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New blog post from Bill Maloni. Good read on potential 2014 GSE moves.
http://malonigse.blogspot.com/
This was posted on our google group, sharing here as well.
Freddie Mac December presentation
See slide 17...
http://www.freddiemac.com/investors/pdffiles/investor-presentation.pdf
$.991B to go. Can't wait for the 4Q2013 to put us over the top.
Have a Happy New Year everyone.
Best JW
Another poster in our group noted this-
"Page 48 it is much more interesting.
The provision is benefit since one year ago and net charges-offs have been declining. there is loan loss reserves in excess ( aprox 24B)"
This extension is in regards to disputed claims. We are not a part of those. Our claims are fully allowed.
It may be a longer wait, but not due to this.
Guster
GCG administered class actions were against Ernst & Young and Directors & Officers and Underwriters. These two settlements are not being paid by the LBHI estate (nothing to do with the LBHI distributions).
These suits were suing anyone related to LBHI - link below
http://www.lehmansecuritieslitigationsettlement.com/
Looks like the have another administered settlement with UBS as well.
Isn't this a class action against Ernst & Young (acounting issues)...$$$ would come from defendant (E & Y). Not LBHI.
Yes, the worst case scenario...
We have to wait until all liquid asset distributions are complete. Until only illiquid assets and NOLs are remaining. Plus, we will need an injection of cash from higher creditors to monetize the remaining bones (NOLs and illiquid assets). Highly likely (they stand to gain a lot more money).
If this happens, we ultimately get reallocations from lower tier equity.
The wait may be longer than expected (years).
Again, I really hope we see some $$$ in April.
I really hope you are correct Cotton.
I have a more conservative estimate when the reallocation stops that each class will continue to receive its pro rata portion of the recoveries beyond the 65B. So if 15B additional cash is available, class 10B is ~ 3.85% of all the allowed claims.
So, 15B x 3.85% (class 10b % of allowed claims) = ~$577M/$10.343B (total $ for 10b)
~$577M/$10.343B= ~$1.40 per share
If you have 100,000 CTs you would get ~$140K
I do believe additional distributions will be made and CTs will get good % of any NOL monetization (the ~$1.40 is only based on cash distros).
Again, I really hope that your correct. Either way I'm happy with the % return here.
Hearing coming up regarding pref securities. Very nice to see the prospectus as the controlling doc. see docket #s below
41668 12/20/2013
Declaration of Holly A. Clack in Support of Four Hundred Fiftieth Omnibus Objection to Claims (Preferred Securities Claims) (related document(s)[41667]) filed by Garrett A. Fail on behalf of Lehman Brothers Holdings Inc.. (Fail, Garrett)
Case: Lehman Brothers Holdings Inc.
Related: 41667
Document
41667 12/20/2013
Motion for Omnibus Objection to Claim(s) : Four Hundred Fiftieth Omnibus Objection to Claims (Preferred Securities Claims) filed by Garrett A. Fail on behalf of Lehman Brothers Holdings Inc. with hearing to be held on 1/28/2014 at 10:00 AM at Courtroom 601 (JMP) Responses due by 1/21/2014, . (Fail, Garrett)
Case: Lehman Brothers Holdings Inc.
Interesting action today...
INKPQ : Pink Sheets INNKEEPERS USA TRUST
Last: 0.005
Change: +0.0049 (4,900.00%)
Bid/Size: 0.00/0
Ask/Size: 0.00/0
Volume: 593900
Looks like another ~$2.15B for the estate has been gathered via the mediation process. Settlements reached in 297 ADR matters involving 396 counterparties. Only ten have terminated without settlement.
Fifteen additional mediations scheduled to commence in Jan, Feb and lastly on 3/14/14.
See docket 41581 for more detail
12/18/2013
Letter to Honorable James M. Peck Regarding Forty-ninth ADR Status Report filed by Peter Gruenberger on behalf of Lehman Brothers Holdings Inc.. (Gruenberger, Peter)
Case: Lehman Brothers Holdings Inc.
Related: none
Peck is 67 or 68. It may be he's just retiring.
I hope your right.
I had to add some comments to that poor op ed. Clearly an agenda.
Run the pps up end of day. Retail sets stop loss after hours. In the morning drop price and take retails shares. Repeat next day and so on and so on. Also, keep pps in range final retail shake will be when they really drop the pps. Many retail will take something over the thought of pps going to zero.
GLTA JW
Likely, that the US econ is finally on the mend. The 10 TSY yield would be the first macro point I'd look at.
Would also mean that the Fed could taper and stop being the only purchaser of GSE mort. assets. Will private buyers come back is the big question. I would NOT if I were heading large private or foriegn central bank capital with the GSEs in conservatorship.
NJM,
Have not thought of a good GSE pref hedge. Difficult, due to the fact these two are so large and largely a duopoly.
Possibly a short real estate etf (or options on the etf). Not a great inverse correlation though.
Anyone with any other good ideas?
This looks like a major move toward full NOL amount...
Docket 41450 12/10/2013
Notice of Presentment of Motion to Authorize the Department of the Treasury-Internal Revenue Services Filing of Amending and Superseding Proofs of Claim in Reduced Amounts filed by Garrett A. Fail on behalf of Lehman Brothers Holdings Inc.. with presentment to be held on 12/18/2013 at 10:00 AM at Courtroom 601 (JMP) Objections due by 12/17/2013, (Fail, Garrett)
Yeah. Not ready to join the tinfoil hat brigade just yet. Many countries on this earth have a version of the fed...things will be fine with fiat as long as countries have GDP and trade.
Please leave the monkies alone also.
Keep in mind that our Fed and Tsy have generational timeframes. They can hold onto anything for as long as they want (generations if needed). That borrowing/buying concept is strange to most citizens.
How does this end?
Look at the purchasers of Mortgage Backed Assets (demand by region and investor type is shown on slides 76,77, & 84). For the FED to taper demand must be greater from private and more importantly demand must become greater from non-US investors.
The sheer scale of what the GSEs back has to have much greater investment from non-US entities (any replacement to the GSEs has to be able to attract trillions of foriegn capital). Alternatively, in the short term our housing prices would have to correct -50 to -75% min. to be supported only by current capital sources.
Janet Yellen understands this very well.
If Congress undermines the healthy trajectory the GSEs are on and further undermines the ability the attract foreign capital, then this likely does not end well.
I agree with 20c...any moves on the GSEs will be extremely slow.
DNU,
See specifically page 85 of the November Freddie Mac presentation...look specifically at who has been buying nearly all the Agency (both GSEs) Mortgage related securities since early to mid 2012 - OUR FED
http://www.freddiemac.com/investors/pdffiles/investor-presentation.pdf
The buyer (FED) will need a seller and little to no one else in the world is buying.
We are in trouble if this continues...
Only two in town that can soak up trillions (GSEs). Game that only the worlds reserve currency can play.
The other option the Fed has is to hold onto the MBS for a very long time...very risky if they need to engage in another crises. IMHO. The current amount and experimental non-conventional monetary policy is very risky as well, but another lesser evil choice did not exist.
I look for Yellen to take a more measured stance on US housing finance market. She cannot afford to let our broken congress mess with her toolbox/punchbowl.
Lew will likely be out of a job in a few years. He is staying quiet or marginally in the media because he's choosing little to no action on housing. He also does not want to mess with the Feds mix of non-conventional monetary policy options while unemplolyment is staying stubbornly high . Yellen is the one to watch. Watt and Demarco also.
Everyone is worried about QE tapering (media). I think Yellen will keep the pedal on for additional QE until both unemployment drop and inflation rises.
It will likely last through this POTUS term. Then the FED will need a VERY liquid market for all the trillions of MBS bought to taper QE effectively.
IMHO. GLTA JW
Thx D. I think major points like this are perfect adds to the header. Helps new investors and helps remind long time investors why were still here
RE: Mel Watt and Jim Millstein exchange with Senator Corker
http://malonigse.blogspot.com/
Unknown, the LBHI board is likely the only group that has an idea of what and when the end maximized value looks like. We only get tidbits to look at and assess.
Judge Peck only takes a quick look now. He's publicly come out and said that LBHI is autonomous and he will rarely (if ever) meddle in their affairs.
The remains of the bankruptcy proceedings look like they are being dealt with now.
My thoughts, it appears LBHI is getting closer to being out of the grasp of the bankruptcy court.
No idea on the deal terms, looks like its largely a tax move.
This was common stock of LBI. Not LBHI. Likely, LBHI held some small number (1000 shares = total ownership of LBI). This would allow easy ownership transfers.
The deconsolidation is very interesting.
Glad to help Jimzim. Some of us here suspect the NOLs are significant and may have grown beyond $55B (Fyi..you had $55M in your msg).
Additionally, putting that together with the likelihood for some sr. creditors to pitch in with the prospect of an acquisition(s)/mergers(s) to gain a much greater recovery makes me smile.
The value of the NOLs will vary based on the tax rate for the acquired/merger entities. Value range is likely 10-30% ($5.5B to $16.5B based on $55B).
Ultimately, think blend of remaining operational cash, illiquid assets growing in value, any sr. creditor capital/assets that merge well, NOLs = all packaged into one Newco with a new Board of Dir. focused on maximizing this newco. Newco common will likely trade at some times book value. Win Win for higher creditors and some of equity.
Waiting for the curtain to rise at this point. GLTA
Hi Jim,
Yes - as of early 2012...
"deep in all the detritus lurk the seeds of a revival, of sorts. Lehman emerged from bankruptcy holding a potentially valuable thing—$55 billion in net operating losses, or NOLs. If the postbankruptcy entity that is Lehman has any future, all the losses it accumulated while in free fall will be the reason.
Link-
http://www.crainsnewyork.com/article/20120311/SUB/303119973#
Wrong board. This is the FNMAS board.
The third guest (Mr. David Min) on friday with Millstein is a strong advocate for the status quo with only reform. He has studied other housing finance systems around the globe. He even goes so far to say that the covered bond system of Europe works well for the TBTF due to the socialist systems/programs in place.
Mr. David Min - his prepared remarks from a few months ago are included link below...HIGHLY RECOMMENDED READING.
Assistant Professor of Law
University of California, Irvine School of Law
Link-
http://financialservices.house.gov/uploadedfiles/hhrg-113-ba00-wstate-dmin-20130612.pdf
I'm glad to see a dose of reality brought up to our legislators.
FYI,
Short vol on FNMA
http://www.otcmarkets.com/stock/FNMA/short-sales
Short vol on FMCC
http://www.otcmarkets.com/stock/FMCC/short-sales
Should be updated for 11/15 shortly.
Too many variables on the common and most of the outcomes are in US TSY favor with the warrants.
Common has been good for quick trades or small amount for an end scenario.
Hope both do well in the end and provide some nice returns for holders. I'm mostly sticking with prefs.
Great point 20c. I agree this will get the DC chatter going strong.
I think the HF lowballed this knowing TSY might counter.
Yes, the hedgies know the real $$$ will be made with a multiplier on the new common for future earnings.
It looks like they (Hedgies) only want the insurance. The securitization stays with F&F or gov't or co-op...etc.
Wouldn't that mean the loan loss reserves for the GSEs would follow to the new insurance co.? That is a nice windfall for the new owners.
This does look like a lowball offer.
Any news on the court proceedings yesterday?
Exactly. Also, the FED has trillions of MBS. That will take a long time (years to a generation) to unload/taper out of.
GLTA
Partially answering your question why they cannot just spin off into a newco or co-op quickly.
RE: Private capital and their ability to take on something the size of the GSEs...recommend you watch the following video.
http://www.restorefanniemae.us/jim
Adding the facts up, that the FED needs a very large and very liquid MBS market to have QE function in its current non-conventional policies and the fact that private capital has no appetite and is not sufficient (has never been sufficient) to replace the GSEs.
I think the status quo is most likely.
TSY and the FED are going to have a great deal of say in what happens to the GSEs...
For those who are interested. Good reading for a peek into the Feds playbook (Bernanke authored). This is part of the reason the MBS purchases have been so large in a non-conventional policy mode by our Fed. I suspect Yellen will follow closely as well.
http://www.federalreserve.gov/Pubs/FEDS/2004/200448/200448pap.pdf
It is a lengthy read, but well worth at least the salient points of what the economy is working through since 2007-2008. We are far from being in the clear.
My main point is that for the mechanics of QE to work the FED will need a Very large and VERY liquid MBS market to be in place.
USA Response To Washington Federal's Complaint
https://docs.google.com/viewer?a=v&pid=forums&srcid=MDUxNDQwNjExMTIwMzQzNjc3NDIBMDUxOTk2MzQzNzQ4NTQyNzQ1MDcBbTR0YkVyalJhc2tKATQBAXYy