Any posts are my opinion, and should not be relied on for your investment decisions.
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Nice. I agree its just a matter of waiting this out now. I will be trading around my other positions to try and add here over time.
Best JW
Hope so, I added a bit more over the past few weeks. Looking forward to MMAB leadership strategy to deploy cash, DTAs, re-list on an exchange.
Best JW
Keep in mind that the BNYM represents (as trustee) a great deal more claims than just CTs. IMHO, they have a conflict to working in our best interests (they are also working for higher creditors).
See attached, page 7 (schedule 1)...BNYM is listed on at least $17B worth of claims. Suspect they went along with our reallocation.
http://dm.epiq11.com/LBH/document/GetDocument.aspx?DocumentId=1315760
I do think the more of us that reach out to BNYM to work on our behalf the better. Let them know we are watching their actions.
I added shares when they dipped into high .20's. IMHO we will see $$$$, even if no distro in Sept or Oct.
Best JW
Use your IRA account.
IMHO, no matter what happens both sides are prepared to appeal. This is far from over.
The issue of ripeness has been raised several times by the US attorneys. If FHFA let the GSEs out of conservatorship, could FHFA/DOJ legally pursue all the banks and sub-prime lenders for shoddy mortgages?
I see BofA is nearing a $16B RMBS settlement (link). Could these be possible without GSEs in conservatorship? I think it really weakens the governments chances.
http://money.cnn.com/2014/08/20/news/companies/bank-of-america-record-settlement/index.html?source=yahoo_quote
If BNYM has no details, then brokers will know less. The estate trustee, EPIQ, or Weil Gotshal & Manges LLP would be good contacts.
The estate trustee and Weil are going to stick to the script. EPIQ may shed additional light.
Based on the volume, I'm guessing the company is buying more shares...
MMAB : Grey Sheets MUNICIPAL MORTGAGE & EQUITY LLC
Last: 1.85
Change: -0.04 (-2.12%)
Bid/Size: 1.83/200
Ask/Size: 1.85/100
Volume: 387643
I sent the following to BNYM...
From: xxxxxxxx
Sent: Monday, August 04, 2014 4:30 PM
To: BNYM
Subject: RE: BNYM acting as trustee for LBHI Capital Trusts
Dear BNYM,
We presently hold the following Capital Trust shares via our broker.
LEHKQ ($25 face)
LEHLQ ($25 face)
LEHNQ ($25 face)
LHHMQ ($25 face).
BNYM is the acting trustee for these securities and claims filed on behalf of the Capital Trusts (Claims 67753, 21805, 22122, and 22123).
The LBHI estate has now exceeded higher creditor cash distributions based on the plan of reorganization and disclosure statement. In light of this development, has the trustee reached out to the estate or been notified to ensure future distributions include pro rata payments to CT holders or another negotiated recovery resolution? Appreciate all of BNYM efforts and any updates or additional information gathered by the BNYM trustee.
Sincerely,
xxxxxxxx
Here was the reply...
From: "BNYM"
To: xxxxxxxxxx
Subject: RE: BNYM acting as trustee for LBHI Capital Trusts
The Lehman Bankruptcy estate will make that determination and will fund us when and if a distribution is warranted based on the classification of our claim.
Maybe. More likely they want a bigger piece of whatever emerges. Additionally citi is a good source of funding to add value/leverage to whatever emerges. Paulson is not in that game.
I look at it broadly. Paulson made his money and is now selling claims. What does citigroup see as a buyer of these claims?
Posted on the dockets today...hundreds of millions in claims transferred from Paulson Co. mostly to citigroup.
Even at .30 pps = 48,000,000 x .30 = ~$14,400,000 (close to 100% of shares) held onto each day.
Maybe they are hanging onto them for a multi million dollar tax loss, LOL!
GLTA JW
Some good dockets posted today. Stay was briefly extended on non-avoidance actions.
IMHO, for those strictly thinking NOLs...IRS Rule 363 ownership change restriction will have passed after March 6, 2015 (3 years from emergence) and there should not be any issue with LBHI issuing stock. Unlikely until then, unless estate gets private letter/ruling from the IRS (we will likely not be privy to).
See page 73, Section 7.6 of the POR regarding use of tax attributes.
Best JW
Glad to share. Have a good weekend all.
For WMIH holders, good reading from client letter for zenolytics (link and WMIH section below)
http://www.zenolytics.com/2014/07/client-letter-on-the-subjects-of-capitalizing-on-corporate-greed-imagination/
Specific section related to WMIH-
"In fact, by the time this decade is done, I believe that corporate exploitation of NOLs will be one of the great legacies of the financial crisis, creating an outcry from Congress that will be as great, if not greater than what we are seeing currently with respect to corporate inversions.
In the meantime, it is fair to assume that corporate profits in the U.S. will continue to increase in the face of limited options for tax efficiency. As a result, I expect NOL shells or corporations with an operating structure that preserves an inordinate amount of NOLs to become increasingly valuable, in proportion to growth in U.S. corporate profits.
This is well ahead of the curve thinking that I feel will benefit our portfolio returns going forward. Our two largest holdings – WMIH & KFS – are both NOL shells. In the case of WMIH it is a pure NOL shell without an operating entity (WMMRC is a legacy operation in runoff) and KFS is a revitalized shell, with a vast majority of its operations being newly formed entities that had no part in creating the NOLs in the first place. In other words, the structure of the balance sheet and operational profitability has been deliberately set around the NOLs. The eventuality in the case of both KFS and WMIH is a much larger entity taking shape that eats through the NOLs in 3-5 years, resulting in a tremendous surge of profitability for both companies going forward.
The potential for maximum utilization of NOLs through reinvesting tax free profits into ventures that will further provide outsized returns will best be experienced by financial companies that have the expertise to seek out a diversified portfolio of active or passive investments while possessing a history of providing a high internal rate of return.
While a company involved in technology or industrial manufacturing will divide an inordinate amount of corporate profits brought by NOLs in a variety of ways, financial companies, in particular Property & Casualty Insurers, tend to focus investments on areas that provide a high internal rate of return within their area of expertise. This type of leveraged, compounding return scenario can very well turn into a virtuous cycle of profitability for financial companies, especially when tax liability is nullified.
The CEO of Kingsway Financial (KFS) in a recent shareholder letter commented on this type of potential by saying: “We believe in the power of compounding. Insurance companies provide unique vehicles to compound investment results. The unfortunate history of Kingsway has resulted in hundreds of millions of dollars of tax losses (for which we have reserved from an accounting perspective) but provides us the opportunity to not pay federal income tax so long as the losses remain available to offset gains. This enhances our compounding.
He goes on to say: “So you could sum up our value-building philosophy as: Compounding capital in the long-term with investments/acquisitions/financings that offer asymmetric risk/reward potential with a margin of safety support by private market values.”
It can’t be understated and in fact should be emphasized clearly what a powerful business model this is in a highly-lubricated economic environment that is filled with opportunistic companies searching for an enhancement in their possibility for achieving returns. There is no shortage of capital that is looking for deals. And there is no shortage of deals that are looking for capital.
Private equity firms are raising record amounts to put together creative acquisitions in a variety of industries. Venture capital is running at two hundred miles per hour. And hedge funds are becoming increasingly creative in their ability to structure deals that resemble a hybrid between private equity and venture capital. In essence, it is a deal environment that has no shortage of opportunities or capital to make those opportunities reality. This will benefit our portfolio investments that are concentrated in NOL plays for Property & Casualty Insurance (I have little doubt that WMIH will eventually merge into a P&C insurer) tremendously going forward as I expect the maximum benefit possible to flow into these names."
Tried to put those two on ignore (tired of the childlike rants in all caps with no factual basis). LOL. I added some N's this week in the .27 range.
The article is meant to illustrate some of the options that LBHI has in front of them. It does not illustrate all of the options.
I still like our chances of a recovery and/or future equity very much.
GL to you JH and GLTA
Best JW
Good reading for the board while we wait. LBHI has options and they have made sure to preserve them.
http://www.thefreelibrary.com/An+empirical+examination+of+prepackaged+bankruptcy.-a017330848
Highlights taken from the paper...
A. Cancellation of Indebtedness Income
"A debtor generally realizes COD income when its debt is exchanged for securities worth less than the issue price of the debt.(10) Under Internal Revenue Code [section]108, however, income is not recognized as a result of COD (a) if the cancellation occurs in a bankruptcy or (b) to the extent the amount of debt canceled does not exceed the debtor's insolvency. Insolvency is defined as the face value of liabilities minus the fair market value of assets. If a debtor avoids COD income because it is insolvent or in bankruptcy, the debtor must reduce its NOLs by the amount of COD income avoided. Despite these general rules, a bankrupt or insolvent debtor will not have to recognize COD income or reduce NOLs if the exchange involves swapping old debt for new equity (the "stock-for-debt exception").(11)
B. Preservation of Net Operating Loss Carryforwards
"Bankrupt firms are allowed to make a special election regarding postbankruptcy treatment of their NOLs. The bankruptcy exception of [section]382(1)(5) may be used, if old shareholders and historic creditors of the firm before the ownership change own at least 50% of the firm's stock after the ownership change.(15) When the bankruptcy exception applies, annual future use of NOLs is unlimited, although NOLs must be reduced according to a statutory formula.(16) "
Nice to see the CEOs quoted instead of FHFA-
In a call with reporters, Fannie CEO Tim Mayopoulos said that the second quarter's earnings gave a good sense of a normalized environment for Fannie. Ditto, said Freddie CEO Donald Layton.
Docket 45617 just released...
45617 08/06/2014
Notice of Presentment /Notice of Presentation of [Proposed] Tolling Agreement and Stipulated Order Relating to Fraudulent Transfer Claims of Individual LBHI Creditors (related document(s)[45406]) filed by Susheel Kirpalani on behalf of Lehman Brothers Holdings Inc.. (Attachments: # (1) Proposed Tolling Agreement and Stipulated Order)(Kirpalani, Susheel)
RE: READ READ READ...
Fortunately he ran out of posts and is over on the YMB ranting.
http://finance.yahoo.com/mbview/threadview/?&bn=e92b755e-b0d8-3001-b5a0-2a35c2bf44fe&tid=1407350634791-17d8eaba-d268-45d6-824c-d7f71651f7c8&tls=la%2Cd%2C0%2C3
To clarify...
LBI expects distro in early Sept
The LBI general estate currently has more than $3 billion available to both make an interim distribution and reserve an appropriate amount to protect the interests and due process rights of the holders of unresolved claims. The exact amount that will be distributed will be determined based on an analysis of the estate’s assets and liabilities at the time of the distribution. The Trustee expects the distribution will begin in early September
LBHI next distro has not been announced, but its usually early Oct.
robigus,
Did you see on page 14?
- Big surprise was the the Company estimates that "$19.6 billion of Cash From Operations will be generated during the Estimate Period" (April 2014 to 2016+). Largely recoveries from non-controlled affiliates ($14.2B of the total $19.6B). That is a great deal more cash found.
Further in they state that the timing on recoveries from non-controlled affiliates is unknown and based on many complexities.
You can remove my sticky note regarding estate cash...looks like they have found more. Still holding all my CTs (also have J's in OBS).
GLTA of us
Best JW
Interesting note from page 14 of the just released balance sheet...
"If LBIE makes distributions on the preferred equity before aggregate distributions from the Joint Venture to the Funds and LBHI2 have reached GBP 2.2 billion (plus interest) then, in certain circumstances, LBHI2, Lux Finance and LBHI shall be obligated to make payments to preserve the economic terms of the transaction as if 100% of the Preferred Equity proceeds had been transferred by LBHI2 to the Joint Venture."
Trying to decipher. Any thoughts?
Good number of claims transfers again on the docket today. Funny that many other higher creditors and distressed opportunity funds are still willing to buy large amounts of claims at this late stage. Have a good weekend Argus (all).
Best JW
Agree 100% Argus. Both posters cruising YMB and IHUB proclaiming they know it all (and its bad), often several times a day...LMAO! The LBHI estate has a board that is charged with creating value and they have options. For anyone to say they know with certainty we end up with zero they would need to be within LBHI.
Knowing the likely options in front of the BOD, I still like our chances. Added a bit this week and holding. Ignore button engaged for...
Best JW
I added a bit more this morning. I like what I've read as well. Going to try and sign-up for IR releases on their website. Looking forward to quarter to quarter moves.
Here's the IR page in case anyone needs it.
http://munimae.investorroom.com/index.php?s=43
Have a good weekend everyone
Best JW
Glad to share. Agree not gonna happen overnight. Im here for the long haul too (hopefully not gummin soup long lol!). Best jw
Not many were available. The run down into the .20's seems short lived. FYI - looks like the K's have got some avail at .34 right now.
Thx, I added some in the high .20's. No tax loss needed for me (not wealthy enough yet). I have never said FV + divis, I have thought we have a shot at a great % return.
GLTA
Best JW
Salty, up&up
Did you see this SA pro write-up?
http://seekingalpha.com/article/2319265-municipal-mortgage-and-equity-still-trading-at-a-40-percent-discount-to-nav-65-percent-upside-remains
Very conservatively NAV of $3...I think conservatively $3.50-$4. The executives and CEO for MMAB brought them back from the depths of 2008-09. WIth all the cash and NOLs in this micro, I like the chances that they will execute well. Insider purchases of over 900,000 shares (last 6 months). Executives have stated twice over the last year that they are looking to re-list on an exchange. At that point, pps is multiple of earnings ($8-10 pps minimum).
It is no slam dunk and plenty of risks here, but I too am long a bit of MMAB. GLTA
If you grab them at .54 and they go to zero, your tax loss selling will be greatly magnified. J/K, LOL!
GL, G
Best JW
I was able to grab about 15,000 at ~.27-.28
Volume is still quite low. Maybe MM trying to gather some in order to keep orders/spread moving.
Cancelled. Those shares were delisted and cancelled. All that remains are the escrow positions.
If they package up the remains with NOLs, new shares will be issued.
Do you have anymore you want to unload at .22 - .27?
Just fine, keep in mind I bought and sold some to lower my cost basis. I essentially doubled my original investment and all the shares I hold now are not part of that return.
Also, price being knocked down on 200-400 shares is meaningless.
GL Gus
JW
Getting any at the bid would be lucky. May ask on the board if anyone willing to part with some at a set price.
The low bids are IMO the retail shake...weak hands will let go.
Yeah, 500 shares...everyone is running for the exits. LOL!!
It was on a total 17,673 shares = $3470.00
Sad to say, but likely some retail had a stop loss and their shares taken for cheap. IMO
No problem JH.
We have had a great deal of negative posters claiming that they know this will take years to finalize and in the end we get little to nothing.
The reason I posted these examiner and estate documented facts is to show that even the hired experts with full inside access/disclosure had an unclear assessment of LBHI two years after they filed chap 11. Additionally, mark to market and mark to book and non-US accounting comes into play with a global company the size of LBHI. Asset valuations have been rising over the life of Lehman and since 2008.
To be clear, I do not think the LBHI will emerge anything close to a $1T company. It does not need to for us to to OK to quite well.
I do think it will be beneficial for top tier creditors to partner with equity and package up whats left with NOLs to reemerge. Top tier gets more and we get some.
Always speculate on your own DD. GLTA
Best JW
WMIH website offline right now.
http://wmiholdingscorp.com/
Site content update?