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Reading the SPSA I noticed this trick fannie and freddie could use to unilaterally end the NWS:
4. Mandatory Pay Down of Liquidation Preference Upon Issuance of Capital Stock
(a) If the company shall issue any shares of capital stock (including without limitation common stock or any series of preferred stock) in exchange for cash at any time while the Senior Preferred Stock is outstanding, then the Company shall, within 10 business days, use the proceeds ... to pay down the Liquidation Preference of all shares of outstanding shares of Senior Preferred Stock...
(b) If the Company shall not have sufficient assets legally available for the pay down of the Liquidation Preference... shall pay down... as soon as practicable...
So - they issue one share of stock. Use that $1.50 to pay down part of the Liquidation preference, then each quarter before they report their profits use all available cash to pay more of the Liquidation Preference. No money left for the NWS. They pay off Treasury over time.
In the fact sheet for the SPSA it says:
The following covenants apply to the GSEs as part of the agreements.
Without the prior consent of the Treasury, the GSEs shall not:
Issue capital stock of any kind
This may be what Treasury thought that agreement said, but that's not how I read it and the 3 amendments.
It does not help that the title of this board says:
WMI Holdings Corp and WMI Liquidating Trust
Yep - a new board for just the active company would be a pleasure. I don't think those looking for bankruptcy assets would care much about the current company so a separation would help all.
I'm also on the fannie board and the discussions are pretty much the same there - so it gives this board a familiar look and feel.
Capuano will be available Ackman for another. Who takes the third opening?
Is there a group to discuss just the current company and its stock?
All this talk about the historical aspects of WMI and the bankruptcy was interesting for a while, but I'm really here to get info about my current investment. I had WMI prior to the bankruptcy, but those losses are in history and I'm looking to the future.
Junior preferred will be unilaterally converted to US dollars.
Unless they offer junior holders something better. For example the junior owners might vote to take shares now instead of dollars 5 years in the future if the exchange rate was good enough.
Any conversion to stock would take into account the expected price on the date of conversion including any splits, secondary IPO's and the warrants being executed. Junior holders should be able to specify their shares are sold the moment they are granted, to prevent any future action from affecting their value.
I'm not worried.
Nice. My limit orders for fannie and freddie both went off right before the close. Now I'm back up to the number of shares I had before I sold some last week - with a little more cash in the account.
I never root for it to go down, but if it does I'm taking advantage of it.
IOU's like the junior_preferred that never get paid_back and don't get interest?
I wouldn't expect a big check as RuddG said. At best expect a refund of the overpayment.
Repayment and ending of the NWS would dramatically increase the share price. So the gov't could simply exercise a few of their warrants to cover any repayment. No hit on the Treasury at all. In fact probably a nice fat cash windfall if they exercise the remaining warrants after recap/release.
If you are expecting fannie and freddie stock to rise above $50 per share I think you will be sadly disappointed. Figure $20 to $50 at best.
From the Fannie junior preferred boilerplate under "Risk Factors":
The market value of the Preferred Stock may be influenced by unpredictable factors.
(iv) economic, financial, political, regulatory or judicial events that affect us or the financial markets or mortgage markets generally. Accordingly, if you sell your Preferred Stock in the secondary market, you may not be able to obtain a price equal to the price that you paid for the Preferred Stock.
You got that right!
Why would Ackman not still make the same money he makes now from his other endeavors? This administration does not consider conflict of interest or insider trading or unethical behavior or pretty much anything to be a problem. It would be the best way for him to maximize his profits and he knows about the companies already so wouldn't need a lot of time to come up to speed.
Just think about how a 9 year old would pick a nominee:
Donnie - we need someone to head the VA. Donnie asks what do they do? He is told they run medical care facilities. Donnie says nominate my doctor!
Donnie - we need someone to head the FAA. Donnie asks what do they do? He is told they manage airplanes and airports. Donnie says nominate my pilot!
Donnie - we need someone to head the Department of Interior. Donnie asks what do they do? He is told they manage federal lands. He says nominate my golf course groundskeeper!
Donnie we need to nominate someone to head the FHFA. Donnie asks what do they do? He is told they manage housing finance. Donnie says nominate Bill Ackman - he manages a lot of finances!
Maybe Bill Ackman will replace Watt?
Nobody gets cancelled, but same effect.
If all of the suits get dismissed neither the common or junior preferred will be cancelled. Why would they? Cancelling the common shares means someone other than the shareholders own fannie and freddie. Who would that be? They are worthless companies with the perpetual sweep so nobody would want that liability. Even the FHFA with their almost unlimited power can't nationalize them.
Cancelling the junior preferred would mean they get paid at par, or a new round of suits. Why cancel them - they are an interest free $33 billion loan that never needs to be paid back. Nice deal.
Maybe you meant they would effectively be cancelled, because with no more suits there truly is no end ever and both common and junior preferred are worthless. I agree with that.
Or were you talking about a liquidation? No way FHFA would liquidate them - the cash flow would stop.
If they don't do a recap and release by 2028 the warrants will expire and the last motivation for the government to recap/release will be gone. We only have 10 more years of hoping, then no hope.
That said I did buy more common shares today...
Looking ahead to my 2018 tax filing. Do I report per share value of fannie and freddie dividends paid to treasury as tax withholding, or charitable contributions?
Or would it be losses due to theft?
TIA
Do CLVLY or CLVLF ADR's get dividends?
The dividend is specified as per CUV share. As I understand it CLVLY shares are non-voting shares while CLVLF shares can vote. Is there any other difference - such as getting dividends or not? Is one CLVLY share equal to one CUV share?
Not that $.02 AUD will make a huge difference, but just wondering. I suppose I should know this, but I bought this ADR way back in 2006 and never looked into these details.
Next NWS Freddie $1.585B, Fannie $4.459B according to the FHFA web site:
https://www.fhfa.gov/datatools/downloads/documents/market-data/table_2.pdf
Date of next NWS is officially TBD = to be determined but not later than 9/28/2018. So we will know 9/28/2018 if it happens.
That money would have been a nice start to recap...
Today's ruling the judge erred saying that the NWS preserved the assets of fannie and freddie. It has been proven that the so-called death spiral did not exist and FHFA knew fannie and feddie would be able to pay their dividends without any additional draws.
The judge makes it clear that the FHFA director is the problem. Absolute power corrupts absolutely and the FHFA director has decided that it is ok to keep fannie and freddie at the verge of bankruptcy, and steal all of their profits in the process.
It's pretty much up to the President to fix that.
However the suits regarding the states of Deleware and Virginia have much better chances. Today's ruling hinted at that when they said the shareholders were wronged, but they didn't argue that in the case before them.
So far the current President has chosen to do nothing about this - so I think a new President would be much more likely to take action.
When will that oral argument take place?
Tutt1126 wins the call-of-the-day award!
Yep so far only waited 10 years - may be another 10? I do think Pence has promise even though I'm a Democrat and politically align more with Trump.
But lately the courts seem to be as promising as a possible President Pence when it comes to the share price of Fannie and Freddie.
I await rek's reply but I think it's pretty obvious. Trump has made a lot of money over the years by cheating, stealing and reneging on obligations. The NWS theft fits right into his long-term business model that he has had great success with. I can't see him changing his methods here. If he can steal to make himself look better by reducing the deficit... he surely will.
Until we have someone in charge that has some ethics or morals - I don't see the GSE's being released voluntarily.
I don't want to end up like along4zride!
I'm not going to worry about woulda shoulda coulda. At some point my sell threshold will go to selling 5% of my holding for every 20% rise. Still a lot of potential gain.
Me and along4zride have been doing the same thing - making money on the ups and downs while we wait for release. I just buy first, then sell - along4zride sells first, then buys. Same idea but less risk.
Just my policy to sell some. For now I buy fannie and freddie whenever they drop 10% and sell some when they go up 20%.
My IRA has over half its value in fannie/freddie commons and preferred. Too much in one basket. My regular brokerage account also has almost half in f&f.
Yeah - hurts to sell, but I'm very close to retirement and am taking the conservative route.
I'm only selling a few thousand shares of each when they tick up, so today's share price gain increased my f&f portfolio much more than the few thousand I sold. So it's still a growing holding.
Call cousin Arnold. He always has good stock advice about fannie and freddie.
How could that letter not be bullish?
If the judge was not considering the award of damages and restitution - they wouldn't have had any reason to ask the question.
I doubt the judge asked the question just to waste time and divert attention - I see it as a sign that the award of damages is pretty certain and the award of restitution is likely.
That said - I am selling into this share price strength just as a matter of policy.
Stock_price is_in_a crouch getting ready to jump up.
Two contrarian indicators today indicating a big move up in fannie and freddie!!!
1. I sold some fannie and freddie today. I always sell right before a big move up.
2. along4zride predicting this is the top. Lately he has been able to predict big moves up by saying it's going down.
I went to the bank to withdraw $100. They used to give me a big stack of one dollar bills. Now they only gave me a much shorter stack of ten dollar bills!!!!!
IS THIS FAIR AND REASONABLE????!!!
Now I can only tip 10 girls at the local club instead of 100!
(Although they do seem to like me more now for some reason)
My question was not why core capital is important. My question is why is only a small subset of a company's capital counted in net worth?
Seems wrong.
1) Core capital is probably the most relevant issue related to stock price given potential impact on existing common equity.
2) Core capital isn’t unique to HERA or FHFA. If you look at banking standards (Basel), it’s Tier 1 capital.
can someone explain this:
This stock will trade at $200 (rounded) if they do a 1 for 100 reverse split.
Or we could really get rich when this stock hits $1000 with a simple 1 for 500 split!
If you round up we already hit $2. $3 is next.
Indicator WMIH will be less flaky?
When that RNC letter first came out I thought it was suspicious.
However it is being given out by the RNC's official web site:
https://prod-cdn-static.gop.com/media/documents/Resolution+on+Protecting+Taxpayers+by+Restoring+Safety+and+Soundness+to+Government-Sponsored++Enterprises.pdf
So either it's legit or someone at the RNC liked it anyway.
That came out a year or so ago, right?
It went to negative entries on the balance sheet.
That is what I originally thought. That is why I increased my holdings about 6 years ago. The number is kinda close, but no that's not it exactly.
Others have explained in detail that the accumulated deficit is mostly dividends paid. And that the senior preferred are elsewhere in that balance sheet. I was able to follow most of that money but it still seems wrong.
However I am convinced that the liquidation preference is already in the balance sheet. And that if for some reason that no longer was owed - the value would increase by that amount. That's the zing factor that could add an extra 1 or two hundred bucks per share.
Ending conservatorship would only add 60 or 80 bucks to the shares, but still not bad.
Any other court granted proceeds would add similar amounts.
And the warrants would divide it all by 5.
In my experience IPO's, conversion of preferred to common, paying off preferred, etc all have net zero effect - other than the benefit to the business model. So I'm not concerned about those.
So... I just wait to see if I end up with 2 bucks, 20 bucks, 80 bucks or 180 bucks for my shares... or zero, although that outcome seems to have dramatically decreased in likelihood in recent years to the dismay of along4zride.
Ha yeah - I had a ton of worldcom, tyco, wmi, wow, and a dozen other now defunct companies over the years...
However a few winners like XM / Sirius make up for all of that so I still place my bets.
This discussion of capital and shares and balance sheets is interesting. However I have not put the time into it yet to understand it myself. I'm still stuck at that negative $130B in accumulated deficit on the liability side of the balance sheet.
I figure if I can't even figure out the sign on a $130B number - which means my error would be up to $260B - then all the other numbers are pretty meaningless.
I have a fundamental belief that the accountants, major shareholders and Treasury are all in agreement that as of today the net worth of fannie is around $3B. I can't figure out exactly how that number was reached over the last 40 years but I'm sticking with it.
No hidden value in there - no hidden debts. Just a measly 2 or so bucks per common share. To me it kind of explains the current stock price too.
However I will still enjoy the show as this is discussed. I have popcorn.
Yeah - I'm usually jumping to conclusions and thus wrong... so I'm leaving it to the experts.
$1.66 per share IPO price seems about right. On a split adjusted basis the price of fannie stock was between $.60 and $2.00 in the early 1980's. I'm not sure exactly when they IPO'd most of their shares and what secondary offerings they had when - but that number is in the ballpark.
They should look into ongoing fraud and abuse of fannie and freddie investors.
Instead they will investigate why two of the most profitable companies in the world spent more than $1000 on paper clips and copy paper.