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For a greater return.
Say you take $1,000,000. Roll it into common and then get a 3 bagger.
Now you have $3,000,000.
Take that $3,000,000 roll it into a MLP pay 7% tax free.
You now have $210,000 tax free dividends vs the $1,000,000 @7.75 % giving you a taxable $77,500.
Conversion from Preferreds to Commons shares
Check this out.
This math considers conversion from Preferred to Common shares at both current prices and redemption value price in both a non taxable and a taxable account.
Here we go.
First Non-taxable holds
Common is $4 per share
A $25 preferred shares is $11 per share
Number of shares used in this equation 100,000 shares
Thus 100,000 shares x $11 per preferred share = $1,100,000
$1,100,000 / $4 per common share = 275,000 shares of common
275,000 shares x $30 (assumed appreciation of common share) = $8,250,000
$8,250,000 Happy Days!
Now hold $25 preferred share to redemption value then buy common
100,000 shares x $25 per preferred share = $2,500,000
$2,500,000 / $9 (future price) per common share = 277,778 common shares
277,778 common shares x $30 (assumed appreciation of common share) =
$8,333,000 Happy Days
Thus $9 per common share price would be a trigger point assuming you get to RV before commons hit $9 per share
Now lets look at a taxable account
Assume you bought the 100,000 shares for $50,000
100,000 shares x $11 per preferred share = $1,100,000
$1,100,000 - $50,000 = $1,050,000
$1,050,000 x .761 ( .239 long term capital gains) = $799,050
$799,050 + $50,000 = $849,050
$849,050 / $4 per common share = 212,262 shares of common
212,262 shares x $30 (assumed appreciation of common share) = $6,367,875
$6,367,875 Happy Days!
Now hold $25 preferred share to redemption value then by common
Assume you bought the 100,000 shares for $50,000
100,000 shares x $25 per preferred share = $2,500,000
$2,500,000 - $50,000 = $2,450,000
$2,450,000 x .761 ( .239 long term capital gains) = $1,864,450
$1,864,450 + $50,000 = $1,914,450
$1,914,450 / $9 per common share = 212,717 shares of common
212,717 shares x $30 (assumed appreciation of common share) = $6,381,500
$6,381,500 Happy Days!
Thus $9 per common share price would be a trigger point assuming you get to RV before commons hit $9 per share
Now I hope and I wish there is some major conversion ration of preferred to common say:
6 shares of common for 1 share of $25 preferred share
12 shares of common for 1 share of $50 preferred share
No tax hit for the conversion…
Then common shares go to $30 to $45 per share!
$25 preferred example in a taxable account:
100,000 shares of $25 preferred stock
100,000 x 6 = 600,000 common shares
600,000 x $30 (Ackman's projected value of one share of common) = $18,000,000
So what is your opinion on my math and conversion to common outlook followed by my little dream attach to the end?
Don't sell early.
The wave, meaning preferrreds are still building-appreciating in price, like a wave crest. Waiting until the settlements, lawsuits and such are completed before selling any shares.
Ask her what she meant by the comment?
foscofrank • 17 hours ago
21users liked this postsusers disliked this posts2Reply
A FEW SOLID FACTS ABOUT COMMON AND PERFERRED SHARES OF FNF
1. They only have no rights under the Gov written documents.
2. They have rights under the constitution
3. The courts found that FNF are private shareholder firms
4. All stocks offered publicly have ownership rights period
5. Does not matter when you bought this stock the rights of ownership per share the same PRE 2008 or Post 2008 for all share classes.
6. The higher the common share price the lower the 79.9% potential senior perferred share conversion will be.
7. If Congress voted to by 79.9% of FNF it would take a vote and the stock price would soar cutting ownership conversion way down.
8. All cases though claims are for prior to 2008 all have same impact for those who own post 2008 as the stock is the same stock then as it is now.
9. There is no dilution effect on this stock UNTILL warrants are purchased and issued - that is a fact
10. Yes shareholder rights were transferred to the conservator NOT end indefinitely!
11. The stock has book value now that the bail out is paid back.
12. The rights of shareholders go beyond any Gov document written or the courts would not have taken the cases.
13. No stock holder on the OTC or NYSE or NASDAC can be taken by the Gov without compensation period.
14. If the Gov was going to wind down it would have happened already.
15. If they could not get a majority vote on winding down during the worst times how can they get it now?
16. Nobody in their right minds would agree these stocks have zero value now that NETZERO has been accomplished.
17. FNF paying all this money through the sweep amendment was a play to get all money back before legal proceedings would take place cutting the Gov out of getting fully repaid fast.
18. If the GOV does not respond on Dec 9 then they want a judgement to release
19. If the GOV responds with no solid arguments other than normal cry baby tax PAYOR claims they loose before they are even in court. Less
Fairholme holding in FAIRX
Portfolio Date: 08/31/2013
https://groups.google.com/forum/?fromgroups&nomobile=true#!topic/freddienfannie/C8wAo9Qq_p0
If no dividends, cash out.
Now what to do.
Maybe double down on F&F commons. Now this would be depended on purchase share price and believed appreciation in the price of a common share of F&F.
What are your thoughts?
Are the big players driving the PPS down?
F&F usually have a spike in PPS with the advent of good news.
The JP Morgan settlement and to a lessor extent BOA lawsuit would cause an increase in PPS. The big players could have assumed the same PPS increase due to the latest news.
So they sat back and waited for the right time to drive the PPS back down to a better acquisition price.
What do you think?
Maybe it is time to switch from preferred to commons shares.
Remember what Mbers said to us years ago. The preferred shares were insurance for a possible total collapse of F&F. We have held for this reason. Now the reason we held this belief appears to be gone (it appear the gov is following Milstein"s plan...at least step #7) for good. So if you are holding a 25 dollar preferred you have the ability from this point of a 4.25x increase. The common shares have no price limit. Even The FAIRX fund is half divided between common and preferred shares.
One possible action, hope, wish, dream would be the retro active reinstatement of dividends on preferred shares. Would any of the current lawsuit push for this issue?
When I see a retarded post like this, I just know we will have an up day. Thank you for the heads-up!
Taint,
I have been follow all posts since 2008. Yes, all of you have a better grasp of what is going on than do I. This is why I do not have much to post.
Still wish Mbers was still part of the group.
Yesterday I had the opportunity to briefly to to these guys. I was curious to what their opinion/mindset was on F&F.
Since I am not as analytical as other on the forum, I posted what little information I could contribute. Nothing more, nothing less. It is all I had to contribute. I though everyone would like to know what these two elites thought about F&F.
I can't post their names because it would threat my job as a serf working for the elites.
If interest rates go up F&F are dead?
Today I talk to two CEOs. Both from major corporations. One acting and one retired. They said if interests rates go up F&F are dead.
They said I already have a 15x bagger so cash out and put it on my wall.
Both CEO are in the Big Big Boy Club. Buddies with WB.
Personally, I don't see how rising interest rates would kill F&F.
They were surprised that I knew anything about F&F let alone owned preferred shares.
What do you think?
Wish that I was sitting on $4.5 million RV.
Maybe I will look at CTs
List of contacts?
Like us private share holders form this and ski forum?
littledevils90210,
What number comes after $1,999,999?
Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee
Your already at $2,000,000?
Sweet! Way to go!
Maybe the reason for the run up.
Maybe the reason for this run up in share price is due to Citi Bank.
Citi Bank decided to settle the push back lawsuit by paying the penalty without costing them any money.
Here is what Citi could have done:
Citi knew about the possible upswing in share price due to Fannie using the DTA. Citi then, for the following reason, decided to be the first to settle the push back lawsuit for a nominal $3.5 billion.
Now, how to pay without paying. Simple, Citi started buying common and preferred shares well before the sparking the massive run up in share price. They knew there would be a massive run up in share price due to Fannies DTA follow by their own settlement of $3.5 billion. So, knowing of the future run up in F&F share price, they bought F&F for pennies on the dollar to offset their settlement. They beat the other banks to the punch without costing them a dime.
Say they purchased over time 160,000,000 shares at .32 cents. This would give them 500,000,000 shares. Then they planned on selling the shares at say $7.00.
500,000,000 shares at $7.00 per share equals $3.5 Billion
I just pulled up random number to show my point of what Citi make have done or what is causing the current run up in share price.
The current run up is not retail but a very major player or players.
Unsure about a conversion rally.
I was just hoping for a conversion.
Past dreams of a conversion.
In the past I would day dream that we would hit RV then buy commons at $1-$2 and ride it up to $28.
The other was a 1:8 conversion to common and then watch commons go to $30+
Though I am happy with what is currently happening to preferreds.
Mbers...I wish she and others could still be with us.
Just bought more FMCCT.
Just picked up some more FMCCT. I wish I would have bought it in January. The money was in hand, but I was getting tired of no real upward movement in F&F. This kept me on the side lines and now I had to pay more per share.
When Freddie uses their DTAs I am hoping to see another big jump in share price.
There has not been any recent news on the lawsuits against the 16 banks.
I wonder if Watt's nomination had anything to due with the lawsuits against the banks.
Would Watt stop the lawsuits against the banks similar to Eric Holder's not prosecuting the Black Panthers for election interference?
Thx twenty!
The $117 b isn't debt, its senior preferred stock. Yes, its true that in a formal sense the dividends to Tsy aren't principal repayment. And yet, in terms of "net investment," i.e., draws less dividend payments, net investment will soon be down to zero or less.
Q: Does that change things in terms of the political/financial situation for our preferreds.
A: Yes, it does. It seems reasonable to expect that once net investment is down to zero, our dividends will be restored.
DTA Page 35 $49,738 billion
So how will F&F break free of Treasury debt?
So Fannie is not paying down the 117 billion in debt to the Treasury?
I guess the government fore saw the profits F&F would soon make thus changed the terms of paying down debt.
http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-results/2013/q12013.pdf
Net Worth
Our net worth increased to $62.4 billion as of March 31, 2013 from $7.2 billion as of December 31, 2012, primarily due to our comprehensive income of $59.3 billion, partially offset by our payment to Treasury of a $4.2 billion senior preferred stock dividend during the first quarter of 2013.
As a result of our positive net worth as of March 31, 2013, we are not requesting a draw from Treasury under the senior preferred stock purchase agreement. The aggregate liquidation preference on the senior preferred stock remains at $117.1 billion. Our dividend payment for the second quarter of 2013 will be $59.4 billion, which is calculated based on our net worth of $62.4 billion as of March 31, 2013 less the applicable capital reserve amount of $3.0 billion. As of June 30, 2013, we will have paid $95.0 billion in dividends to Treasury.
Table 1 below displays our Treasury draws and senior preferred stock dividend payments to Treasury since entering conservatorship on September 6, 2008.
Table 1: Treasury Draws and Senior Preferred Stock Dividend Payments
Treasury draws(1)(2) . . . . . . . . . . . . . Senior preferred stock dividends(3) .
(Dollars in billions)
2008 2009 2010 2011 2012 2013 (first quarter) Cumulative Total
(1)(2) $(15.2) $(60.0) $(15.0) $(25.9) $ — $ — $(116.1)
(3) — 2.5 7.7 9.6 11.6 4.2 35.6
(1) Represents the total draws received from Treasury based on our quarterly net worth deficits for the periods presented. Draw requests are funded in the quarter following each quarterly net worth deficit.
(2) Treasury draws do not include the initial $1.0 billion liquidation preference of the senior preferred stock, for which we did not receive any cash proceeds.
(3) Represents total quarterly cash dividends paid to Treasury during the periods presented.
The funding we have received under the senior preferred stock purchase agreement with Treasury provided us with the capital and liquidity needed to maintain our ability to fulfill our mission of providing liquidity and support to the nation’s housing finance markets and to avoid a trigger of mandatory receivership under the Federal Housing Finance Regulatory Reform Act of 2008 (the “2008 Reform Act”). We have not received funds from Treasury since the first quarter of 2012. Through March 31, 2013, we have requested cumulative draws totaling $116.1 billion. Under the senior preferred stock purchase agreement, dividend payments cannot be used to offset prior Treasury draws. Accordingly, while we have paid Treasury $35.6 billion in dividends, Treasury still maintains a liquidation preference of $117.1 billion on the senior preferred stock.
Taint,
Do you have the latest numbers of what F&F owe the Feds?
Speculation. If say DTAs are $60 billion and are exercised what would be the real number of dollars that would reduce loan principle to the Feds?
Thx.
Latest events
What could be happening now.
Considering the lastest turn of event certainly raises questions. The large run up in share price followed by big names promoting preferred shares F&F. The prevention of DTAs. The replacement of Demarco with the nononation of Watt.
Here is a question. If all profits above 3 billion dollar are givin to the Feds, how does F&F pay down their loans?
I must speculate that the Feds saw what income both companies would soon be producing thus change the established agreement and would take all profits above 3 billion which by the way wouldn't be considered as pay down of principle.
The latest share price run up due to DTAs, lawsuits against the big banks and the turn around of the housing market bring to light what cash cows F&F are to generate money for the Feds and not the share holders. So for financial and political reasons, the Fed will use its power to retain the wealth of F&F. I believe it will have to come to either a lawsuit or a major player media push to release F&F.
Watt. My opinion is that he has two purposes. One, push a political agenda. Second he is buddies with the big banks and will hurt us by accepting pennies on the dollars to settle the pending lawsuits. This will allow his banking buddies to get off with minimum pain while allowing the Feds to continue to control the housing market with the added bonus or raking in money to themselves and not the shareholders. This will leave us to sit and spin.
So, how can F&F pay off the principle if the Feds confiscate all of F&F profits above 3 billion?
Quote:
I don't understand why some people like ____ and other destroyed the FNMAS site[/quote
Because they cannot stand the light
notice how his falsehoods do not contain links or he has inserted false arguments into the text as if it was from an independent source
Thx
Petition signed
Ace gave me the heads up to to new forum.
Just checking in for roll call and to say hello.
I don't understand why some people like Blue and other destroyed the FNMAS site.
Major players preventing F&F from being removed from OTC
One thought on the recent run up and retreat of mainly the common and to a lessor extent preferred share prices.
If major players are trying to control the current rise in share price, they would not want commons to remain over $1.00. News of a turn around would affect the price of both common and preferred shares. As we have seen in the past years is a systematic rise and fall of share prices. The price per issued shares lined up at times, almost perfectly, up based on the value of common, 25 and 50 preferred shares. Now, with all the good news, the major players cannot hide the fact of a major turn around with F&F. Whatever the agenda, not wanting F&F to be released or being able to accumulating more preferred shares at a discount, one thing is certain. By no means can they allow F&F to be removed from the OTC and move back to the big board until the time is right.
Thus the control and manipulation of the common share price. It will linger below $1 until the players decide to reinstate dividends to preferred or redeem the preferred shares. Yes, we may see some blips in the price of common shares, but in general they will be tightly controlled under $1 to the advantage of the major players.
Anyone who passes or recieves knowledge of future policy changes.
Hank Paulson warned his buddies back in 2008 before he put F&F in conservativeship.
Disparity between price of common and preferred shares.
The issue is the disparity in price between the price of common and preferred shares. Could this disparity be the result of the insiders knowing of a impending government induced restructuring of F&F. A restructuring where the preferred shares are converted based on RV, where as the commons being heavily diluted based on impending government warrants thus holding a reduced value?
Or could it be just the adjusted value based on the warrants held by the government?
Another big issue is F&F profits used to shore up the Feds budget. Would the Feds be willing to give up free money?
I know this has been hashed out before, but has anything really changed?
Ace_of_Wands
Please check your email.
Thx
Lake
Finally saying hello.
I have held commons before Paulson Torpedo us in 2008. Since then I switch to Preferred. Through all of this, I have been enjoyed reading your posts every week day while lurking in the background as all of you educated me on F&F.
Too bad Mbers and others are no longer with us.
I thank all of you for helping me keep the faith.
By the way, the Devil makes me laugh buy always posting "to da moon."
The following is my proof
From:lakeoftheislands
Subject: Please add me to the new FNM-PS exiled holders group message board.
To: Ace_of_Wands
Date: Sunday, July 4, 2010, 8:17 PM
Hello,
Please add me to the new FNM-PS exiled holders group message board. I have been following this post for close to two years. I admit that I haven't posted much of anything. I am just a stock newbie who believes in Freddie and Fannie.
LakeoftheIslands