the common is 20-30 with the warrants and 80-120 without. Not a recco to buy or sell.
I have never bought a common or preferred stock of a company in receivership/bankruptcy.
It is usually a really bad deal.
I have only bought one company that was put into conservatorship. I stuck with the preferreds in that case. I thought conservatively, it would take ten years to pay the 10% dividend and return the capital back to the gov't. I then thought that (by rule of law) the company would be turned back over.
The premise was that they would not put $5 trillion on the fed balance sheet. Risk the chinese fleeing USD/bonds/MBS in droves driving interest rates up on treasuries, rattling the MBS market and housing by extension. My premise was that by the time things "got better", the entire company would be ready to be released like the railroads under president wilson. Of course the rails were a little different because the issue there was lack of organization. The people who bought those rail stocks made an absolute fortune.
They were underwriting 90% of the mortgages in bad times because the banks refused to guarantee anything. By insuring at that clip, they became much more profitable than before because I think they only had something like 35-60% of the market.
I know we all know this stuff. just re-stating.
Sad that it comes down to rule of law when it is clear what the law requires.
if the bond price is above par(see American Airlines recently), it indicates there is possible value in the preferred/common. If it is trading @ 10 cents on the dollar, it is rough toilet paper in most instances.
anything south of 80 cents and there is virtually no hope for the common shares. If it is above 50 cents, preferred usually get awarded a piece of the newco equity.
This is more opinion/experience from watching and trading this stuff for 24 years. Not a guarantee or recco.
One other thing.... bond holders by nature are usually more skittish. You can get some really great returns buying distressed bonds in bankrupt companies
(like getting them for 8-10cents and ending up with 30-40 cents.
all about the underlying assets. i am sure you know most of everything i posted.
I didn't think it was a deposition. I thought it was a short, signed accounting of what he said occurred prior to the taking on 8-17-12.
From my understanding, it wasn't testimony(or sworn testimony).
It was a press release type of deal where they prepared a written, signed statement.
wait till they get all of the people under oath. Not one of them will want to commit perjury to cover something up. I know, I have been in that spot.
Especially when they know if one of them admits to some kind of cover up, it will get even worse. That is why they won't lie. Some of them may just tell them: "I will not lie". They won't be asked directly to lie, it will just be implied/asked.
When they bring in witness after witness, it is going to get ugly in the press because it will be salacious against Paulson and Geitner.
Gotta love thise Goldman Sachs guys!!!
I don't think either of the treasury secretaries will lie, either.
They know this is over. It is a matter of "when"
not a buy or sell recco.
Always tough hearing about the loss of life when one is so young. Makes us all appreciate what we have for the short time we are here.
I have been in finance my entire life and done a ton of research on this. If you have a nice, diversified blue chip portfolio...
You should be able to take out 3% into perpetuity and GROW the principal a little bit(and beat inflation).
If this happens, I am collecting dividends for a minimum of 4 years and using those proceeds to invest. My goal since I was 12 was to create a legacy. My whole family knows that this isn't about money. It is about creating a legacy that could last hundreds of years if structured properly. This is a life changer for me. I will still work. I get my best ideas when active. I got this idea from an insurance executive in late 2008....
Fixed income will never be the big part of my mix. A legacy is built with continued DD and growth. I may use precious metals as a small hedge, though. PM's have fallen from 5% to less than 2% due to the growth in the portfolio. I think PM should be part of any mix for leaving a legacy.
What do you think you will do? Ideas?
Anyone else? What do you guys plan to do?
I never made a case for the commons. No need to take the risk if you were in early. 40x money is good enough for me. 100x is awesome, though!!!
not a buy or sell recco.
Time to wake up, fellas! Don't get too euphoric today!!! Not a buy or sell recco....
I guess that means the preferreds have value, huh?
Or just go straight to Pink Floyd.
Money!
Full 180 has now occurred in my opinion.
That is actually an excellent "bolding of the statement", George!
apparently, the rule of law may mean something.
beware of euphoria today!!!
expect a pullback at some point.... No prediction on where/when a pullback will start but the excitement might reach a crescendo today.
not a recco to buy or sell.
It's Mike Royko..... spelled it wrong RIP Mike!
His columns were always funny. I read them when I was a paperboy and always loved it. Man I will never forget some of the people on my route would get mad cause I read the paper before they did!!! They would see me on the corner reading it for 30-40 minutes. The papers I delivered were still on time! just not early!
In any event, I think both he and Alan Abelson would get a kick out of fannie and freddie. They would write about them no doubt.
Yes it did start there. It has been a long time coming. The hardest thing to do in investing is to hold on to your winners. Too many folks ring the cash register on the winners and let the losers keep dropping.
I hope to meet you in vegas. I'm going when this happens. Of course it could be 3 more years. Hopefully the gov't will settle soon....
you are too funny. I am not rico suave'!
I do believe in the rule of law!
not a recco!!!
They are attempting to delay as long as possible. They want zero discovery since even limited discovery back to august 17, 2012 is likely to be problematic for the treasury.
I think the shares may be responding to the possibility that the judges may allow for so much discovery that the gov't is forced to settle with all of the parties to the cases. They will likely want to settle with everyone all at once.
This may get crazy. If they attempt to sit down with 17 parties, there is no doubt it will be "leaked" and basically public information that settlement talks are underway. Fireworks by July??
I own zero common of either entity. I own the preferreds. not a recco to buy or sell.
This is a thing of beauty. I own zero common shares of FNMA and zero FMCC. I own preferred in both companies. Not a buy or sell recco.
Watch The lawyers tear into this with Prima Facia evidence that FNF have some value. They(Fairholme) offered 17 billion in cash(and taking all the preferred stock out) for the structure and all the intellectual property when others said it was "worthless".
The response is going to be nice.....
again... not a recco of any kind.
I am glad you are still here. Las Vegas. Never been there. Never had a desire to go. To meet all of you guys, I will go. My frugality may force me to drive, though!!!
I still read every post. On here and Google. If this ever gets "decommissioned"(enough people abandon it) I will move over there. I like it here, better!!!
There are a ton of eyeballs on google. Totally mainstream. Ackman and Berkowitz are on the trail, now....
I thought he was dead cause they said it on google. I guess you can't believe everything you hear on the internet.
They say "don't open your mouth and remove all doubt that you are an idiot". I never subscribe to that theory! I had no idea that this judge is deciding this case and showed my ignorance of the court cases. I honestly am only following what is posted, here in terms of the court cases. I know law, not individual judges.(I am not a lawyer, though) You obviously know more than I do here and I apologize for my ignorance.
They should allow people to be "unbanned" after a certain amount of time. I think 6 months is long enough. then if they get banned twice, third strike, they are out......
JMO
And thank you very much for posting it. I think Maloni was referencing Led Zepplin, too!!!
His writing style reminds me of Alan Abelson. I miss Alan. Best financial writer of all time. So sad when we lose "great ones".
In opinion columns, Mike Ryoko always comes to mind.
he isn't the chief anymore. But he is on the panel.
BTW. I don't intend on chipping in for the attorney. I think it would be better that you trust your own judgment. Stay the course. Know that the law is on your side.
You have to do what you feel is correct, though... I have been investing for a long time. the hardest thing to do is holding on.
It is also not a "matter of law". The first arguable point is "matter of law" HERA is a law, but it is a matter of choice/decision. Second, they weren't bankrupt and to say "because it was bankrupt, is patently false". Bankruptcy is like pregnancy either you are or "you ain't"....
Conservatorship is a very rare event in this country and has rules. They spelled out he rules and then didn't follow the rules as laid out. Typical political doublespeak. Say one thing and then change it/do another. It may work in politics but it doesn't work in contracts, capital markets or the courtroom.
Because they didn't file for bankruptcy in 2008, 09, 10, or even 11 the window was well closed by august 2012.
the window is still closed.
Since the window is closed, the shareholders can't have their shares taken w/o "just compensation"
Berkowitz may continue to buy common. I think other hedge funds are now taking positions. Not a recco to buy common or preferred.